acca f4 to p7 exam tips june 2012

Paper F4 Corporate and Business Law

BPP Exam Tips F4

• Court structures.

• Differences between criminal and civil law.

• Contracts – offer/acceptance/ consideration/intention.

• Negligence – duty of care, breach of duty, causation/defences.

• Company formation – not agency and partnerships.

• Capital structures – treasury shares.

• Company directors – insider dealing, breach of duties or market abuse.

• Employment contracts – employees vs self‐employed.

• Remedies to contract formation.

• Liquidation/administration.

Open tuition exam tips

Q1 Criminal law, civil law, arbitration December 7

Q2 Lifting the veil June 8

Q3 Meetings Pilot paper

Q4 Corporate governance – auditors December 7

Q5 Self‐employed or employed June 10

Q6 Damages, measurement and remoteness June 9

Q7 Insolvent liquidation December 7

Q8 Treasury shares – new to syllabus

Q9 Intention to create legal relations December 7

Q10 Bribery – new to syllabus

Pq Magzine exam tips

Q1 ‐ The English Legal System. Likely focus is on the court structures or differences between criminal and civil law

Q2 ‐ Contract Formation covering offer / acceptance / consideration / intention

Q3 ‐ Negligence (but not auditors) covering duty of care, breach of duty, causation or defences

Q4 ‐ Company formation, unlikely to test agency or partnerships

Q5 – Capital structures including the NEW TOPIC of treasury shares

Q6 – Company directors, maybe including some insider dealing or the NEW TOPIC of market abuse

Q7 – Employment law focusing on either employment contracts or distinguishing between employees and self‐employed workers

Q8 – Problem question on contract formation including advice on type of remedies available

Q9 – Problem question featuring Company Directors and alleged breach of duties

Q10 – Problem question featuring a company in difficulty covering liquidation and administration.

Paper F5 – Performance management

Tips from BPP

• Environmental accounting techniques.

• ABC.

• CVP or dealing with risk and uncertainty.

• Budget appropriateness and behavioural impacts.

• Mix and yield variances, planning, operational, as well as basic variances.

• Performance measurement and control – likely to be tested at every sitting.

Tips from PQ magazine

• Specialist Cost and Management Accounting Techniques: Environmental accounting techniques have not yet been tested, so this could feature as part of a question. ABC may be tested as we did not see this in 2011.

• Decision making techniques: CVP or dealing with risk and uncertainty could feature, especially as this area of the syllabus was enhanced recently.

• Budgeting: Discussion marks often focus on the appropriateness of budgeting types or the behavioural impacts of types of budgeting.

• Standard costing & variance analysis: Variances are likely to feature in the exam, students should be prepared for mix and yield variances, planning and operational variances as well as the basic variances and operating statements. Questions typically require thought about the most appropriate layout and could include discussion of variances which have already been calculated.

• Performance Measurement and Control: Likely to be tested at every sitting, it is probable that there will be a question dealing with one topic in detail. It could contain a significant discussion element.

• Overall students should avoid question spotting and be prepared for all areas of the syllabus as all questions are compulsory.

Tips from Opentuition.com

• Activity Based Costing

• Cost volume profit analysis

• Planning and Operational Variances

• Budgets – mainly written, but with preparation of a flexed budget and commenting on it

• Financial and non‐financial performance measures (with main emphasis on non‐financial)

Tips from LSBF

• Costing methods – ABC.

• Decision making – decision.

• Budgeting – forecasting models.

• Variance analysis – planning and operational variances.

• Performance measurement – non‐financial indicators.

Paper F6 taxation (uk)

Opentuition.com

Q.1 Income Tax / VAT

This question always requires the preparation of an Income Tax Computation for at least one individual, possibly two (spouses or civil partners) or even three taxpayers (members of the same family) The two main sources of income tested within the computation are Employment Income and the adjusted trading profits of the Self Employed. Interest income is frequently tested with examples of taxable interest received net and gross plus exempt interest and of course some dividend income.

A scenario involving a transition from employment to self employment part way through the tax year would allow both employment income with assessable benefits for part of tax year to be tested along with adjustment of profits and a capital allowances computation for a short or long opening period of account and dealing with pre trading revenue and capital expenditure. The adjusted profit would then be used to determine the assessments in the opening years of the new business and the computation of the overlap profits.

