ACCA exam guide for December 2007 (BPP & FTC)
NOTE: These exam guide should only be used in conjunction with proper studying. We cannot guarantee that these tips will appear in the actual exam as we have not seen the exam papers. The tips are based on Kaplan’s experience and understanding of the ACCA exams.F5 – Performance Management
ABC
Variance analysis, including mix and yield and interpretation
Learning curves
Performance measurement, including NFIs, the balanced scorecard and Fitzgerald et al
Decision making
F7 – Financial Reporting
CBS or, slightly more likely, CPLA
Published Accounts with mixed standards
Interpretations or CFS, with latter more likely, maybe with bits of Interpretation
Standards with concepts, such as Leasing, DT, Construction contracts, Impairment, Depreciation with Revaluation, etc
Standards with concepts (other standards, standard setting, human assets, conceptual framework, etc)
ACCA PAPER F7 (GLOBAL) TIPS DEC 2007
The whole exam is compulsory
• Q1 (25 marks): Consolidated income statement (P&L) and/or balance sheet with one subsidiary plus associate (including adjustments for fair values, unrealised profit, intragroup trading, goods/cash in transit. Discursive part (b) on fair values or other group topic.
• Q2 (25 marks): Accounts preparation/restatement with adjustments e.g. current/deferred tax, depreciation, inventory (stock) valuation, leases, construction contracts, substance over form issues, financial instruments (amortised cost), revaluations, share issues or government grants. May include disclosure of discontinued operations, movement in reserves/ statement of recognised income & expense (gains & losses) or EPS calculation.
• Q3 (25 marks): Interpretation and/or cash flow statement
• Q4 (15 marks): Theoretical/Conceptual question – possibly on provisions, inflation, accounting policies, leases or substance over form issues with reference to the conceptual framework
• Q5 (10 marks): Mixed bag question (e.g. tangible/intangible assets, impairment, deferred tax, governments grants, financial instruments, substance over form issues or EPS)
F8 – Audit and Assurance
Ethics – objectivity, conflicts of interest
Planning – identifying and explaining/addressing risks in a scenario
Internal controls – weaknesses and recommendations
Audit evidence – substantive tests, sales and debtors
Completion – overall review
Internal audit – role, reliance by external auditors
ACCA Paper F8
Audit & Assurance
December 2007 Exam Tips
All of the questions in this exam are compulsory and the examiner aims to test the syllabus widely at each sitting so it is very dangerous to rely on question spotting as you revise for this paper. The following outline aims to indicate the type of questions that may come up in the exam. Only the examiner knows what has been put into the paper, so these suggestions have been based on the content of the pilot paper, comments made and articles written by the examiner and the content of the old syllabus paper 2.6. The paper F8 examiner, Alan Lewin, set the old syllabus paper 2.6 from June 2005 to June 2007.
Question 1 (30 marks)
This will take the form of a case study with four or five separate requirements. The main requirements are likely to focus on audit procedures on a core area of the financial statements, such as revenue and receivables, purchases and payables or inventory.
Other parts of the question may look at internal controls in the same areas of the accounting system, or the auditor’s use of computer-assisted techniques.
Question 2 (10 marks)
This will be a 10 mark factual question and likely to cover at least three separate topic areas. The requirements are likely to test basic knowledge of ISAs. The examiner’s aim in this question is to broaden his coverage of the syllabus, so these could be drawn from any area.
Questions 3, 4 and 5 (20 marks each)
The examiner has said that these will be very similar in style to the questions he used to set in the old syllabus paper 2.6. This means that they will tend to have three or four separate requirements, and be based on short scenarios and syllabus areas as listed below. (Relevant questions from the 2007 P & R kit are listed separately after each topic.)
• Audit ethics
• Audit risk
• Corporate governance and its links with either internal or external audit
• Internal controls, possibly with requirements in the style of a “report to management”
• Audit completion and areas such as going concern, management representations, events after the balance sheet date and audit reporting
Relevant Articles
The following articles can be found in the Student Accountant magazine (or ACCA website)
• Audit working papers, Namasiku Liandu, February 2007
• Examiner’s approach to paper F8, Alan Lewin, February 2007
• Audit risk in a brave new world, Namasiku Liandu, 30 September 2004
• Internal audit and review reports, Katherine Bagshaw, January 2003
• The role of internal audit in risk management, Katherine Bagshaw, April 2002
• Directional testing – a methodology, Kim Smith, May 2001
F9 – Financial Management
Investment appraisal – especially NPV with tax and inflation. Additionally make sure you know the advantages and disadvantages of each appraisal method.
Working capital management – especially cash operating cycle and associated calculations.
Finance – especially financial and operating gearing and financial and business risk.
ACCA Paper F9
Financial Management
December 2007 Exam Tips and Useful Articles
This exam consists entirely of compulsory questions; this makes question spotting particularly dangerous. The purpose of this analysis is to highlight areas the major syllabus areas that we would expect to be regularly tested based on the pilot paper and the sittings of the old syllabus 2.4 paper which was also examined by your examiner Anthony Head (since 2003).
Use the following tips as important areas to cover but remember that no one knows what is in the exam, apart from the examiner. Your safest bet is to achieve good syllabus coverage in your revision, as the examiner aims to do in the exam.
Financial management function:
Key ratios such as return on capital employed, return on equity, earnings per share and dividend per share and total shareholder return can be used to evaluate an organisation’s performance from the point of view of its shareholders. Don’t forget value for money as a useful framework for assessing the performance of not for profit organisations.
Working capital management:
Ratios, including inventory days, average collection period and average payment period & average payable period can be used to calculate the operating ratio. This is often tested with numbers and a discussion of how to improve working capital management. This discussion could include debt factors and invoice discounting.
The sales revenue/ net working capital ratio has been specifically mentioned and can be used to forecast finance needs.
Investment appraisal:
NPV with tax is commonly tested with a discussion either of alternative methods of appraisal (e.g. ROCE, IRR or payback) or an analysis of risk or uncertainty.
Business finance:
You may be asked to assess the impact of sources of finance using ratios such as operational and financial gearing and interest coverage.
Cost of capital:
Questions are likely to focus on the calculation of the weighted average cost of capital and a discussion of strategies to reduce the weighted average cost of capital in the style of the pilot paper question on this area.
Business valuations:
This was not tested in the pilot paper but is a major syllabus area. Questions are likely to focus on the use of the share valuation models (asset, dividend, earnings) and a discussion of their limitations.
Risk management:
A risk management question is likely to focus on currency hedging using forwards and money market hedging. Other topics that are likely to be tested here include interest rate parity theory and the purpose of currency futures and options (without numbers).
Useful Articles:
If you want to read around the subject or improve your understanding there are a number of articles on the ACCA website. Scott Goddard (the examiner) has not written anything recently although the following articles are still relevant to the syllabus.
P1 – Professional Accountant
Director Remuneration Packages
Roles / Problems with NEDs
Unitary v 2-Tier Boards
Criticism of a company's current Governance
How/whether companies should deal with stakeholders
Board - Performance Evaluation
Role of internal Audit + Audit Committees
Different Ethics Models in business
Identification + Management of risks in a company
ACCA Paper P1
Professional Accountant
December 2007 Exam Tips and Useful Articles
Tipping is not a precise science at the best of time, and for the first sitting of a brand new paper it is little more than a ‘shot in the dark’. It would be inappropriate to guess what is likely to appear in the first exam, so the following tips suggest important areas to cover. However please remember that no one knows what is in the exam, apart from the examiner. Your safest bet is to achieve good syllabus coverage in your revision, as the examiner aims to do in the exam.
The following is a guide to areas that you should include as part of your revision:
Section A:
Application of corporate governance principles:
A deep understanding of the purpose and aims of good corporate governance, together with an appreciation of the relevance of different approaches (rules or principles) that could be utilised is key. Questions are likely to require the application of corporate governance to address organisational control deficiencies described in the scenario is quite likely.
Identification and assessment of all aspects of business risk:
The use of a methodical approach to identify, categorise and assess the array of risks facing an organisation will be a common feature of scenario questions. From this position the examiner can than then ask candidates to propose and recommend remedies.
Internal control mechanisms and their review:
Internal management control systems are a key feature of any successful organisation. Indeed corporate governance mechanism could in themselves be viewed as of the internal control framework. The questions are likely to either identify deficiencies in internal controls or ask students to suggest enhanced controls to manage risks identified.
Corporate social responsibility and environmental management:
The need to act appropriately in terms of social and environmental responsibilities is key feature of the modern business world, and could be an element of a scenario question. This being the ethical stance that an organisation takes allows for many theories and frameworks to be incorporated into answers.
Section B:
Although likely to be based on small scenarios, Section B questions are likely to test specific areas of the syllabus in more detail.
Corporate Governance:
This could require detailed discussion of aspects of the Combined Code or Sarbanes Oxley, or even a comparison between the two. Specific areas relating to the role of non-executive directors, remuneration and disclosure requirements could also be tested, which requires the recollection of detailed syllabus knowledge to secure a good mark.
Risk assessment and management:
Describing the frameworks used in assessing and controlling risk any organisation either in a holistic view in specific detail (e.g. risk profiling) could be on the paper. However there will be no computation of the value of risk required.
Internal control (inc. internal audit):
Approaches to enterprise risk management together with embedded /cultural risk awareness would appear to be prime topic worthy of revision.
Professional values and ethics:
An array ethical theories and frameworks could be specified and tested in detail. Emphasis is likely to be on the role of the professional accountant and the possible conflicts and threats to independence that can arise and need to be resolved.
Useful Articles:
If you want to read around the subject or improve your understanding there are a number of articles on the ACCA website.
‘Big Brother’ by George Bakehouse studies ethics and how advances in information technology have changed the way businesses work
Effective report writing by Mustafa Muchhala explains the key points of effective report writing
‘Examiner's approach to Paper P1, Professional Accountant’ by David Campbell, examiner for Paper P1offers his approach to the Professional Accountant paper
P2 – Corporate Reporting
Group accounts - foreign currency or cash flow
Accounting standards set in a case study environment including - impairment, financial instruments, pension, retirement benefits
Discussion - conceptual framework
P3 – Business Analysis
A fundamental appreciation of the key activities associated with strategic analysis, choice and implementation will always be required in interpreting the scenario.
