Here’s our ACCA exam guidance for the March sitting, with a little help from BPP:
Performance Management PM
As any syllabus area could be tested in sections A&B the best advice is to study all areas of the syllabus! Sorry, but you knew that.
Areas expected to be tested in section C include (but are not limited to): budgetary systems, planning and operational variances, mix and yield variances, and evaluation of the company performance (either as a whole, or on a divisional basis).
Given the fact that this is a performance management paper you would be advised to be prepared to evaluate some performance.
PM has the following syllabus areas:
A. Information, technology and systems for organisational performance.
B. Specialist cost and management accounting techniques.
C. Decision making techniques.
D. Budgeting and control.
E. Performance measurement and control.
General advice: You are strongly advised to plan answers to section C questions before starting to type. Ensure that you make reference to the scenario in your answer.
Finally, the examining team have repeatedly stated that they expect students to study broadly for all of the syllabus areas, meaning that question spotting is not a good idea, instead students should expect the unexpected. Since the introduction of MCQs this advice is even more critical because more topics can be tested. The exam will be approximately 40% calculation and 60% discussion, meaning that it is not sufficient to be able to perform all of the calculations. Interpretation and application are crucial, especially in section C.
Taxation TX (UK)
In section A there here will be a wide range of topics tested as there are 15 OTQs. Tutors expect at least a couple of these OTQs to be devoted to the administration of income tax and corporation tax. So, candidates should ensure they are comfortable with the following:
• Due dates for the payment of income tax (including payments on account).
• Due dates for the payment of corporation tax (including instalments for large companies).
• Filing dates for the income tax and corporation tax returns.
• Penalties and interest for late payments and returns.
Other topic areas likely to be tested in section A of the exam are:
• VAT rules on registration, impairment loss (bad debt) relief, and the SME schemes relating to cash accounting, annual accounting and flat‐rate schemes. • Inheritance tax due on lifetime transfers both in the donor’s life and on death.
• Statutory residence tests for individuals.
• Identification of groups of companies for corporation tax loss reliefs and gains.
• Trading loss reliefs for both companies and sole traders.
It is important to remember that section A offers the exam team an opportunity to test the whole syllabus, so practising all kinds of TX questions from the practice and revision kit will help build on and complement your existing knowledge.
In section B of the exam the questions will be similar to those of section A, but there will be a longer scenario to deal with. This means a slightly different exam skill is necessary as you have more information to work through and each OTQ will require you to find the relevant information or data in that scenario. It is not a difficult skill, but we would hope you have had time to practise an extensive range of section B questions from the practice and revision kit before attempting the real exam.
In section C you will face the longer, constructive response questions with scenarios and much more open requirements. Your answers will need not just sound technical knowledge, but also the application of that knowledge to the question you have been asked.
Furthermore, your answer will have to be presented logically so the marker can follow your thought processes. At least 50% of your revision time should be spent answering the section C questions in the practice and revision kit to build up confidence and speed in a way that will also maximise marks.
1. Remember to learn your income tax and corporation tax pro formas.
2. Calculations which require no more than two or three entries into your calculator can be included on the face of your pro formas (e.g. time apportioning a salary). Calculations which are more complex (e.g. company car benefits) need separate workings which are properly referenced (W1, W2 etc) and have a heading.
3. Actually attempt the narrative parts of the requirement – aim for as many sentences as there are marks with each sentence containing something technical. Keep your paragraphs to no more than 3 sentences long.
4. In both numerical and narrative answers leave plenty of space on the page. So, in pro formas – leave a gap between each line (you may need to add something in). Show workings down the page, rather than across the page as it makes them easier to mark. In narrative answers leave a line or two between each paragraph just in case you remember something later. Well‐spaced answers are also easier to mark – and you always want to keep the marker happy.
We know that the two longest questions will focus on income tax and corporation tax. These are likely to include the following:
• Employment benefits.
• Property income.
• Relief for pension contributions.
• Adjustments to profit to arrive at trading income for both companies and sole traders – in past sittings we have seen a number of questions whereby you have to correct errors in computations included in the scenario.
• Capital allowance computations.
So, remember to cover the whole syllabus when using the practice and revision kit.
Finally, remember the pass mark is 50% so you don’t need to be perfect. If you don’t know something have a guess and move on. Sometimes you have to do that in order to get follow through marks in section C questions. If you make a mistake, but then use that incorrect figure later in a subsequent calculation, then that’s fine – you can only lose the mark once. In sections A and B never leave an OTQ unanswered – have a guess if you don’t know the answer. It might be right!