The changes to the pension contribution rules with the introduction of the Annual Allowance (AA) and AA Charge will probably attract the examiners attention in this year’s exams so should be understood – this could feature as part of Question 4 or 5 instead.

Class I NIC’s for the period of employment and or Class 2 and 4 NIC’s for the period of self employment could also be tested.

If VAT was included in such a question then it could test issues of VAT registration, submission of first VAT return dealing with pre registration input VAT and suitability of small business accounting schemes such as cash and annual accounting and the flat rate scheme.

Q.2 Corporation Tax / VAT

Will require the preparation of a Corporation Tax Computation for a Chargeable Accounting Period which will probably straddle Financial Years 2010 and 2011e.g. Accounting Year Ended 31 December 2011 or 9 months to 30 September 2011.A significant amount of marks are usually available for the adjustment of profit statement and Capital Allowances Computation. The company may be in a gains group. If VAT featured in this question it might include group VAT registration

Q.3 Chargeable Gains

If a question involves corporate gains rather than an individual then the main assets that a company may dispose of would include:Properties – this may involve establishing the cost of the property from an earlier acquisition via a no gain no loss transfer from a fellow gains group member and/or the cost may have been reduced by a rollover relief claim at the time of acquisition. The gain arising may now also be deferred by a full rollover or partial rollover relief claim or if a depreciating asset is now acquired a holdover relief claim may instead be available.

Land – a part disposal of land

Shares

Chattels – e.g. a painting from the boardroom

Questions 4 and 5

IHT seems likely to be a regular feature of part of a question and it would seem likely that at some point the examiner will test the more difficult problem of CLT’s not only taking place within the 7 years before the date of death but there also being a CLT more than 7 years before death. This would not itself be chargeable on death but given the cumulative nature of IHT would impact on the transfers within the 7 years following it which do then become chargeable on death.

Groups if not tested in Q.2

Income tax loss reliefs and / or partnerships

BPP exam tips

• Income tax – with a focus on partnerships.

• VAT – penalties and special schemes.

• Corporation tax – long period of account, plant and machinery, computation.

• CGT – from a company’s perspective. Disposals involving shares, replacement of business asset relief, part disposal.

• Changing in accounting date rules for sole trader/partnerships.

• IHT liabilities of lifetime gifts.

• Self‐assessment scheme.

• Pension contributions.

• Loss relief – income tax, corporation tax.

PQ magzine exam tips

Q1 will test income tax with maybe a VAT section attached as a separate part. The income tax could focus on a partnership. The VAT section could look at registration for VAT, penalties and special schemes.

Q2 will test corporation tax and could involve a long period of account, capital allowance computations for plant and machinery, computation of corporation tax payable and payment of tax.

Q3 will test capital gains tax and could be from a company’s perspective this time. This question will involve a number of different disposals involving shares, replacement of business asset relief and part disposals.

Q4 & 5 will test anything else. Possible topics that may be examined here are:

‐ commencement, cessation and change of accounting date rules for sole traders and partnerships

‐ inheritance tax testing the inheritance tax liabilities on lifetime gifts and as a result of the individual’s death.

‐ Self assessment system

‐ Pension contributions

‐ Income tax loss relief

‐ Corporation tax loss relief

LSBF exam Tips

Question 1

Income tax computations for husband and wife

•For a self employed person involving adjustment of a loss.

Question 2

(a)Corporation tax computation with a straddling chargeable accounting period and maybe long period of account.

(b)VAT

•Due date for VAT registration or surcharges for paying the VAT late.

•Pre‐registration input VAT.

Question 3

Capital gains/ loss computations for a company or individuals and capital gains tax

•Determining capital gains and losses with chattel rules.

Question 4

Pensions and the new rules.

Question 5

Inheritance tax.

F7‐ Financial Reporting

Exam Tips by LSBF

F7

Q1 ‐ CIS and/or CSFP.

Q2 ‐ redrafting or published accounts.

Q3 ‐ interpretation and cash flow.

Q4 ‐ standards eg leasing, non‐current assets, impairment, EPS, contracts, etc.

Q5 ‐ conceptual framework & standards eg substance, discontinued operations, deferred tax

*The secret to passing F7 is to know something about all the examinable standards.

Exam Tips by PQ magzine

Q1: Consolidated SPLOCI and/or SOFP with one subsidiary plus associate with intragroup adjustments and fair value adjustments. May include written part on a group topic.