The relevance of ethics and corporate governance to strategic decision making
Issues related to globalization and international business management
Be able to comment in general on how things like HR and IT can help underpin a strategic plan
Also review the pilot paper and make sure you know what CMMI is
P4 – Advanced Financial Management
Business Valuation through acquisitions
Foreign exchange hedging
Investment Appraisal and risk
Cost of capital and sources of finance
Advantages and disadvantages of listing and corporate objectives
P5 – Advanced Performance Management
Corporate failure.
Performance improvement strategies.
Value based management approaches.
Environmental management accounting.
The changing role of the management account in today's business environment
P7 – Advanced Audit and Assurance
Audit Risk Assessment and Management
Matters and evidence
Professional conduct and ethics
Reporting
Assurance Services - CDD
Changes to acca syllabus
ACCA converterthe above are the website for the conversation of current acca syllabus to the new one.. if anyone of you need any assistant on it.
You can also go to ACCA website to see their transitional papers. It is called the horizon conversion tool kit. Key in all the papers you have cleared and it will generate a list of paper you can attempt this december 2007.
http://www.accaglobal.com/horizon Basically you can take core papers separately, dont have to take all three together, subject to conditions set by ACCA. Please let me know if you need to get a copy of the core paper rule change.
ACCA Exam Tips June 07 Part 3(b) collected from help of Coolly
ACCA 3.5 Exam Tips
FTC
Key Areas:
A fundamental appreciation of the key activities associated with strategic analysis, choice and implementation will always be required in interpreting the scenario.
The relevance of ethics and corporate governance to strategic decision making
Issues related to globalization and international business management
Marketing and how it may be influenced by ethics and globalisation
Be able to comment in general on how things like HR and IT can help underpin a strategic plan
BPP
Section A
Always difficult to predict the subject matter of the case scenario. Therefore this time it might be something simple in structure and based on the Manufacturing environment.
Areas that could be included within the requirements could include
* A discussion of the relative merits of different ways of making strategy
* Stakeholder analysis and objective setting
* Application of strategic analysis models
* Evaluation of strategic objectives, using the numbers included
* Marketing issues
* Change management
Section B
Marketing, including new product development. In part suggested by the recent article, and still has not been examined. – Refer to Dec 2003 Q1d as a good review.
Information Technology. This is feasible this time because it is an important subject and will be very present within the new ACCA syllabus.
Globalisation strategy. The strategic development of global businesses was very popular when the paper was first introduced. It remains relevant and could be due another appearance.
Change management. A favourite topic of the examiner and due to be reappear in either section A or B.
Ethics and corporate social responsibility. With all of the talk (and recent cases) of corporate scandal ethical behaviour is a very topical area of the syllabus
China Website
• Strategic analysis – likely to be analysis of competition using porter’s 5 forces analysis
• Strategic choice and evaluation – competitive strategy, market product strategy and method of development
• Marketing and globalisation
• Sustainable strategic position & competitive advantages
• Quality issues & TQM
• Application of IT (internet)
• Corporate social responsibility & Ethical issues
Article
Strategy challenge: the internet (Student Accountant March 2007)
By Niu Niu (Prepared By Mr Philip Woo.....)
June 2007 suggestions
1. Models of strategic management
• Kenichi Ohmae – Strategic triangle (three c’s)
• Michael Porter – Competitive advantage and generic strategies
• Strategic development – Deliberate, emergent and incremental
strategies ( Mintzberg, Linblom and Quinn)
• Henry Mintzberg – 5 P’s (Plan, ploy, pattern, position, perspective)
• Strategic Intelligence – Donald Marchand
2. External environmental scanning
• Analysis of customers and markets – Market segmentation
targeting and positioning
- Market research
(Desk and field research Retail audit and test marketing)
• Benchmarking – Internal, Competitive, Process/Activity, Customer and Generic
• Industry Analysis - Michael Porter’s 5 competitive forces
3. Internal Assessment
• Product Market Portfolio (BCG)
• Product Life Cycle (PLC)
• McKinsey 7s
4. The nature of strategic analysis and choice
• Corporate Appraisal – SWOT, PESTEL, 6M, Value Chain
• Ansoff’s - Product market matrix
• Stakeholder expectations – Mendelow matrix
• Strategic direction – Mission statement, objectives and strategic
Intent (Hamel and Prahalad)
5. The nature of strategy implementation
• Marketing strategies – strategies of market leader, follower, nicher
and challenger
- promotion mix (advertising, sales promotion,
public relations, personal selling)
- marketing mix (4P’s/6P’s)
• Service marketing – Intangibility, inseparability, variability, ownership
• IT and strategic advantage – Strategic importance of IT (McFarlan
and McKenny strategic grid)
- Michael Earl awareness, opportunity and position framework
- Michael Earl system audit grid
• Management and control of quality – TQM and Quality Circles
• Management of change – strategies for managing change
(Johnson and Scholes, Lewin, Gemini 4R’s, Huczynski and Buchanan
Pettigrew and Whipp), System intervention Strategy
• Goold and Campbell – Strategic management styles (strategic planning
strategic control and financial control)
6. Matching structure with strategy
• Matrix structures, SBU, transitional/adaptive structures (virtual organization
• Burns and Stalker – organic and mechanistic structures
• Henry Mintzberg – organizational configurations
7. The nature of global competition
• Global strategies – product positioning
- development of global brands
- Standardization vs Customization
• Managing global company – Ethnocentric, Polycentric, Geocentric
- Kenichi Ohmae 5C’s
• Development of global business
- market convergence, cost advantages, government pressures, currency, trade barriers and global competition
• Entry to foreign market – Jacoby’s six stages
8. Outcomes of the strategic management process
• Corporate decline / Strategic failure – causes, failing to adapt and
strategic drift (Miller)
• Learning Organisation – Peter Senge and David Galvin
9. Ethical considerations
• Corporate ethics and managerial ethics – Carroll’s moral, immoral and amoral management (ethical norms, motives, goals, legal orientations and strategy)
• Corporate governance – features of poor corporate governance
- code of best practices and combined code
• Social responsibility
ACCA 3.6 Exam Tips
FTC
Section A
This compulsory question will be on the preparation of consolidated accounts and the twist that is due is that it will have a foreign subsidiary.
Section B
Mixed scenario based questions involving some of the following standards
Impairment
Share based payments
Deferred tax
Financial instruments.
Reirement benfits
Discussion question on accounting theory in repect of recognition and measurement issues
BPP
Section A
* Compulsory question on group accounting topics such as complex group structures, consolidation of a foreign subsidiary or group disposals
Section B
* 'Mixed' questions where a range of standards are covered such as related parties, pensions, recognition and impairment of tangible and intangible assets, leases, revenue recognition, changes in accounting policies, effects on EPS or deferred tax.
* 'Events' questions such as shutdown of an operation, switch to IFRS, natural or deliberate disaster, bringing in areas such as: impairments, provisions, events after the balance sheet date, non-current assets held for sale, discontinued operations, pension scheme curtailment effects, government grants etc
* 'Specialist industry' questions, where a range of standards are also tested, but in the context of a specific industry (NB: no specific knowledge of the industry required)
* Questions on topical areas, such as the continuing attempts to bring about international harmonisation and the effect on a company's accounts of applying IFRS, financial instruments or share-based payment, or standards inconsistent with the framework (eg leases)
* A discussion question looking at current developments in corporate reporting such as success/issues on implementation of IFRS, approach to segment reporting, mineral resources, comprehensive income, social and environmental reporting or business ethics
By Niu Niu (Prepared by Navzar FTMS)
1)Group-Overseas,indirect subsi and reverse acquisition
2)Operating lease esp those related to genuine sales and leaseback in OL form
3)EPS? Im not sure coz he said didnt examined quite some time. From what i see from his dec 06 tips, he also spotted this. But unfortunately, this EPS didnt came out...
4)International harmonisation and FRS 1/IFRS 1, possible reconciliation Qs
5)As in examiner's article, FRS 119 on pension accounts, familiarize yourself with treatment on actuarial losses/gain and its theories as frs 119 provide 3 choices! So, argue its benefits and drawbacks.
6)Again, examiner's article FRS 2 and other other articles on FRS 6....
ACCA 3.7 Exam Tips
FTC
Section A:
1) Overseas NPV: This topic was last examined in December 2003 and therefore will be on everybody’s tip list. The specific items that you need to be familiar with are: the application of double tax agreements, remittances from subsidiaries, use of purchasing power parity theory and the overall structure of an Overseas NPV. Excellent questions are Axmine(Pilot94) andAVTO(Dec03). He has also written as lightly different style of question Wickern(Dec01) where he gives you all the PV calculations in the question and asks you to analysis the numbers. This is worth reviewing. Basic awareness of political and economic risk is essential.
2) Risk management:
Currency Risk: Scott wrote a wonderful question called Lammer(Q2Jun06) which you should review in detail as it includes his main tricks on all the major techniques to hedge transaction risk. It is also worth reviewing Vertid(Jun95) in which Scott takes a more theoretical approach to currency risk.
Interest rate risk: This topic appeared as a case study in the last exam. However,be aware you’re your examiner has already written a case study that combined Currency Risk and Interest rate risk (Autocrat-December2002).Play it sate and review this topic. Excellent questions are HYK Communications Dec (99) and Interest Rate Hedge (Jun 05).
3) Hunting down the discount rate:WACC – Risk adjusted WACC –APV calculations within the context of a standard investment appraisal question.However risk adjusted WACC could also be examined within the context of traditiona lgearing. WACC-Jetter© (Jun02) and Semer(a)(Dec05). Risk Adjusted WACC–Romage Jun(00). Traditional Gearing-Bentras(Dec01). APV–Strayer(Jun 02).
4) Merger and Acquisitions: A FCF calculation possibly within the context of Going Private. Also review the share for share exchange style questions Raywood( Dec 92).
Section B:
1) Economic Value Added – EVA This is a topically area and you should review Toutplut (Jun 02) and Remuneration (Dec 04).
2)Portfolio Theory and CAPM Hasder(Jun03) is an excellent question as it covers both Portfolio Theory and CAPM calculations and the topic of international diversification. The Portfolio Theory section is technically demanding as you are given the covariance as opposed to the normal correlation coefficient. It is also interesting to note that in Scott’s answer he calculated the coefficient of variation for the first time. This will now be a standard requirement in all portfolio theory questions.
