Preparing for your Financial Reporting exams

Preparing for your Financial Reporting exams

Here are some top tips for how you should prepare for the Foundation Paper and Professional Papers 1 and 2.

In this article, we will be giving you some advice on how to be successful in your Financial Reporting exams. You have three papers which increase in technical complexity as you progress. It is also expected that by the time you are ready to sit the final paper, you will have a critical understanding of all the accounting standards within the syllabus and of contemporary issues that the accounting profession is facing.

In my experience, students find Professional Paper 2 particularly challenging. I will be discussing all the papers in this article, but particular focus will be given to how to prepare for professional papers.

Foundation Paper

As you might expect, the Foundation Paper provides you with the foundational knowledge to build from in professional levels 1 and 2.

The examination consists of 25 multiple choice questions. This means that at this stage you don’t have to worry about your presentation for the exam itself (students find this challenging even at professional levels). However, it does not mean that there is no need to practise preparing accounts and systematically working your way through questions.

The downside of multiple-choice exams is that you do not get marks for workings. You are either right or wrong. You therefore still need to learn the steps involved for a particular adjustment. This systematic approach will prepare you for the professional levels, as well as preparing you for the Foundation Paper.

Professional Papers 1 and 2

You will have heard many times that you cannot read yourself to success; instead, you have to practise under timed conditions. When you initially start practising, you may have notes as a guide. You need to plan your revision so that you will have completed multiple papers under timed exam conditions before you take the real exams.

You need to be ruthless with your time allocation in the exams, and when your allocated time for a particular question has run out you must move on. These are really important points, so please do not ignore this advice.

For Professional Papers 1 and 2, we have some additional advice that relates to preparing for the technical elements (i.e. relating to numbers) and more discursive elements of the paper.

Preparing for technical questions

Moving away from the multiple choice format of exams means that you will be able to get marks for method. This is good news. Realistically, most students will not get questions 100% right but you can still achieve a very high mark. You will not fail for incorrectly answering a question; instead, you will fail if the marker cannot follow your answer and give you method marks.

Top tips include the following:

● Develop a systematic approach to particular question types and practice.

● Learn the proformas given in your study text, for example: a. consolidation steps; b. how to deal with the acquisition or disposal of a subsidiary; and c. reconciliation of pension scheme assets and liabilities.

When sitting the exam, you will inevitably feel nervous. However, knowing that you have completed many practice questions under exam conditions will hopefully help you with your nerves as you will have been in this position many times before.

Inevitably, the questions set will be new to you. Therefore, having a systematic and well-rehearsed approach to a particular type of question will help to calm your nerves and also give you the best chance of obtaining the maximum marks.

Preparing for more discursive questions

As you progress to Professional Paper 2, you will be required to critically evaluate proposed accounting treatments and have a critical understanding of contemporary issues faced by the profession.

Students generally tend to find it difficult to structure their answers to these questions – as well as, more specifically, knowing where to start. I would advise the following steps when a question requires you to critically evaluate any proposed accounting treatments:

● explain what the issues relate to;

● explain what the relevant accounting standard expects preparers to do; and

● apply the standard to the particular scenario in the question.

Remember that the treatment that is proposed in the question will rarely be correct. If you find yourself agreeing with what is presented in the question, it is likely that you will have not fully answered the question. Also, be mindful of the marks available for the question. Make sure that you are making enough meaningful points for the marks available. You need to practise written questions as often as the more technical questions.

Critical evaluation of a particular standard or approach

In Professional Paper 2, you are expected to demonstrate a critical understanding of all the standards in the syllabus. In my experience, students again struggle to know where to start and how to structure their answers.

Here the conceptual framework can really help you by providing you with a reference point against which standards can be evaluated. No standard is perfect – there will always be a trade-off, with some elements of the conceptual framework gaining more primacy than others.

Start your answer by considering the extent to which the standard achieves the two primary qualitative characteristics: faithful representation and relevance. Then, consider the four supporting characteristics.

To prepare for your professional papers, make sure that for all the standards in the syllabus you have prepared a summary of how these characteristics are achieved and where there may be compromises. This is as important as practising technical questions.

Finally, good luck with the exams!