Q2: SPLOCI and SOFP preparation from TB or restatement with usual adjustments for depreciation, revaluation, current/deferred tax plus others such as leases/substance, financial instruments (change in FV or amortised cost). May include discontinued operation/EPS/SOCIE.

Q3: Interpretation and/or statement of cash flows. Could focus on specific ratios or specific part of SOCF.

Q4 & Q5: One question in context of conceptual framework, and the other containing one or two discrete topics, such as regulatory framework, inflation, government grants, discontinued operations, impairments, deferred tax, leases or intangible assets.

Exam Tips by BPP

• Consolidated SPLOCI or SOFP with one subsidiary plus associate with intragroup adjustments and fair value adjustments.

• SPLOCI and SOFP prep from TB or restatements with usual adjustments.

• Interpretation or statement of cash flows – focus on specific ratios or part of SOCF.

• Q4 & Q5: pick from regulatory framework, inflation, government grants, discontinued operations, impairments, deferred tax, leases or intangible assets.

Exam Tips by open tuition

Question 1, Consolidated satement of Income, subsidiary and associate,

mid‐year acquisition, share for share exchange, nci based on share price,

fair value adjustment, intra group sales and pup, 5 mark chat – exclusion

of subsidiary from consolidation

Question 2, Usual question 2, preparation of financial statements,

Financial Position, Income, Comprehensive Income, Changes in Equity from a

trial balance

Question 3, Report on financial performance – possibly a simple cash flow

included

Question 4, Framework, possible element of reliabilty, relevance, faithful

representation

Question 5, Development expenditure or a complex asset depreciation

Paper F8 Audit and Assurance


Q1 (30 marks) This question will be based on a scenario and incorporate between 3 and 5 distinct requirements.

The areas most likely to be tested in this question include audit planning and the identification and explanation of audit risk, audit procedures (substantive tests and/ or tests of control) and internal control.

Q2 (10 marks) This will be a factual or knowledge based question. It is likely to cover several areas of the syllabus with 2 or 3 separate requirements worth between 2 and 5 marks each.

Topics for Question 2 can be drawn from all areas of the F8 syllabus and questions could include the responsibilities of directors and auditors as well as other definitions such as assurance and audit regulation.

Q3, Q4 and Q5 (20 marks each) These questions will be scenario based but will also include some knowledge based requirements.

Areas which are likely to be covered in these questions include ethics, planning, the identification and explanation of audit risks, the audit of specific transactions or account balances (including estimates), internal controls, internal audit, management representations, going concern, audit reports.

Note that the scenario may be set in the context of a profit making or non‐profit making organisation.

Exam Tips by BPP

• Audit planning and identification of audit risk, audit procedures and internal control.

• Responsibilities of directors and auditors.

• Definitions – assurance and audit regulation.

• The 20‐mark questions: ethics, planning, audit risk explanation, specific transaction audit, internal controls and audit, management representations, going concern and audit reports.


Q1 Inventory count.

Q2 Nature of an assurance assignment/internal audit

Q3 Going concern and analytical procedures

Q4 Computer assisted audit techniques

Q5 Contingent liabilities

Paper P1 Governance risk and ethics

Exam Tips by BPP

Governance – agency and stakeholders.

Internal control reporting.

Ethical theories are regulars and don’t forget professional codes. General business ethics and fraud/whistleblowing.

Clash of CG cultures – think Olympus.

Remuneration.


In the long 50 mark scenario question you can usually expect to see all areas of the syllabus being tested. So you should ensure that you have not neglected any of the broad syllabus areas of governance, risk and ethics. The topic of risk can be further subdivided between risk and control.

Some good areas of governance to look at are agency and stakeholders.

Don’t neglect internal control reporting. Ethical theories get tested regularly, and professional codes of ethics are an important part of the syllabus.

The examiner draws on governance issues that are emerging in the news but remember the exam was written several months ago. Ethical issues were in the news so you might see questions on general business ethics (are businesses justified in breaking the law?) or on fraud and whistleblowing. Perhaps you could see a question on the clash of different corporate governance cultures, so what would happen if you have a CEO used to the Anglo‐Saxon outsider form of governance trying to deal with fraud at a company more used to insider style ownership? Remuneration has also been a hot topic and one that the examiner has tested regularly in the past.