Financial Reporting FR
· Fifteen 2-mark OTQs on a wide range of topics including several on consolidation and interpretation of financial statements.
· Expect a few questions on non-core areas (e.g. inflation, specialised entities).
Section B (Case questions):
· Three separate scenarios with five OTQs on each scenario; each question is worth 2 marks.
- Each scenario could be a mix of topic areas or focused on one topic and will usually consist of two/three calculations and two/three narratives.
· Questions are not dependant on each other and can be answered in any order.
Section C (Constructed response questions):
· Two 20-mark questions, one covering interpretations and the other preparation of financial statements.
· One question is likely to be in the context of a single company and one in the context of a group, so you could have a single company interpretation and a groups preparation or vice versa.
· Accounts preparation questions may include extracts or standalone calculations or full statements of profit or loss and other comprehensive income and/or statement of financial position.
· Both questions will cover the accounting for items from other areas of the syllabus.
· May include a short separate part, e.g. with a statement of changes in equity, statement of cash flows extract, earnings per share calculation or linked written topic.
· A consolidation question would include one subsidiary and often an associate, with adjustments, e.g. fair values, deferred/contingent consideration, PUP on inventories/PPE, intragroup trading and balances, goods/cash in transit.
· A single entity question could be preparation from a trial balance or restatement of given financial statements with the usual adjustments for depreciation, revaluation and current/deferred tax (including deferred tax on revaluations) plus a mixture of adjustments on other syllabus areas, e.g. leases, substance over form issues, financial instruments (change in fair value or amortised cost), share issues, government grants, inventory valuation, revenue recognition or construction contracts.
Audit & Assurance AA
All three questions in section B will be broken down into sub requirements and be scenario based. The majority of marks in each question will test syllabus areas B, C and/or D.
Areas expected to be tested in questions 16 to 18 include:
• Audit planning.
• Audit risk (identification and explanation of audit risks from a scenario and explanation of the auditor’s response to each risk).
• Internal audit.
• Internal controls (identification and explanation of deficiencies in internal control and the recommendation of suitable internal controls or description of tests of controls).
• Audit procedures (both substantive procedures and tests of controls).
AA has the following syllabus areas:
A. Audit framework and regulation.
B. Planning and risk assessment.
C. Internal control.
D. Audit evidence.
E. Review and reporting.
General advice: Where questions are based on a scenario it is essential that you use the information in the scenario to make your answers relevant. You should also think about how you will present your answer – try to use a tabular format in your solutions where relevant as the examining team have stated that candidates who do this score better.
Pay attention to the verbs used in question requirements as these indicate the number of marks available. For example, the verb “explain” requires a sentence and will score one mark if properly explained whereas the verb “list” simply requires you to list out information with no further explanation and this will score 0.5 mark per point.
Finally, please read the examining team’s comments relating to past exams which are on the ACCA website: http://www.accaglobal.com/uk/en/student/exam-supportresources/fundamentals-exams-study-resources/f8/examiners-reports.html.
Financial Management FM
Questions in section A will often be knowledge based (testing your knowledge of key technical terms), and will balance out the questions in section B and C of the exam to make sure that all aspects of the syllabus are examined.
It is therefore likely that a good number of these questions will test your understanding of financial management and objectives (ratio analysis, the concept of shareholder wealth) as well as the economic environment and financial institutions topics (financial intermediation, fiscal and monetary policies). The efficient market hypothesis is likely to be tested here too.
Each section B case-study will be broken down into five separate 2-mark MCQs (so 15 questions in total). Areas expected to be commonly tested in this section are working capital management (e.g. the operating cycle, the impact of a change in credit period or accepting a factor’s offer), business or security valuations (e.g. methods of valuation), and financial risk management (most likely mainly in the form of currency risk, but it is possible that interest rate risk is examined here).
Section C’s two 20-mark questions will be broken down into sub requirements and be scenario based. These two questions will focus mainly on syllabus sections C, D and E. Section C is working capital management, section D is investment appraisal and is likely to feature NPV with inflation and tax. Section E is business finance; either an evaluation of financing options (interest coverage and gearing ratios are likely to be important here) or a cost of capital and analysis are most likely. Whichever of these three topics does not feature in section C is likely to appear in section B of the exam.
Keep checking the ACCA website for articles in the lead up to the exam, any articles written by the examining team are often tested and are important to read.