3) Term Structure of Interest rate - review Bond Prices (Jun 03) and BNG (Dec 00)
4) International economics– I.M.F-(Dec96), Current account deficit(Pilot01), Foreign
trade risks (Jun01) and Political risk (Dec01).
BPP
The December 2006 exam awarded very few marks for cost of capital, NPV, and currency hedging which are major areas of the syllabus that are regularly examined. It is reasonable to expect these areas to feature more strongly in June, but the examiner deliberately tries not to be too predictable and just because a question featured last time, doesn’t mean it won’t feature this time.
The following is a guide to areas that you should include as part of your revision:
Section A:
Global financial management: NPV – of an overseas project, leading into a discussion of financing issues. Adjusted Present Value is a possible angle that could be taken by the examiner; don’t neglect this area just because it was tested in the December 2006 exam.
Investment decisions: If not tested in an overseas context as above, NPV can be tested in a domestic context. Cost of capital is generally the main focus of domestic NPV questions and can easily lead into a discussion of gearing strategy.
Risk analysis: Currency hedging is a core topic that can be expected to arise somewhere on the paper especially because this did not feature significantly in the December 2006 exam. A likely area for the examiner to focus is currency futures and options.
Section B:
Risk analysis: Black-Scholes is due to be tested; it is a regularly examined area that has not been tested in the last 2 exam sittings. Strategy formulation: Economic Value Added is a regularly examined area that has not been tested since December 2004.
Investment decisions: Portfolio theory is a regularly examined area, it has also come up as a compulsory question so make sure you don’t neglect it.
Other: Question 6 is always discursive. Recently it has featured questions on the Global Economic Environment. Corporate Governance or financing overseas investments are areas that are likely to be tested.
From Niu Niu
Spotted topic for 3.7 June 2007 final sitting
1)Overseas investment
2)Forex
3)Demerger
4)Black & Scholes/Option pricing
5)Portfolio Theory
ACCA Exam Tips June 07 Part 3(a) collected from help of Coolly
ACCA 3.1 Exam Tips
FTC
Q1 Risk appraisal, risk management and audit strategy
Q2 Assurance services - reporting on narrative statements egg environmental reports
Q3 Matters and evidence when reviewing files before signing audit reports
Q4 Audit reporting - application of ISA 700
Q5 Professional conduct and ethics
Q6 Current issues
BPP
Questions 1 and 2
Scenario questions in the context of audit risk/business risk/financial statement risk. One of these is likely to have a non statutory audit theme.
May also include:
* Control suggestion and/or evaluation
* Audit evidence on Paper 2.5 accounting areas (see also Q3 suggestions)
* Group audit issues (including audit work on fair values)
* Planning/practice management/quality control issues
* Assurance services, e.g. performance measurement or prospective financial information
Question 3
Audit evidence. Comment on the matters you would consider and the audit evidence you would expect to find as audit manager conducting a review of audit files.
Likely to be several scenarios covering various Paper 2.5 level accounting standards, e.g:
* Events after the balance sheet date
* Provisions
* Impairments
* Earnings per share
* Segment information
* Related party disclosures
* Deferred tax
* Discontinued operations
* Standard costing
* Intangible assets
* Revenue recognition
* Borrowing costs
Section B
Question 4
Part (a): Any syllabus area. Part (b): A related question on reporting.
Question 5
Ethics, professional and quality control issues scenario question.
Question 6
Discussion question on current issues, e.g:
* Fraud and auditor liability
* International convergence
* Audit exemption for small companies
* Risk-based auditing
* Related parties
* Corporate governance
* Laws and regulations
The discussion question often covers a scenario on a topic where the examiner has written an article in your Student Accountant magazine in the months prior to the exam. You should check the magazine/ACCA website for new articles in the months leading up to your exam.
ACCA 3.3 Exam Tips
FTC
* Contribution based decision-making – possibly involving expected values, maximax, maximin & minimax regret.
* Practical aspects of pricing policy
* Performance evaluation - NFPIs
* The strategic framework – specifically a question based around the examiner’s article on “Business Strategy and Performance Models” (Student Accountant – April 2006). This is likely to focus on Porter’s 5 Forces
BPP
There were some be new areas in the syllabus from June 2006 which the examiner has already included in the latest paper;
Ansoff's growth vector matrix
BCG matrix
Porter's five forces model
Section A
To date the large question in this section has contained some elements of budgeting (short term planning) and recently it has also examined return on investment. This will be heavily numerical with a small written element.
The shorter question has often tackled some element of performance measurement with the majority of the marks being for numerical analysis.
Section B
There is usually a high discursive element in this section with 2 questions being wholly or heavily discursive. If it has not made an appearance in Section A performance measurement will make an appearance here it may even appear if it has already been seen in Section A.
Many of the modern management and management accounting techniques have been examined here;
Numerical topics do still appear in this area, topics that such as transfer pricing (which can also include qualitative issues) can be complexand confusing on first read, as can questions relating to and uncertainty in decision-making.
ACCA 3.4 Exam Tips
FTC
• Value of information systems
• Groupware
• Data warehousing and data mining
• Outsourcing
• SWOT
• Earls three legs
• Earls Grid
• Information strategy
• Virtual company
• Business and IT strategies
BPP
Section A
This is the last sitting so expect no great surprises here – again expect the scenario will be a business with significant system issues linked to a business plan or some strategic view. The following are some outstanding topic areas that are either so core to the syllabus or were not covered in recent exams.
The requirement areas could include
There will always be an I.T link to the business strategy maybe with a specific reference to Earl’s 3 legs.
A SWOT analysis on the scenario.
Impact of I.T on the organisation once implemented – i:e: the organisational and social impact.
E- commerce with reference to the internet in a specific system / business opportunity.
The academic framework could be McFarlan’s / Peppards grid suggesting development priorities.
Section B
Soft Systems methodology. Unusually this popular topic has been absent for a little time so this may be its final bow. Probably with the emphasis on the root definition and conceptual model elements.
Change management. This could be a section A topic as well . Maybe a question based on the 3C's and /or another model such as Davis and Olsen.
Parsons IS Strategies and Nolan’s Stage Hypothesis. Still tipping these two. A possible section B academic discussion could appear on either or both of these models.
Knowledge management and databases. A topic again that has been absent for a little time, that could appear in a mini scenario requiring a suitable technical explanation.
Porter's value chain. An outside bet, but maybe the examiner will finish with this model, just as he started the exams with it.
China Website
• TPS, MIS, DSS, EIS and Expert system
• Knowledge management & data management#
• SWOT analysis and its application
• IS, IT and IM strategies
• Earl’s 3-Leg analysis, Reasons for IS Strategy, Systems Audit Grids#
• Parson’s 6 generic IS strategies#
• Nolan’s 6-stage growth model#
• Ws framework
• McFarlan Strategic Grid# and Peppard application portfolio
• Project risk
• Gap Analysis and 3Cs
• SSM – SSM stages, Root Definition (CATWOE) and Rich Picture
• Application package solution & bespoke solution (strategic issues)
• Outsourcing#
• Systems changeover
• Impact of IS
# - spare topics
ACCA Exam Tips June 07 Part 2 collected from help of Coolly
ACCA 2.1 Exam Tips
FTC
Managing Information Systems
* Accounting for IS/IT costs
* Staff roles and responsibilities
* Flat project based structure
* Project management and control
* Centralisation/decentralization
Designing Information Systems
* Methodologies
* Modelling
* Invitation to tender
* Quality software characteristics
* Decision table
* Testing
Evaluating Information Systems
* Changeover techniques
* Documentation
* Training
* Maintenance
* Post implementation issues
BPP
The key issue about the exam format is that each section will have just one question on each major section of the syllabus.
The three key areas are: -
1. Managing information systems,
2. Designing information systems,
3. Evaluating information systems.
Overall there will therefore be 2 questions on each key area; one compulsory (section A) and one chosen (section B).
The section A questions are often in two parts, with the marks split evenly across the two parts:
- Part 1 - State the theory
- Part 2 - Apply the theory to the scenario
It therefore follows that unless students learn the scenario approach of extracting information from the scenario and applying this to their answers they will have difficulty in gaining a pass mark from section A.
Managing information systems
Business Strategy and IS/IT alignment
Delivering information systems – accounting issues
Project planning – Gantt charts
Organising IS – End user computing
Designing information systems
The information systems development process – Waterfall and Spiral models
Modelling user requirements – data flow diagrams
Developing solutions – Bespoke systems
Evaluating information systems
Implementing security – physical security
Implementation issues – training
Computer Misuse Act
Time/Cost/Quality Triangle
China Website
Managing Information Systems
• Data capturing technologies – Barcoding, OCR, OMR
• Business Strategy and IS Strategy
• Centralised and decentralised IS departmentS, Flat structureS
• Legacy System#
• Accounting issues – cost centre and profit centre
• Feasibility study – purpose*, issues on TOSE
• Project management – project sponsor and project manager, critical path analysis, Gantt chart, Terms of Reference, project planning stages
Designing Information Systems
• Methodology, Waterfall model, spiral model
• Functional and Non-functional requirements
• Models – process model, Structure model (ERD) and event modelS (ELH) (construction and notation)
• Tasks of external design*
• Supplier selection* – measures and metrics
• Bespoke solution and package solution
• ITT
Evaluating Information Systems
• Systems changeover
• Systems Maintenance and change control proceduresS
• Quality issues – QM, QA and QC
• Security issuesS
• Testing – unit testing, systems testing, user acceptance testingS, performance, usability testing (explanation & measures and metrics)
• Functional correctness and reliability (metrics)
• Decision table
# - in the pilot paper but has not appeared as real examination question.
* - in the syllabus but has not appeared as real examination question.
S - Spare topic
ACCA 2.4 Exam Tips
FTC
• Investment Appraisal; to include NPV, IRR, tax, relevant costs, risk & sensitivity and lease or buy
• Sources of Finance; to include gearing, ratios, rights issues and other methods of issue and the problems of SME’s
• Working Capital Management; to include cash and/or stock
• Budgeting; to include budgetary systems and cash budgets
• Variance calculations
• Organisational objectives
BPP
Section A
Section A is a compulsory 50-mark question based on a case scenario of about 1½ - 2 pages. It tends to contain questions on investment appraisal and sources of finance.
