PQ magazine, March 2016

PQ magazine March 2016

www.pqmagazine.co.uk / www.pqjobs.co.uk

We’ve five ACCA and five CIMA courses to give away. See inside!

ACCA TOP TIPS FOR YOU

RECORD INTAKE

BOOSTS ICAEW PQ magazine

EXCLUSIVE

The ICAEW just can’t stop growing! New figures show that the number of students signing up to an ACA training agreement rose by over 10% in 2015.

The ICAEW student intake last year was a record high, with 8,256 new students studying its chartered accountancy qualification. Add students studying the ICAEW CFAB qualification and the institute signed up almost 14,000 students in 2015.

That means that the ICAEW now has over 24,000 to nurture. At the recent Tutors’ Conference, Director of Qualifications Shaun Robertson stressed that the institute had a responsibility to these new students to ensure they have the best chance of qualifying. And he added that the institute has to ensure these training chartered accountants achieve the standard of the current 146,000 members.

The ICAEW also announced that the planned introduction of CBE exams will now take place in March 2017, a year later than originally hoped. With partners BTL and RM in place, the ICAEW has the CBE ‘ready to go’. It now needs to re-tender for a partner to provide the actual exam delivery – the computer exam centres. It had

ACCA signs up British Council

Robertson: ICAEW has a responsibility to nurture its students

chosen learndirect, only for Pearson Vue to come in with an offer to take them over, putting implementation on hold.

Tax Compliance will be the first to go CBE and there was even talk at the conference of a possible pilot this September.

The ICAEW is also continuing to evolve the syllabus, to ensure students qualify ‘fit for purpose’. In January, it introduced scenariobased questions to the Management Information and Principle of Taxation exams.

With students specialising at an earlier stage in their career the

ICAEW has decided to offer alternative modules. From June, Business Planning students can choose between taxation and the newly introduced banking and insurance alternative modules.

Roberston was keen to stress, however, that they were not trying to create specialists and PQs will still have to sit and pass 15 exams.

From March 2017, students will be able to choose between UK GAAP and IFRS when sitting the Financial Accounting and Reporting exam.

The same choice will be offered in Corporate Reporting at the Advanced Level (in 2018).

The ACCA has unveiled the new partner to provide its global exam centre network for the introduction of the ACCA’s CBE and paper-based exams – the British Council. The agreement means the British Council will provide a secure network in the UK and in over 100 countries where the Council operates.

This new initiative builds on the long-standing relationship between ACCA and the British Council, which is currently the association’s main exam centre provider for paperbased exams, providing over half of the venues in the ACCA’s international network.

ACCA CEO Helen Brand said: “This new agreement sees the British Council provide ACCA’s future exam centre network in the UK and overseas, exclusively for ACCA students. It supports the roll-out of ACCA’s new computer-based exams for ACCA’s Fundamentals Skills Level (F5-F9) exams from September 2016 onwards.”

She said CBEs were an exciting development for ACCA, incorporating spreadsheets and word processing to better reflect the tasks PQs have to do well in the workplace.

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comment PQ

CONTENTS

News 08ICAEW results Sit three papers if you want to succeed!

10CIMA pass rates The good, the bad and the ugly papers 12ACCA exams Pass rates struggle to hit the 50% mark Features, etc 06Mind your Ps&Qs ACCA treats us as cash cows; CIMA President is an inspiration; plus the best of social media 14ACCA F9 Shaking up the WACC calculation; and we’ve five CIMA and ACCA classroom courses to give away – for FREE! 17ACCA exam tips special Four pages of red hot tips, plus what the examiners thought of your efforts on the ‘P’ papers

22ACCA exams How will the

move from two to four exam sittings a year affect you?

23Let’s get technical Costing terminology you need to understand to get that pass

24CIMA case study All you need

March 2016 28ICAEW spotlight Institute

launches two new papers – Business Planning: Banking and Business Planning: Insurance 29Careers #1 Do I stay or do I go? The dilemma of whether to stay put or seek a new job 30Careers Life in the financial sector in Sri Lanka; another of your careeer ‘issues’ solved; plus the PQ Book Club review 34Fun time The mad world of accountancy; and our giveaways The columnists Robert Bruce Standards, and why we must cut through the clutter 8 Prem Sikka Tax avoidance harms all our businesses 10 Carl Lygo Singapore sets a shining example to us all 12 Subscribe to PQ magazine It’s FREE – see page 33 or go to www.pqmagazine.co.uk ABC July 2014 – June 2015

32,233

to know about the Strategic Integrated Case Study

25AAT Facebook society A

name change for the AAT support group with big plans for the future

26ATT winners list Who were

the November award winners?

We list them all, and the students with distinctions

Publisher’s statement: We send a digital issue of the magazine to an additional 8,414 requested readers Free to all accountancy students Annual subscription: £35 (£50 overseas)

Making comparisons This month’s issue is jammed-packed with exam results. We take a look at the ACCA, CIMA and ICAEW results on our news pages. So what did we think? Well, just one ACCA paper had a pass rate over 50%; CIMA’s P1 and P2 are still as tough as ever; and (counter-intuitively) ICAEW professional level students do better the more exams they sit!