Different contributors to corporate governance ( internal auditors,

external auditors, non‐executive directors )

Ethics, ethical dilemma, deontology / teleology, Kohlberg

Board sub‐committees, unitary board cf two‐tiered board

Role of risk manager, risk committee, Mendelow

Any of the questions could possibly include a computational element – so

TAKE YOUR CALCULATOR INTO THE EXAM ROOM

Paper P2‐ Corporate Reporting

Exam Tips by LSBF

Group income statement.

Deferred tax.

Financial instrument.

Joint arrangements.

Fair value.

SME.


Q1: group SOFP and/or SPLOCI including discontinued activities, acquisitions and disposals or a statement of cash flows, plus adjustments on other syllabus areas such as financial instruments, pensions, share‐based payment and impairments. Written part on a linked accounting adjustment and social/ethical/moral aspects of corporate reporting.

Q2 & Q3: 2 case study questions, one following a theme such as non‐current assets, deferred tax, financial instruments, pensions, share‐based payment, the other an industry‐based question testing a range of standards such as accounting policies and the framework, leases, grants, IFRS for SMEs, provisions, events after the reporting period and related parties.

Q4: discussion question e.g. fair values, management commentary, improvements in performance measurement, leasing, including an application part with some computations.

Exam Tips by BPP

Group SOFP and SPLOCI – discounted activities, acquisitions and disposals or a statement of cash flows.

Non‐current assets.

IFRS for SMEs.

Events after the reporting period.

Fair values or improvements in performance measurement.

Leasing – application part with some computations.


Complex group – question Rod ( adapted past exam question ), or

Piecemeal acquisition / partial disposal – question Beth ( December 2007 )

or Base Group ( adapted past exam question ).

Management commentary – question 52 in Kaplan revision kit

IFRS 10, 11, 12 and 13 – no past exam question – check the OpenTuition course notes

a question on “Various IASs / IFRSs” – many examples from past exams.

Entity reconstruction – no past exam question – check the OT course notes

Any one, including question 1, could ask for “special” style – report,

memorandum, email or even letter! So make sure you answer in appropriate

style.

Paper P3 ‐Business Analysis

Exam Tips by LSBF

Strategic Analysis ‐ particularly what the external environment has been in the past (including effect on financial performance) and will be in the future.

Strategic Choice ‐ particularly using suitability, feasibility, acceptability (including management accounting techniques).

Strategic Implementation ‐ particularly using IT improvement of business processes (including how to choose an IT package)

Exam Tips by PQ magazine

Strategy models

Analysis of the environment and/or internal factors has featured in most exams. Key models include PESTEL, Porter’s Five Forces and the value chain.

Evaluation of strategic options is usually tested one way or another, for example an acquisition or relocation. SAF can be a useful framework to generate ideas but don’t feel you need to follow it slavishly.

Strategic action (largely change management and organisational configuration) is often overlooked, but has featured in recent papers, emphasising the need for good syllabus coverage.

Business Process Change

A popular area, which may be based around models such as Harmon, or completely unstructured, describing a process and asking for improvements. Expect to see some numbers in questions in this area to help with decisions such as automation and outsourcing.

Information Technology

A pervasive theme in many questions. Make sure you are comfortable with some of the more important recent concepts in technology such as cloud computing, viral marketing and new business models.

Project Management

This is a major topic and is tested in most sittings. Analysis and realisation of benefits is a popular area and may well include a numerical element.

Financial Analysis

Lots of management accounting knowledge from F5 is assumed knowledge here, including budgeting, variance analysis and relevant costing. The lessons from Q1 in the current syllabus are, 1) this may be in

the compulsory question and 2) you may not be specifically told which techniques to use, but have to work it out from the data given.

People

This is most likely to be tested in conjunction with one of the other topics.

Most importantly…

Knowledge alone will not get you close to a pass on this paper. You need to be able to apply your knowledge to specific situations. Practice this using past questions and stories in the press or on the web as often as you can and you will be ready for whatever the exam throws at you!

Exam Tips by BPP

Analysis of the environment and internal factors – key models PESTEL, Porter’s 5 forces and value chain.

Strategic options acquisition/relocation.

Change management/ organisational configuration.

Harmon.

IT – cloud computing, viral marketing and new business models.

Project management.

Financial analysis – budgeting, variance analysis and relevant costing.