* Investment appraisal
* Sources of finance
* Working capital (probably stock management but possibly debtor management)
Section B
In section B of the exam there will be two questions on Financial Management – if investment appraisal does not appear in section A then it will definitely appear in section B, the examiner has never set a 2.4 exam which does not have an investment appraisal question. The other two questions will be on areas from the Management Accounting section of the syllabus.
* Modern costing techniques
* Variance analysis
* Responsibility and investment centers
* Sensitivity analysis, risk and uncertainty
ACCA 2.5 Exam Tips
FTC
Group balance sheet with an associate undertaking and fair value adjustments.
Cash Flow
Key accounting standards include: impairment, leases, segmental reporting.
Accounting theory based on the information needs of users.
BPP
Section A
* Consolidated income statement (P&L) and/or balance sheet with one subsidiary plus associate (including adjustments for fair values, unrealised profit, intragroup trading, goods/cash in transit. Discursive part (b) on fair values or other group topic.
Section B
* Accounts preparation/restatement with adjustments e.g. current/deferred tax, depreciation, interest, substance over form issue, financial/capital instruments (amortised cost), revaluations, share issues, inventory (stock) valuation, government grants, deferred tax. May include disclosure of discontinued operations, movement in reserves/ statement of recognised income & expense (gains & losses) or EPS calculation.
* Theoretical/Conceptual question – possibly on provisions, inflation, tangible/intangible assets, impairment, accounting policies, leases or substance over form issues, with reference to the conceptual framework
* Interpretation and/or cash flow statement
* Mixed bag question (e.g. deferred tax, segment reporting, events after the balance sheet date, construction/long-term contracts, government grants, financial/capital instruments, substance over form issues or EPS)
Joe Fang's tips for Paper 2.5 (By roy_pck)
Q1- consol balance sheet
Q4- ratios or combined cash flow & ratio analysis
FRS 138, 116, 112, 117, 137, 132, 136
ACCA 2.6 Exam Tips
FTC
ETHICS - Objectivity Threats, Conflict of Interest (see below)
PLANNING - Practical Audit Risk Scenarios
CONTROLS - Suggesting control objectives and procedures
SUBSTANTIVE TESTS - Inventory, Receivables
REVIEW/COMPLETION - Going Concern audit work
REPORTS - Practical Scenarios
INTERNAL AUDIT / CORPORATE GOVERNANCE - Business Risk, Comparison of External v Internal Audit, Audit Committees
BPP
* Internal audit/ Internal review – Following the current examiner’s article on how the internal audit department can assist in corporate governance and risk management, this area has been frequently tested. (In all papers, December 2006, June 2006, December 2005 and June 2005). Note that in addition to a specific question on internal audit or reviews conducted by internal or external staff, questions could be in the form of a report to management on control weaknesses with recommendations, very similar in substance to that produced by an external auditor
* Substantive testing – This will be in the exam, but what will be tested? The December 2006 question covered external confirmations and audit of bank balances (Q3). In June 2006 Non current (Fixed) assets were tested. December 2005 covered inventories (stock). In June 2005 sales and tangible assets were tested. In December 2004 substantive testing of payroll balances was tested (Q4). In June 2004 inventories (stock) (Q3) and payables (creditors) and accruals (Q4) came up. In December 2003 payroll audit was tested (Q2). In June 2003, Inventories (stock) (Q2) and provisions were tested (Q3). In the December 2002 exam, payables (creditors) (Q3) and inventories (stock) were tested (Q5). In June 2002 cash was tested (Q2) and in December 2001 receivables (debtors) were tested (Q4). That would appear to leave receivables (debtors) and possibly another appearance of inventories or provisions as likely candidates for examination this time round.
*Systems and controls – Again this topic will be included in the exam in some format. In December 2006 the question dealt with weaknesses in a purchases system. In June 2006, the question covered the objectives of internal controls. In June 2005 Q3 was centred around a complex computer system. The examiner has warned that computers will be expected to feature in scenarios. In December 2004 Q3 risks from a scenario had to be spotted, and controls recommended. In June 2004, they came up in the context of outsourced catering and payroll (Q5). In December 2003 controls over payroll were tested in Q2 and Q1 included controls over business risks in the areas of human resources, procurement and marketing. In June 2003, controls over non-current (fixed) assets were tested (Q6). In the December 2002 exam the sales system was tested (Q2). In June 2002 the cash system was tested (Q2) and in December 2001 Purchases/ capital expenditure were tested (Q3). Any of these could come up again: the payroll and sales/receivables systems looking the most likely.
* Planning and risk assessment (from a scenario) – risk in one form or another comes up at most sittings. It is one of the key stages of the audit, but can also be examined in the context of a company's business risk as it was in June 2004. In December 2006 Q1 focused on the purpose of risk assessment procedures and issues to be considered when providing services to a given client. In December 2005, an audit planning memorandum, or audit strategy, was required. In June 2005 Q1 was a straightforward question looking for risks from a simple scenario. In December 2004, Q2 was centred around planning and the information you require, and Q1 was about spotting the risks of fraud and error.
* Professional ethics – This is a core area examined in June 2006 (confidentiality) after a period away from the exam in the previous 4 sittings. It is still a topical issue with all of the recent corporate collapses bringing the independence and professionalism of their advisors into question. Confidentiality came up again in December 2003 (Q6), conflicts of interest in June 2003 (Q3) and objectivity in December 2002 (Q1). Independence issues are still important and could to be examined again at this sitting.
* Audit/Assurance Reports – This is a very important area of the syllabus, it is deliverable from the end of all assurance engagements. You also need to be aware of the differences between internal audit reports/ external audit reports and other assurance reports such as review reports. It was tested in June 2005 as an unpopular optional question asking for errors in a given audit report. It has been tested in December 2003 (Q3 b and c), June 2003 (Q3c and Q5), June 2002 (Q3b) and December 2001 (Q5), but not in the last few sittings.
* Parts of questions – The following topics could form discrete parts of questions at this sitting: fraud, management representations, audit regulation, subsequent events and e-technology (see article below) so make sure you are up to speed on these areas.
ACCA Exam Tips June 07 Part 1 collected from help of Coolly
ACCA 1.1 Exam Tips
FTC
(i) Company accounts
(ii) Consolidated balance sheet
(iii) Interpretation of accounts
(iv) Cash flow statements
(v) Accounting Standards and theory
(vi) Incomplete records
(vii) Partnership accounts
BPP
Section A - 25 compulsory MCQs (50 marks)
Each question is allocated 3.6 minutes
The examiner sets MCQs that intentionally have wide syllabus coverage but often have a similar style. Therefore lots of question practice is the best way to approach this part of the exam.
Common areas examined are year end adjustments, including calculation of accruals and prepayments, amendment of errors, bad and doubtful debts, inventory valuation and non-current assets (including depreciation). The examiner usually sets questions on reconciliations – both bank and control accounts – often by getting students to correct an existing reconciliation that has been performed by a trainee accountant. Expect to see a question on the accounting equation either in section A or B.
It would be worthwhile reviewing past MCQs on partnerships to become familiar with the examiner’s style for these questions.
A significant number of the questions will be written rather than computational. Topics examined in this way include accounting policies & estimates, regulatory framework and application of standards. However students with a good basic understanding should be able to eliminate incorrect answers and should not struggle too much with these.
Certain key areas will be examined via a number of MCQs if they are not examined in section B. Therefore students should be well prepared on the following areas: interpretation of financial statements, cash flow statements, group accounts. Based on past exams it seems to be more likely that cash flow statements will be examined this way in June.
Section B - 5 compulsory questions (8-12 marks each to a total of 50 marks)
Expect there to be a mix of computational and discursive (written) questions, normally with two written questions per paper.
Common topics for computational questions
* Consolidated Balance Sheet. - This has not been tested since Dec 05. It is always good for students to be well prepared for such a question as they have a strong chance of gaining high marks. This has been examined in December every year for the past 5 years and therefore has a good chance of coming up again this year.
* Preparation of a Balance Sheet or Income Statement - however this could be for a sole trader, partnership or limited company so students must ensure they are familiar with all the proforma formats.
* Incomplete records – Balance Sheet or Income Statement. The examiner has not tested since Dec 05 but always possible to come up as it incorporates lots of the key elements of bookkeeping such as error correction, T-accounts and journals.
* Suspense accounts - error correction and profit adjustments have been tested in the last four out of six sittings.
Topics for written questions
* Interpretation of Accounts - likely to be a discussion question with computational elements. Be prepared for a fairly open requirement: eg “calculate some profitability ratios” “Assess the company’s liquidity using ratios” which means you need to know which ratios fall under these headings and also their formulae. A large proportion of the marks will be for commenting on the ratios so students should practice questions from the P&R kit so they have a wide range of comments on ratios at their disposal.
* Accounting issues – maybe with some computations/disclosure notes – often related to accounting standards. Typical topics could be events after the balance sheet date, provisions and contingencies, intangibles. Alternatively could ask students to explain company specific items such as share capital and reserves.
* Accounting concepts and principles - a favourite of the examiner. In June 06 going concern was tested. Be aware this area may include a questions on the advantages and disadvantages of historic cost accounting – there are some good questions in the P&R kit to help practice this area.
REMEMBER TIME MANAGEMENT IS VERY IMPORTANT, 1.8 MINUTES PER MARK
ACCA 1.2 Exam Tips
FTC
The paper will consist of 25 MCQs of 2 marks each and 5 long questions of 8-12 marks each. The MCQs will vary in difficulty, but the variety will ensure that the paper reflects the syllabus. The five long questions will be a mix of (mostly) calculations and (a few) written marks. The vast majority of the marks in this paper will be for calculations.
The nine key areas of the syllabus will make up the bulk of the exam paper:
* Cost classification and behaviour.
* Material, Labour and Overhead costs.
* Absorption and Marginal Costing.
* Process Costing.
* Standard Costing (includes variances).
* CVP analysis (includes break-even).
* Pricing Methods.
* Relevant Costing
* Limiting Factors and Linear Programming
BPP
Section A – 25 MCQs (50 marks – 50%)
Expect Section A to have broad syllabus coverage. It is best to set yourself ‘multiple choice question (MCQ) tests’, to time, which include a selection of questions from different areas of the syllabus.