It will be interesting to hear reader reaction to the varying pass rates.

When we tweeted out the ICAEW results one follower simply put these pass rates next to the ACCA’s and retweeted them, asking: “Why the massive difference?” The ICAEW December 2015 Audit & Assurance exam had a 75% pass rate. The ACCA Audit & Assurance exam had a 46% pass rate. I will let you draw your own conclusions.

The pass rates do worry ACCA students, in particular those at the option level. Our lead letter this month is from a concerned overseas reader and reflects what many PQs tell us. How can it be acceptable for two out of three students to have passed (or be exempt from) 12 core papers, only to get stuck on the last two optional papers. When twothirds of final level PQs are failing these papers students have a right to wonder what is going on.

The first-ever March ACCA exams are just around the corner. To help we have four pages of tips and advice. Don’t forget to go onto the study zone on our website for even more detailed help and advice.

Oh, and don’t forget our great giveaways this month. We have teamed up with First Intuition Leeds to give away courses for ACCA and CIMA PQs. There are 10 up for grabs – go to page 14 for all the details. You can also ‘win’ a PQ magazine memory stick and colour yourself calm book (see page 34 for those).

Everyone at PQ Towers is getting very excited about the forthcoming PQ awards, taking place again at the Café de Paris. They are our 13th awards night – and will surely be lucky for some. We will unveil all the winners in next month’s issue.

Graham Hambly, PQ magazine editor – graham@pqaccountant.com

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PQ have your say

email graham@pqaccountant.com Are we cash cows?

at the right standard for a generalist in this very specific area. Hence we consistently see 35%-ish pass marks – it’s not acceptable for students, nor should the ACCA be happy.

P5 is technically at about the right level, but the marking seems incredibly harsh – witness the ridiculous sub-30% rates.

P7 is also set at the right level, but too much is expected in the answers; too much depth and breadth for a three-hour exam.

This is evidenced by the pass rate increasing massively and it’s still only 39%!

What does all this mean? It

The ACCA Option papers are ridiculous – the proof is in the pass rates.

So here’s my take. I accept that the exams should be a tough test. I think there should be more exams, with less to learn in each and thus allowing for a greater understanding.

The 50% pass rates (or just below) seem reasonable. My issue is with the Option papers, and the ACCA simply must act.

It’s the same story every time.

P4 is ridiculously difficult and is not set

The writer of the star letter each month wins a fantastic ‘I ❤ PQ’ mug!

Make your mind up

I am confused! Two months ago you suggested the world is a better place thanks to accountants (I think it was an IFAC report). Last month you said we “have no moral compass” (PQ, February, p14). You need to make up your mind. I’m surprised only 50% of accountants have been either pressurised (or knew someone who had) by a manager to change the accounts.

How can a PQ stand up and safely be a ‘whistleblower’? Many rightly know that it would be the end of their career in accountancy.

Name and address supplied

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STUDY ON CAMPUS 23 FEB 2016

appears that the pass rates for these papers are regulated and we students are not happy at all.

We are appealing to ACCA to review its marking scheme for these papers so students can progress to completion. Brilliant students reach this level and have to re-sit P5 and P7 five, six or more times – that’s ridiculous.

Perhaps the ACCA will start to listen when the number of students starts to fall – by then it may be too late. It appears pass rates are controlled and students are becoming merely ‘cash cows’ – and we all know it.

A disgruntled student, by email

Hot & Tweet

The hugely successful AAT Distance Learning Group on Facebook recently changed its name to ‘The AAT Students Independent Group’. We tweeted out the news, explaining you would have to be crazy not to join. As the group retweeted: “We don’t discriminate, crazies also welcome. Helping each other make studying fun!” If you want top find out more see our exclusive story on page 25.

How refreshing

It was nice to read that the current CIMA President didn’t pass all her exams first time. I recently failed the case study and it was a shock to me too – it is the first exam I’ve ever failed. Like her, this failure really rocked me, but I’m now ready to take it on again. I have promised myself I won’t be sitting it a third time. Can I ask, is she really only the second woman to be CIMA President? What is CIMA doing to promote diversity?

Name and address supplied The editor says: Yes, she really is just the second woman to be President. The first was Claire Ighodaro, 12 years ago. Let’s hope we don’t have to wait another 12 years for another woman.

FIND OUT MORE

We loved the comment on theASNG.com LinkedIn page

by Uzochukwu Okpala: “Graham Hambly at PQ magazine is always on top with the news and happenings of the ACCA and was first to predict the ACCA 4 sittings in a year. Graham keep it up.” He is trying to!

We also used LinkedIn to tell students they could sign up to Becker’s FREE study school. It is still running by the way (if you are reading this before 26 February that is). All the details are on our website at www.pqmagazine.co.uk.

If you are working in practice and looking for a group to join then take a look at HMRC Watch. It looks at the harsh reality of working with the taxman.