Q1 Strategic position and analysis; corporate parenting

Q2 Communicating mission and core values (see recent ACCA SA article)

Q3 Project gateways, project lifecycle and project initiation document

Q4 Expected values/decision tree. Process improvement

Q5 Benchmarking

Optional Papers

P4, P5, P6 & P7

P4 PQ magazine tips

Ethical issues continue to appear regularly as an optional discussion question, normally with practical financial issues from elsewhere in the syllabus. Economic value added and ratio analysis can also be used to appraise the performance of a company.

Cost of capital calculations are regularly tested, make sure that you are comfortable adjusting betas for differences in gearing. Real options are also a very popular theme.

This exam normally contains a question involving valuations which the examiner sees as a crucial part of the syllabus; valuations questions are also likely to cover strategic and financing issues. This area was not tested in December 2011 and is therefore more likely than usual in June 2012.

We would expect to see a numerical risk management question featuring either interest rate or exchange rate hedging; interest rate hedging was tested in December 2011.

For emerging issues – the European debt crisis is very topical.

Paper P5 PQ Magazine

*‘Beyond budgeting’ is an important area that can be tested either as a discussion or a numerical question.

Performance appraisal requires effective information systems, expect to be asked to identify the key strategic, tactical and operational information requirements of a business.

Analysis of the risk of a new proposal could include numerical techniques such as expected values and probabilities; but strategic frameworks such as PEST analysis could feature here.

Divisional performance measurement is another key area; ROI, RI , EVA, NPV or even cost of quality could feature here and transfer pricing could feature as an aspect of these questions.

EVA is especially likely given the recent articles published in this area – make sure you have read them. Modified IRR is new to the syllabus so make sure that you are comfortable with this area.

Questions are commonly set that require a good understanding of the balanced scorecard, the building blocks model and the performance pyramid. Questions will often require you to analyse data that has been collected using one of these models. The balanced scorecard and the buildings blocks model are due to be tested.

Linking strategic decisions to mission statements or suggesting strategic options using models such as Ansoff’s matrix or the BCG matrix lend themselves to questions containing a mixture of financial and discursive elements that could easily include a simple NPV or profit analysis.


Section A will involve two case study questions covering around 60‐70% of the marks. One will be from a personal tax perspective and the other from a corporate tax perspective. Both questions will cover a range of topics and taxes and will require the construction of professional documents like reports/letters.

Section B will comprise 3 questions making up the balance of the marks.

Key topics that may appear are as follows:

Liquidation

Consortium relief

Sole trader/partnerships

Inheritance tax versus capital gains tax

Company purchase of own shares

Overseas aspects of income tax

Pension contributions

Enterprise investment scheme/venture capital trust

Income tax losses

Personal service companies

Land and buildings aspects of VAT


Despite the minor syllabus refresh for 2012, there are still a number of areas that candidates can usually expect to see in their P7 exam:

• A risk‐based planning scenario in the compulsory section, frequently including financial data

• Questions based on articles published in Student Accountant (though not necessarily from the last six months)

• A number of requirements asking for audit procedures and required evidence in respect of specific financial reporting issues and ISAs

• A practice‐based scenario looking at professional, ethical and quality control issues

• A reporting scenario of some sort ‐ probably testing candidates’ knowledge of either the various modifications to the standard audit report or other forms of communication available to the external auditor.

As well as attempting as many past paper questions as possible, we would also recommend that candidates read the examiner’s reports from both the June and December 2011 exams (in the context of each exam paper) and keep the following additional issues in mind as part of their revision:

• Don’t forget key brought‐forward knowledge from Paper F8 which candidates have traditionally struggled with at P7 (audit risk, audit procedures and audit reports)

• Candidates should also not forget about practice‐related issues (such as the terms of audit engagements, sampling and documentation) where topics such as quality control procedures, ACCA firm practising requirements and the ethical implications of one firm providing both internal and external audit services could be discussed

• The correct accounting treatment of complex issues, such as IFRS 9 Financial Instruments and IAS 19 Employee benefits (both of which have changed since the 2011 exams), IAS 21 The effects of changes in foreign exchange rates or even the associated issues of disclosure (such as IFRS 8 Operating segments or IAS 33 Earnings per share) could form part of either section in the exam

• The examiner has reiterated that specific ISAs (including those created as part of the Clarity Project) will be examined in sufficient detail to require learning more than just the headlines for regurgitation in the exam. Most ISAs have already been tested by now, so

acca f4 to p7 exam tips june 2012

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