Section B – Five compulsory questions (Worth between 8-12 marks each – 50%)
Section B questions will be primarily computational; however, increasingly the tasks are broken down into 2-3 parts, with a written element for between 2-3 marks. Some areas we feel likely to come up are:
* Absorption Costing - Complete part of the absorption costing process (allocation / apportionment etc) or construct a P&L under either AC or MC (or both) and possibly reconcile the difference in profits. Be able to explain the different stages of absorption costing.
* Break-even - Calculate break-even or sketch a break-even chart.
* Variance Analysis - Construct an operating statement to reconcile budget profit to actual profit having calculated sales and cost variances, possibly with a slant towards overhead variances. Provide explanations for what may have caused the variances.
* Relevant Costs and Decision Making – Calculate the relevant cost of a scarce resource by applying the opportunity cost concept.
* Limiting Factor Analysis – Use linear programming to draw a graphical representation of a problem that has more than one limiting factor and interpret the result. Conclude on a contribution maximising or cost minimising solution.
* Pricing Policy - Discuss pricing policy including some calculations
REMEMBER, TIME MANAGEMENT IS VERY IMPORTANT, 1.8 MINUTES PER MARK!!
ACCA 1.3 Exam Tips
FTC
Primary Tips:
Structure – forms of Organisational Structure
Culture – Handy and comparative theories
Motivation – Herzberg and comparative theories
Role of Management
Effective Communication Practices
Management of Diversity/Equal Opportunities
Secondary Tips:
Management and Leadership
Management by Objectives
The Learning Process – Mumford and Kolb
Recruitment and Selection
BPP
In Section A there is a compulsory Scenario Question worth 40 marks, which is usually broken down into between 4-8 discrete parts. It is difficult to predict whether the examiner will remain in a mainstream core area of the syllabus or examine somewhere less obvious. However he has written an article in Student Accountant prior to most exam sittings, and often based Question 1 upon it, so it is important to keep a look out for articles right up until the exam.
In Section B there is a requirement to undertake 4 from 5 questions, each worth 15 marks. It is difficult to make tips of which areas he might examine, however, it would be worth reviewing the following topic areas:
1. Recruitment and Selection – a question in every exam to date
1. Training and development – as performance appraisal was examined in Dec. 2006
1. Effective Communication Practices – a favourite area
1. A number of topics have not been examined for a while: teams, culture, H&S
Each question is broken down into 2 -3 parts. Be careful to only answer what the examiner has asked for.
Tips?ACCA December 2006 Exam Tips?
WARNING: Tips are no substitute for revision!thanks to ching.. i know the tips are flying here and there around the net... just that whether i have any time to get everything she already compiled and re-post it here...
sorry for those who visit here to look for tips.. hope this is not too late.. but just praying hard for you guys... and hoping that luck is on your side and please do not just reply on tips itself :)
Paper 1.3 Managing People
Primary Tips:
* Counseling
* Individual, Groups and Team behaviour
* Motivational Theories
* Objective setting; performance indicators
* Effective Communication
* Management of Diversity/Equal Opportunities
Secondary Tips:
* Leadership Theories
* Recruitment and Selection
* Management by Objectives
* The Learning Process Mumford and Kolb
ACCA Paper 1.3-BPPManaging People
December 2006 Exam Tips
In Section A there is a compulsory Scenario Question worth 40 marks, which is usually broken down into between 4-8 discrete parts. It is difficult to predict whether the examiner will remain in a mainstream core area of the syllabus or examine somewhere less obvious. However he has written an article in Student Accountant prior to most exam sittings, and often based Question 1 upon it, so it is important to keep a look out for articles right up until the exam.
In Section B there is a requirement to undertake 4 from 5 questions, each worth 15 marks. It is difficult to make tips of which areas he might examine, however, it would be worth reviewing the following topic areas:
Recruitment and Selection – a question in every exam to date
Culture – absent for three sittings
Health and Safety – long overdue, only ever examined once
Effective Communication Practices – a favourite area
Each question is broken down into 2 -3 parts. Be careful to only answer what the examiner has asked for.
Health Warning! Please note the examiner, Dr John Ball, deliberately tries to avoid question spotting. Just because a question featured last time, does not mean it won’t feature this time. Use the tips as areas to have a good look at, but remember that no one knows what is in the exam, apart from the examiner. Your safest bet is to achieve good syllabus coverage in your revision, as the examiner aims to do this in the exam.
Paper 2.1 ISManaging Information Systems
* Business strategy and IS/IT strategy
* IS cost allocation methods
* Feasibility study
* Legacy systems
* Accounting for IS/IT costs
* Staff roles and responsibilities
* Project management and control
* Centralisation/decentralisation
Designing Information Systems
* Methodologies
* Analysis,CASE
* Modelling
* External design: data capture
* Invitation to tender
* Prototyping and 4GL
Evaluating Information Systems
* Security/legislation
* Implementation
* Post-implementation review
* Quality
* Documentation
* Maintenance
Source: Lecturer Parminder Singh (KSA)
1. HCI (specially on GUI n Screen), IS personnel, flat structures
2. Data capture
2. IS/IT/IM strategy
4. Cross-charging, seperate company, centralization/decentralization of IS function
5. SLDC (training, testing, maintenance, fact finding/documentation, TOSE, software packages, change control procedure, data conversion/creation)
6. V model
7. Prototyping, CASE, Spiral model
8. Project management (project plan, network diagram, grantt chart, risk management process)
9. SAD (ERM, decision tables/trees, DFD)
10. Quality (project quality plan)
11. Security (features, malicious software, disaster planning)
12. Legislation (DPA, CMA)
Paper 2.1 Exam Tips
Exam Tips and Relevant Articles
The key issue about the exam format is that each section will have just one question on each major section of the syllabus.
The three key areas are: -
1. Managing information systems,
2. Designing information systems,
3. Evaluating information systems.
Overall there will therefore be 2 questions on each key area; one compulsory (section A) and one chosen (section B).
The section A questions are often in two parts, with the marks split evenly across the two parts: -
Part 1 - State the theory
Part 2 - Apply the theory to the scenario
It therefore follows that unless students learn the scenario approach of extracting information from the scenario and applying this to their answers they will have difficulty in gaining a pass mark from section A.
Managing information systems
There will be a maximum of 40 marks on offer applicable to this area.
Business Strategy and IS/IT alignment (Q1 and Q70)
Delivering information systems – accounting issues (Q9 and Q91)
Project planning – Gantt charts (Mock Exam 1 Q4 and Q81 )
Organising IS – End user computing
Designing information systems
There will be a maximum of 40 marks on offer applicable to this area.
External design – User friendly systems and Prototyping (Q40 and Q83)
The information systems development process – Waterfall and Spiral models (Q24, Q25 and Q26 )
Modelling user requirements – data flow diagrams (Q85)
Developing solutions – Bespoke systems (Q83)
Evaluating information systems
There will be a maximum of 40 marks on offer applicable to this area.
Quality assurance in the management and development process – V model (Q47 and Q87)
Relationship of development processes and quality (Q94 and Q80)
Implementing security – physical security (Q53)
Implementation issues – training (Q!07)
Paper 2.2 Corporate & Business LawSource: Lecturer Viknes 1v37 (KSA)
Advices:
*Never mention the section if ur unsure as mistake to the section numbers implies serious matter n the whole answer will be voidable at the option of the marker to implies NIL mark for the whole said section or some 'sympathy marks' for u. However, as the fact given, putting down the section number indicating student of well-readness n extra bonus marks might be given to ur overall performance, hereby, again at the option of the marker.
*leading decisions of case law must not be omitted in ur answer. Elaborate all your answer by giving defination (quoted from the act/case law/own defination is acceptable), stating any illustration from the act (if any), n followed by relevant case laws (preferably m'sian case).
Contract law
1. Offer vs ITT & acceptance vs counter offer (D01 Q8)
2. Consideration (executory, executed, past)
3. Frustration S57(1)(2)
4. For problem-solving (mixture of coercian, Specific performance, certainty, exclusion clause)
Company law
1. Turquand (ESSAY)
1. Shares (read all plus preference share/redeemable)
2. Receiver (liability)
4. Directorship (dun spot, read all especially duties, S132C/S132E/S133)
5. Meeting
5. SLP lifting veil by parliment
6. Promoter (only Glucstein's case on recovery profit)
6. Auditor (removal)
Agency
1. Duties of Agent to principal
Partnership
1. termination
2. liability
Malaysian Legal System
1. Subsidiary legislation
2. How law is made
3. common law
Employment law
1. constructive dismissal
Paper 2.3 Malaysia Taxation1. company tax marks targeted: 20/30
- memorize all d expenses whether allowable, not allowable or double deduction n their explanations
- d explanation must b specific. try to avoid explanations like 'wholely and exclusively incurred in d production of income' or 'incurred in d normal course of biz'
- capital allowance is expected to b examined
2. personal tax marks targeted: 15/25
- S13(1)(a) and (b) r expected to b examined in details. must b able to distinguish which benefit falls under which section
- small value asset, repairs vs maintenance, royalty income, child relief (new changes)
3. sales n service tax marks targeted: 8/15
- bad debts
- mostly theories
- sales tax (credit sys)
- service tax (imposition of service tax, failure of non-compliance, evasion of service tax)
4. RPGT marks targeted: 10/15
- memorize d RPGT computation n isi tempat kosong laugh.gif
- NGNL especially transfer of asset from individual to co controlled by him/her [para 3(b)]
- private residence exemption (new changes)
5-7. others: marks targeted: 3/15
1. CA [HOT!!!]
2. resident status
3. individual tax planning
4. SAS for co
5. case law R or E
*FYI s108 not targeted
ACCA 2.4 Financial Management and Control
Investment Appraisal; NPV to include relevant costs, tax and inflation, and possibly capital rationing and/or sensitivity analsysis, determinants of the discount rate
Raising Finance
Ratio analysis
Replacement policy
Working capital management, possibly to include stock
Costing systems (ABC ?)
Budgeting and Budgetary control
Divisional Performance appraisal and strategic performance measures
Long term finance and gearing
FTMS CKT Tips
CaseStudy : Investment Appraisal (NPV)
section b
-Sources of Finance : Ratio -Debt Valuation (calculate & discuss)
-Financial Risk & Investor Ratio
-Standard Costing : Mix & Yield Var**
ACCA Paper 2.4 – Financial Management & Control
Section A: One compulsory question worth 50 marks
Question 1
investment appraisal & about 10 marks management accounting.
Section B: Two out of 4 questions each worth 25 marks
Question 2 to 5
2 of section B questions will be in the area of financial management and the other 2 questions on management accounting. Of these, one question will be purely theory. In the last exam paper, the pure theory question was on aspect of financial management. This time may be financial management as well.
Possible topics:
1. Last Paper Lack Investment Appraisal. Focus on - Investment App :: Appraisal Techniques , evaluation decision with relevant cost, inflation, tax adjustment(might incorparate probability and expected value) , capital rationing & replacement policy.
2. Working capital management. Focus on debtors ( assessing credit worthiness and cash discount), Cash Mgmt ( miller-orr model & operating cycle) also likely.
3. Sources of finance. Focus on debentures( convertible debenture) valuation. Theory on methods of issuing share. Every Exam there is Question on Investment Ratios.
4. Flexible budget,Incremental Budget, ZBB and rolling Budget.Forecasting techniques : Regression Analysis.
5. Performance Measurement
6.There is a question on variances in each exam. So look out! *Mix & Yield Var*
ACCA Paper 2.4-BPPFinancial Management and Control
December 2006 Exam Tips
Anthony Head is the examiner for FMC. He has set exams, which are fair and focused on the core areas of the syllabus.
The references after each topic are to questions in the 2006 Practice and revision kit:
Section A
Section A is a compulsory 50-mark question based on a case scenario of about 1½ - 2 pages. It tends to contain questions on investment appraisal and sources of finance.
· Investment appraisal – Q86 Water supply services, Q95 Springbank, Q98 Sassone
· Sources of finance – Q65 Newsam, Q66 Sources, Q69 Collingham, Q72 Raising finance, Q74 Tirwen
· Performance measures – Q95 Springbank, Q38 Investment Group
Remember that the more complete case scenarios you attempt the better prepared you will be. The Case scenarios in our practice and revision kit are questions 88 to 98.
Section B
In section B of the exam there will be two questions on Financial Management – if investment appraisal does not appear in section A then it will definitely appear in section B, the examiner has never set a 2.4 exam which does not have an investment appraisal question. The other two questions will be on areas from the Management Accounting section of the syllabus.
· Working capital (probably stock management but possibly debtor management) – Q59 JIT and EOQ, Q56 PCB, Q55 Special gift suppliers, Q61 Velm
· Modern costing techniques – Q7 Throughput accounting, Q10 Abkaber
· Variance analysis – Q19 Hairdressers, Q22 Woodeezer, Q23 Carat, Q24 Linsil
· Capital rationing - Q83 Filtrex, Q84 PI, Q85 Basril
· Sensitivity analysis, risk and uncertainty – Q80, Q81 Forex risk, Q82 Umunat
ACCA Paper 2.5 Paper 2.5 does not change. You must work through the last 6 exams. The style and content of the questions remains very much the same.
Q.1 is consolidation and you can expect another balance sheet but be prepared for an income statement. You must be able to include an associate (or a joint venture) in the consolidated accounts using the equity method.
Q.2 is the “list of balances” question – practise on the last 6 exam questions – they cover the same ground. There are two approaches. Either go for workings to start with and then prepare the financial
statements asked for, or prepare pro-forma financial statements first and fill in the numbers as you work through each note in the question. This is a good question to choose in Section B. It is not difficult, but it is time consuming.
Q.3 is the single-standard question together with accounting principles – focus on impairment,provisions, eps, leases, contracts, discontinued operations. Consider the principle of substance over form and the principles of revenue recognition.
Q.4 usually includes a cash flow statement – work through the last 6 question 4s from past papers.You should get some financial analysis in December. Remember your ratios and the key points for comment.
Q.5 is the “multi-standard” question – of course you need to know all examinable standards.
ACCA Paper 2.5 (Global)
Part 2 - Financial Reporting
December 2006 Exam Tips
Section A
Question 1
Section A will comprise one compulsory question that will examine group accounting. Group accounting is a core area and this question could ask you to produce a consolidated balance sheet and/or income statement (profit & loss account) with one subsidiary and possibly an associate or joint venture.
It usually includes adjustments for items such as: fair values, unrealised profit on inventories (stock) or tangible assets, cancellation of intragroup trading, goods/cash in transit, pre-acquisition dividends.
Part (b) of the question usually includes a related discussion element.
Section B
Section B will comprise four questions out of which candidates should select three questions. The examiner, Steve Scott has stated that the style of the paper will remain fairly static:
Question 2
Question 2 will be preparation/restatement of an income statement (profit & loss account) and/or balance sheet. This question normally requires adjustments for current tax, depreciation, interest and dividends. Other adjustments may relate to debt factoring or other substance over form issues, leases, financial/capital instruments, revaluations, share issues, inventory (stock) valuation, government grants or deferred tax. There may be further disclosure requirements such as discontinued operations, movement in reserves or an earnings per share calculation.
Question 3
Question 3 will be a written question examining theoretical/conceptual areas or accounting standards. This could be on construction contracts, leases, provisions, inflation, intangible assets, accounting policies or substance over form issues with reference to the Framework for the Preparation and Presentation of Financial Statements (Statement of Principles).
Question 4
Question 4 is likely to examine interpretation and/or cash flow statements. There could also be a discursive part on why, for example, related party or discontinued operations disclosures are useful.
Question 5
Question 5 has no specified format or content and will cover other areas of the syllabus. The examiner frequently includes a 'mixed bag' question, which examines three or four different accounting standards.
Possibilities this sitting include: deferred tax, segment reporting, events after the balance sheet date, governments grants, financial/capital instruments, discontinued operations or substance over form issues.
ACCA 2.6 Exam Tips New Client Appointment / Conflicts of Interest
Practical Audit Risk
Engagement Letters
Materiality
Management Letter - purchases / computer controls
Sampling
Substantive Testing of Receivables / Payables
Audit Report scenarios
Role of Audit Committees
Responsibilities for fraud
McOrange Sheila's 2.6 Tips [NEWLY ARRIVED!!!]
1. Ethics
- conflict of interest
- what to do when fraud/ defaults & unlawful acts are discovered
- new client appointment/ considering whether to continue wif client
2. Identifying business risk & how to manage the risks identified/ internal review
3. Internal controls & tests of controls (payrolls function or purchasing function)
4. Role of EA & IA in risk management
5. Internal audit
6. Identifying audit risk - scenario
7. External review - theory - ISRE 2400
8. Substantive procedures
- audit of trade receivables and ISA 505 direct confirmation (incl. use of CAATs)
- audit of bank/ overdraft/ loans (incl. use of CAATs)
- audit of accounting estimates (provision for bad debts, prov for damages)
9. sampling
10. materiality, summary of audit differences
11. analytical review
12. audit automation, CAATs
13. audit report - theory or scenarios
14. going concern (symtoms, audit procedures & audit reports)
15. misc audit stds:
- ISA 260, 510, 720, 230, 700
16. Corp governance- role of audit committee
Paper 2.6i Exam TipsACCA Paper 2.6
Audit & Internal Review
December 2006 Exam Tips
The following list is an idea of the type of questions that may come up in the coming exam. The list highlights areas of the syllabus and how they may well be tested.
Suggested practice questions from the BPP Practice and Revision Kit (2006 edition) are shown after the relevant area. It is also worth reviewing the past exam questions mentioned to give you an idea of how a topic has been examined recently. These are easily available on the ACCA website (www.accaglobal.com/students).
Internal audit/ Internal review – Following the new examiner’s article on how the internal audit department can assist in corporate governance and risk management, this area has been frequently tested. (In all papers, June 2006, December 2005 and June 2005). Note that in addition to a specific question on internal audit or reviews conducted by internal or external staff, questions could be in the form of a report to management on control weaknesses with recommendations, very similar in substance to that produced by an external auditor (see Systems and Controls below) (P&R kit practice: Q6 Internal Auditors, Q8 Roxy Hotels)
Substantive testing – This will be in the exam, but what will be tested? In June 2006 Fixed (Non current) assets were tested. December 2005 covered inventories (stock). In June 2005 sales and tangible assets were tested. In December 2004 substantive testing of payroll balances was tested (Q4). In June 2004 inventories (stock) (Q3) and payables (creditors) and accruals (Q4) came up. In December 2003 payroll audit was tested (Q2). In June 2003, Inventories (stock) (Q2) and provisions were tested (Q3). In the December 2002 exam, payables (creditors) (Q3) and inventories (stock) were tested (Q5). In June 2002 cash was tested (Q2) and in December 2001 receivables (debtors) were tested (Q4). That would appear to leave bank/cash and receivables (debtors) and possibly another appearance of inventories as likely candidates for examination this time round. (P&R kit practice: Q42 Springfield Nurseries, Q49 Goodfoot & Q51 Villawood Computers)
Systems and controls – Again this topic will be included in the exam in some format. In June 2006, the question covered the objectives of internal controls. In June 2005 Q3 was centred around a complex computer system. The examiner has warned that computers will be expected to feature in scenarios. In December 2004 Q3 risks from a scenario had to be spotted, and controls recommended. In June 2004, they came up in the context of outsourced catering and payroll (Q5). In December 2003 controls over payroll were tested in Q2 and Q1 included controls over business risks in the areas of human resources, procurement and marketing. In June 2003, controls over non-current (fixed) assets were tested (Q6). In the December 2002 exam the sales system was tested (Q2). In June 2002 the cash system was tested (Q2) and in December 2001 Purchases/ capital expenditure were tested (Q3). Any of these could come up again: the purchases/payables and sales/receivables systems looking the most likely. (P&R kit practice: Q36 Cosmo & Q34 Internal Control)
Planning and risk assessment (from a scenario) – risk in one form or another comes up at most sittings. It is one of the key stages of the audit, but can also be examined in the context of a company's business risk as it was in June 2004. In December 2005, an audit planning memorandum, or audit strategy, was required. In June 2005 Q1 was a straightforward question looking for risks from a simple scenario. In December 2004, Q2 was centred around planning and the information you require, and Q1 was about spotting the risks of fraud and error. (P&R kit practice: Q20 EWheels & Q25 Nepco)
Professional ethics – This is a core area examined in June 2006 (confidentiality) after a period away from the exam frm the previous 4 sittings. It is still a topical issue with all of the recent corporate collapses bringing the independence and professionalism of their advisors into question. Confidentiality came up again in December 2003 (Q6), conflicts of interest in June 2003 (Q3) and objectivity in December 2002 (Q1). Independence issues are still important and likely to be examined again at this sitting. (P&R kit practice: Q10 Billington Travel & Q11 Manly).
Audit/ Assurance Reports – This is a very important area of the syllabus, it is deliverable from the end of all assurance engagements. You also need to be aware of the differences between internal audit reports/ external audit reports and other assurance reports such as review reports. It was tested in June 2005 as an unpopular optional question asking for errors in a given audit report. It has been tested in December 2003 (Q3 b and c), June 2003 (Q3c and Q5), June 2002 (Q3b) and December 2001 (Q5), but not in the last few sittings. (P&R kit practice: Q62 Audit Reports, Q65 Cremorne)
Parts of questions – The following topics could form discrete parts of questions at this sitting: fraud, management representations, audit regulation, materiality, e-technology (see article below) so make sure you are up to speed on these areas.
ACCA 3.1 Exam Tips
Risk Appraisal, Risk Management and Audit Strategy
Assurance Services - PFI and Performance Measurement
Matters and Evidence - usual GAAP favourites - Intangibles, Provisions, Impairment etc.
Audit Reports - ISAs 570 & 720
Ethics/Professional Conduct/Practice Management
Current Issues - 'Yesterday's News'
ACCA Paper 3.1 (Global)
Audit and Assurance Services
December 2006 Exam Tips
Suggested practice questions from the BPP Practice and Revision Kit (2006 edition) are shown after the relevant area. We recommend you tackle all of them to get broad syllabus coverage.
Section A
Questions 1 and 2
Scenario questions in the context of audit risk/business risk/financial statement risk.
May also include:
Control suggestion and/or evaluation
Audit evidence on Paper 2.5 accounting areas (see also Q3 suggestions)
Group audit issues (including audit work on fair values)
Planning/practice management/quality control issues
Assurance services, e.g. performance measurement or prospective financial information
2006 P&R Kit Questions: 10 Azure, 17 Signet, 22 Alakazam, 26 Hydasports, 47 Ferry, 55 Imperiol, Mock Exam 1 Q2 (Plaza)
Question 3
Audit evidence. Comment on the matters you would consider and the audit evidence you would expect to find as audit manager conducting a review of audit files.
Likely to be several scenarios covering various Paper 2.5 level accounting standards, e.g:
Events after the balance sheet date
Provisions
Impairments
Earnings per share
Segment information
Related party disclosures
Deferred tax
Discontinued operations
Standard costing
Intangible assets
Revenue recognition
Borrowing costs
2006 P&R Kit Questions: 33 Phoenix, 34 Aspersion, 35 Visean, 40 Verdi, 42 Data
Section B
Question 4
Part (a): Any syllabus area. Part (b): A related question on reporting.
2006 P&R Kit Questions: 59 Delphinius,60 Avid, 61 Cinnabar Group, 65 Kite Associates
Question 5
Ethics, professional and quality control issues scenario question.
2006 P&R Kit Questions: 3 Aventura International, 4 Corundum, 5 Isthmus, 9 Ebony
Question 6
Discussion question on current issues, e.g:
Fraud and auditor liability
International convergence
Audit exemption for small companies
Risk-based auditing
Related parties
Corporate governance
Laws and regulations
The discussion question often covers a scenario on a topic where the examiner has written an article in your Student Accountant magazine in the months prior to the exam. You should check the magazine/ACCA website for new articles in the months leading up to your exam.
Paper 3.2(MYS)
3.2
1. Investment Holding Company
-definition, 80% test, Computation -Listed/unlisted
2. Individual
-wife claim child relief
-join assessment
-settlement s65 anti aviodance
-relationshop wif small scaled co on tax planning(directors' fee/remuneration, div payment,19% Epf planning)
-personal finance(deposits,shares,reits,landed prop)
-self assessment for inv
-residense status of ind
3. islamic finance
-BBA
-ijara
-AL-wadiah vs al-mudharabah
4.Trade associtation,club, charitable inst
5. RPGT
-rpc,exchange of prop, para12,3(b),17,19,administrative
6.Incentives,
-exemption on export
-labuan
-R&D, contract R&D, R&D co, PR5/2004
-acq of foreign owned co
-OHQ &emplyees' exemptions
7. Tax planning for co
-50% sustantial shareholding test
-surrendering loss
-interest restriction
-div-credit,s108
-extraction of capital gain
8. employers' responsb
-tax evasion s114
-tax avoidance
-incorrect return s113
-record keeping
-directors' resposb s75A
-self assessment for co
9. s4A withholding tax PR4/2005
-s107A witholdung tax
ACCA 3.3 Exam Tips
Contribution based decision-making – possibly involving expected values, maximax, maximin & minimax regret.
Performance evaluation – ROI/RI and the conflict between performance evaluation and investment appraisal.
The strategic framework – specifically a question based around the examiner’s recent article on “Business Strategy and Performance Models” (Student Accountant – April 2006). This is likely to focus on Porter’s 5 Forces and/or Ansoff’s matrix
Decision making, focus on calculations of contribution and/or throughput
Pricing decisions (discussion of traditional vs. strategic pricing decisions,maybe something on bowman's strategy clock)
Modern developments. JIT, TQM and a discussion of activity based
management (ABC, ABB etc)
Strategic planning models...value chain analysis or porters 5 forces
Performance measurement. Divisional performance measurement and transfer pricing
Benchmarking
Maybe small question on MIS
ACCA Paper 3.3
Performance Management
December 2006 Exam Tips
Suggested practice questions from the BPP Practice and Revision Kit (2006 edition) are shown after the relevant area. Remember also that questions drawn from the 2003 and 2004 exam sittings, which are not contained in the 2006 P&R Kit but can be taken off www.accaglobal.com, are also an excellent source of preparation.
General: The exam is often time pressured and careful planning is required to ensure marks are maximised in time allowed. The examiner has examined some of the key topic areas in a very practical way but this has often looked unusually challenging on first read through.
There were some be new areas in the syllabus from June 2006;
Ansoff's growth vector matrix
BCG matrix
Porter's five forces model
Section A
To date the large question in this section has contained some elements of budgeting (short term planning). This will be heavily numerical with a small written element.
2006 P&R Kit Questions: 66 Privmed, 65 Motor Breakdown Services
The shorter question has often tackled some element of performance measurement with the majority of the marks being for numerical analysis.
2006 P&R Kit Questions: 43 Eatwell Restaurant, 37 Management Accounting and the Public Sector
Section B
There is usually a high discursive element in this section with 2 questions being wholly or almost wholly discursive. If it has not made an appearance in Section A performance measurement will make an appearance here.
Many of the modern management and management accounting techniques have been examined here;
2006 P&R Kit Questions: 11 Costs and Quality, 50 Activity Based Budgeting
Numerical topics do still appear in this area, topics that have not appeared for a little while include transfer pricing (which can also include qualitative issues) and uncertainty in decision-making.
ACCA 3.4 Exam Tips
Porters five forces
Macfarlan/Peppard
Earls 3 leg
PEST
EIS
Data management and data mining
Soft systems methodology
Impacts of the use of ecommerce
Software selection – web site design
FTMS Tips (updated)
Section A
Question 1 – Compulsory 60 marks
Strategic Role of Information System
Earl’s nine reasons
Earl’s IT/IM/IS strategies: three legs
SWOT Analysis
Gap Analysis & Business Case Development
Earl’s System Audit Grid
McFarlan’s Grid
Peppard’s Application Portfolio
BCG Matrix
IS And Competitive Position
Porter’s Competitive Strategies
Porter’s Value Chain Analysis
Porter’s Five Force Model
Internet as a Strategic Business Tool
Virtual shopping
E-commerce
Section B – 2 out of 3 questions 20 marks each
Organizational Information
Cost and Benefit
Type of IS – EIS/DSS/ES
Knowledge Management & Data Management
Dbase & DBMS
Knowledge Support System
Data mining
Date warehouse and group collaboration systems
Strategic Role of Information System
Zuboff’s Automate, Informate, Tranformate
PEST; CSF
Business Systems & Systems Thinking
Business Automation, Rationalization, Re-engineering
SSM (Rich Picture and CATWOE)
Business Processing Re-engineering
Gap Analysis & Business Case Development
Gap Analysis
Earl’s Risk and Return Portfolio
IS And Competitive Position
Acquisition Procedures
IT outsourcing
Implementing Change
Lewin Model of changes
Ethical analysis; socio-technical design
3.4
parmindar's focused areas for 3.4 dec 2006.
IS in organization - CBIS(EIS), reasons for IS failure
office automation systems - groupware, tele-working
DBMS, data warehousing/mining
SWOT, PEST, CSFs, BCG, generic strategies, BPR, McFarlan/Peppard models, Parson and Nolan, business case justification
Earl's - information systems strategies, why IS/IT is strategic
SSM
e-commerce
change management - resistance and change theories/models
IT strategy in international context
ethics
Paper 3.4 Exam TipsDecember 2006 Exam tips
Section A
To a large extent with this Examiner the nature of the scenario is irrelevant – it will be a business with significant system issues linked to a business plan or some strategic view.
The requirement areas could include
* Links with business strategy maybe with reference to Earl’s 3 legs
* Role of CSF’s defining information needs, in line with Jim Stone ‘s article of July 2006
* Application of Ethics as opposed to the more academic 5 moral dimensions question in December 2005
* E- commerce in a specific system / business opportunity
* Evaluation of the scenario’s business systems – maybe the long telegraphed legacy systems could appear!
* McFarlan’s / Peppards grid suggesting development priorities
Qs: 20, 34, 37,58,67,80,
Section B
Soft Systems methodology. A popular topic of the examiner and surely must return soon. Probably with the emphasis on the root definition and conceptual model elements. As an outside possibity there may be a link with agile systems in line with his April article.
Qs: 23, 25, 26, 27
Soft and hard development approaches. There may be a more general discussion on the approaches as opposed to the more specific application of a hard approach which was in the last exam.
Qs: 22, 83
Porter’s Models. Although the value chain came up recently, 5 forces has not been examined for 2 years. It could be time for that to reappear, but there are his other models
Qs: 16, 18, 65, 68
Parsons IS Strategies and Nolan’s Stage Hypothesis. A possible section B academic discussion could appear on either or both of these models.
Qs: 2, 13, 77
Knowledge management and databases. A popular topic that could appear in a mini scenario requiring a suitable technical explanation.
Qs 3, 6, 31, 32
ACCA 3.5 Exam Tips• 60 marks study –likely to focus strategic management
• Environmental analysis
• Stakeholders
• Strategic options
• Section B ( possible areas)
• Marketing strategy possibly in a foreign country, where you would
have to analyse how you would adapt the marketing mix for a foreign
market
• Ethics/social responsibility
• ROI problems / benefits
• Role of the accountant in the innovation process
• Innovation/Business Growth/International Business/Change Management
Paper 3.5 Exam TipsDecember 2006 Exam tips
Section A
Always difficult to predict the subject matter of the case scenario. Therefore this time it might be something simple in structure and based on the Manufacturing environment.
Areas that could be included within the requirements could include
* A discussion of the relative merits of different ways of making strategy
* Stakeholder analysis and objective setting
* Application of strategic analysis models
* Evaluation of strategic objectives, using the numbers included
* Marketing issues
* Change management
Qs: 52, 51, 49, 47 and 45
Section B
Marketing, including new product development. In part suggested by the recent article, and still has not been examined. – Refer to Dec 2003 Q1d as a good review.
Qs: 24, 26, 27, and 34
Information Technology. This is feasible this time because it is an important subject, which has been absent for the past few sittings.
Qs: 23, 28, 31 and 56
Globalisation strategy. The strategic development of global businesses was very popular when the paper was first introduced. It remains relevant and could be due another appearance.
Qs: 41, 42, 43 and 48
Change management. A favourite topic of the examiner and due to be reappear in either section A or B. – Refer to Q 54 c
Qs; 32 and 39
Ethics and corporate social responsibility. With all of the talk (and recent cases) of corporate scandal ethical behaviour is a very topical area of the syllabus
Qs: 16, 17, 18 and 49
ACCA 3.6 Exam TipsSection A
This compulsory question will be on the preparation of consolidated accounts and the preparation of a group accounts with a foreign subsidiary is due, as is cash flow statements!
Section B
Share based payments
Deferred tax
Financial instruments.
Developments in group accounts
Management Commentary / the OFR
Reporting of non financial performance e.g. Corporate Social Responsibility, sustainability reporting
Measurement issues
Accounting standard for SMEs
ACCA Paper 3.6 (Global)Advanced Corporate Reporting
December 2006 Exam Tips
For each area described, please note the reference to useful questions from BPP’s Practice and Revision kit (P&R kit) 2006 edition. We recommend you practise them all to get broad syllabus coverage.
Section A
The section A question can be on any of the traditional higher-level group accounting topics that are not examinable in paper 2.5. Complex group structures, consolidation of a foreign subsidiary or a group cash flow statement appear to be the most likely topics for this sitting.
The question often includes an adjustment for 4 or 5 marks on another area such as pensions, financial instruments, assets 'held for sale' or incorrect accounting entries.
2006 P&R kit practice questions: Largo, Rod (UK kit only), Memo, Squire.
Section B
Section B questions can either be a single question on one topic or questions that cover a range of standards.
Possibilities for examination include:
* 'Events' questions such as shutdown of an operation, switch to IFRS, natural or deliberate disaster, bringing in areas such as: impairments, provisions, events after the balance sheet date, non-current assets held for sale, discontinued operations, pension scheme curtailment effects, etc
* 'Mixed' questions where a range of standards are covered in separate unrelated parts of the question, such as related parties, recognition and impairment of tangible and intangible assets, foreign currency transactions, revenue recognition, leases, changes in accounting policies or deferred tax.
* Single topic questions in more detail (theoretical aspects followed up with calculations) such as segment reporting, earnings per share, , share-based payment or financial instruments (see examiner's articles below)
* Questions on topical areas, such as the continuing attempts to bring about international harmonisation and the effect on a company's accounts of applying IFRS, or on recent exposure drafts on the planned changes to groups and provisions.
* One of these questions can also include elements of group accounting, including group reorganisations, especially if question 1 is a cash flow statement question
2006 P&R kit practice questions: Argent (INT kit only), Transystems, Issue, Pohler Speed, Cohort, Rockby and Bye, Low Paints, Enterprise, Gear Software, Trident, A B C & D
* Performance and valuation measures, how they are changing and how they are affected by accounting policies often appear in the exam.
* A discussion question looking at current developments in corporate reporting. Topics that could appear here include: management commentary/operating and financial review, social and environmental reporting, business ethics, and reporting on the internet.
Remember the key topics for the December 2006 exams.
For the Section A question and groups:
- changes in the composition of a group – including disposals
- indirect holdings
- overseas entities
- the standard on business combinations, including reverse acquisitions
- group cash flow statements
The most likely question is one asking for translation of a net investment and hedge accounting
under the FI standard. It is possible that you get a group cash flow statement, possibly with an
overseas subsidiary.
For Section B questions:
- pension costs
regularly examined
consider the under-funding problem and the treatment of actuarial gains and
losses (conceptual problem under the corridor approach)
consider the merits of the amendment of the employee benefit standard in this
regard
both problem areas arise in defined benefit plans – possible discussion area
- SBPT – examined in each of the last 3 exams – consider cash-settled SBPT and share
appreciation rights
- non-current assets held for sale
- international harmonisation and convergence and the first-time application of
International (or Singapore or Hong Kong GAAP)
- discussion paper areas – in particular, leases
classification drives the accounting
the conceptual problem that arises if a lessee does not capitalize operating
leases
should a lessee capital all leases?
the leasehold property problem – classify L and B separately and account for
accordingly
can an operating lease be classified as an IP? If yes, how to account for such a
lease
sale and finance leaseback
sale and operating leaseback
- the improvements project
- revenue recognition
- the highly examinable area of financial instruments consider:
classification
reclassification
impairment
derecognition
accounting for convertibles
accounting for non-equity interests
hedge accounting – 3 different situations; 3 different sets of rules
- the often examined area of impairment
impairment of goodwill
impairment of corporate assets
impairment of financial instruments
- the regularly examined areas of provisions and intangibles
- the sometimes examined areas of related parties, government grants, segment reports,
investment properties and agriculture – the segment reports standard is being revised –
consider the question: what is an operating segment?
- PPE – compare OOP with IP – what is a hotel? OOP or IP?
- how should a property developer account for pre-sold property? – consider the timing of
the recognition of revenue
- conflict between the “principles” and the requirements of accounting standards
the leasing standard – the problem of lessees not capitalising operating leases
the employee benefits standard – the problem of recognition of actuarial gains
and losses under the corridor approach
the government grants standard – is there a conceptually method for the
recognition of the benefit of a government grant?
- eps and deferred tax issues – eps is a very likely area for examination – note the
treatment of contingent shares in basic and diluted WANOS
- ethics and good corporate governance and environmental reporting
- accounting for minerals and emission rights
- share valuation
- recycling
- web-based reporting
- an accounting standard for SMEs – possibly, again – read the article in the April 2006
Student Accountant
- etc……..
Note the shift in emphasis in the December 2005 exam to “single-standard” questions. June
2006 reverted to the more usual multi-standard questions. Be prepared for both types of
question in December 2006. Be prepared for questions on eps, leases, impairment and, again,
financial instruments.
ACCA 3.7 Exam TipsSection A
* Overseas NPV: Ability to perform a basic overseas NPV/FCF calculation. Including one off cash flows, annuities and perpetuity calculations and the knowledge of the specific issues that relate to foreign direct investment.
* Company Valuation within the context of Merger and Acquisitions: A possible question that requires a valuation under various methods like NAV, DVM, P/E Ratio and FCFs. (maybe within the context of Going Private.) Also review the share for share exchange style questions.
* WACC - Risk adjusted WACC – APV calculations within the context of a standard investment appraisal question. However risk adjusted WACC could also be examined within the context of traditional gearing.
* Risk management: Interest rate risk / Currency Risk
Section B:
* Economic Value Added – EVA
* Portfolio Theory and CAPM - summary and alpha tables
* Dividend Policy
* Term Structure of Interest rate
* International economics – I.M.F., Treasury Management. Balance of payments deficits and Forecasting exchange rates.
ACCA Paper 3.7Strategic Financial Management
December 2006 Exam Tips and Useful Articles
Health Warning!
The examiner deliberately tries to avoid question spotting. Just because a question featured last time, doesn’t mean it won’t feature this time. Use the tips as areas to have a good look at but remember that no one knows what is in the exam, apart from the examiner. Your safest bet is to achieve good syllabus coverage in your revision, as the examiner aims to do in the exam.
On this basis specific tips would be misleading and counterproductive. The following may be a guide however:
Section A:
Capital Structure:
M & M Theory with and without tax leading into gearing and ungearing betas to estimate a cost of capital and then use that cost on an investment appraisal. Real options theory.
Global Financial Management:
As a core topic this can be expected to arise somewhere on the paper although for the June sitting this did not feature significantly. An overseas NPV would seem a likely candidate for the compulsory section. The examiner will expect you to be able to discuss political risks in this context.
Corporate Restructuring:
This topic is due to be tested in depth again. Management Buyouts did arise as an option question in December 2005 involving a forecasting element. There has not been a reconstruction scheme tested for some time however. Valuations may be incorporated into the calculations.
Section B:
CAPM and Portfolio Theory:
This is tested so often it is notable when it doesn’t arise. Changing business risk featured in December 2005 but there was no Portfolio Theory this is a popular optional question with the examiner.
Adjusted Present Value:
This topic has not arisen for some time and is due to be tested.
Interest Rate/Currency Hedging:
Other:
EVA and Free Cash Flow particularly due to the article published in June/July. Black Scholes is also due to be examined.
Question 6 is always discursive. Recently it has featured questions on the Global Economic Environment. Corporate Governance or ethical business practices have not been tested for some time.
for more continous updated tips please visit
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