We also had a bit of a run-in with Ipsos MORI, who produced a survey of ‘the most trusted professions’ – without including accountants. MORI’s Ben Page suggested: “You aren’t interesting enough :) more seriously we have to stop somewhere.” We told him to be very careful – there’s a lot of accountants out there. He came back: “If ICAEW or someone else wanted to sponsor it, as the BMA have in the past, happy to.”

Follow us @PQmagazine

PQ Magazine Fourth floor, Central House, 142 Central Street, London EC1V 8AR | Phone: 020 7216 6444 | Email: graham@pqaccountant.com Website: www.pqmagazine.co.uk | Editor/publisher: Graham Hambly graham@pqaccountant.com | Advertising manager: Polly Thrasivoulou polly@pqaccountant.com | Associate editor: Adam Riches | Art editor: Tim Parker | Subscriptions: dom@pqaccountant.com | Contributors: Robert Bruce, Prem Sikka, Carl Lygo, Tony Kelly, Phil Gammon, Jo Daley | Origination and print services by Classified Central Media If you have any problems with delivery, or if you want to change your delivery address, please email dom@pqaccountant.com

Published by PQ Publishing © PQ Publishing 2016

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PQ news

ROBERT BRUCE It’s time to cut through the clutter

The ability to wrap up a business concept in one sentence is a gift few have. But it makes an almost incalculable difference if it can be done. Life becomes much simpler.

One of the best examples in recent years came from Sir David Tweedie, ex-chairman of the International Accounting Standards Board. He has always had the ability to come up with something that cuts through all the flummery and reveals the essence. His best was why the world needed to get a grip on the offbalance sheet nonsense surrounding leasing. “Before I die,” he would say, “I’d like to fly on an aircraft that is on the airline company’s balance sheet.”

And there you had it. No one could misunderstand what the concept was, where the current confusion and poor practice lay, and how you would know when the problem was solved. And it was all in one simple sentence. It took almost 20 years to get a decent standard onto the statute books; it came about earlier this year.

The mayhem and chaos as politicians and pundits have traded misunderstandings with each other has been hugely depressing. To some extent it has been understandable.

The vast empire of tax rules and lore that politicians have created over decades is impenetrable. I suppose we should expect such chaos when it appears that the whole point of tax, to them, is not to raise revenue but instead to score political points. As a result we are lost in a world of red herrings and wild goose chases. n Robert Bruce is an award-winning writer on accountancy for The Times

Don’t steal from a partner!

ICAEW provisional member Saurabh Choudhary has been issued a severe reprimand and fined £1,200 after he was sacked by his firm for stealing Japanese prints and a Chinese vase from a partner’s office.

The firm sacked him for gross misconduct after he admitted that in “a moment of madness” he had taken the items. He even revealed the pictures were on his wall at home!

The ICAEW’s tribunal concluded that Choudhary’s conduct brought discredit on himself, the institute and the accountancy profession.

The tribunal also said that while these were very

serious matters, Choudhary had shown real remorse and had persuaded them that he would not behave in this way in the future. In these circumstances it accepted that a severe reprimand was warranted, but any further transgression will likely lead to him being declared unfit to become a member.

In another disciplinary case, ACA PQ Namit Kad was ordered to pay £5,000 costs for altering two internal review forms to enhance the assessments given to him by appraisers.

Kad had already lost his job, as his firm had terminated his employment.

Dual designation for all CPFAs As new opportunities emerge, organisations need multi-skilled finance professionals who understand the dynamics of a changing environment. To this end, CIPFA and ICAS are working together to address the public sector’s need for both public sector and corporate finance expertise.

If you are a qualified CIPFA you can now fast track to dual ICAS membership. This will provide you with chartered accountant (CA) status, as well as providing you with skills across both public and corporate sectors and access to the ICAS member benefits.

For further details visit www.cipfa.org/newheights or email newheights@cipfa.org

Sit three exams for success Did you know that the more ICAEW papers you sit the more chance you have of passing them all? This is certainly true when it comes to the December Professional exams.

Some 72.7% of candidates sitting three papers passed all of them. While just 69.3% of those sitting two papers passed both, those opting for one paper had a 65.9% success rate. Some 5,134 students sat the December 2015 session, with 9,285 papers attempted.

The concern will be the slide in pass rates in some key papers, particularly the Audit and Assurance exam. In September, the pass rate for this paper was 87.5%; this time around it slumped to 74.9%.

ICAEW PROFESSIONAL EXAM RESULTS Dec 15 Sep 15 Audit & Assurance 74.9% 87.5% FA & Reporting 74.2% 83.2% Tax Compliance 73.4% 83.9% Business Planning Tax 77.3% 81.3% Business Strategy 88.4% 92.0% Financial Management 78.8% 79.7%

Tesco finance team ‘needs education’, says damning report

Tesco’s whole finance team needs to be ‘re-educated’, says the Groceries Code Adjudicator, Christine Tacon, in her damning report into the supermarket’s practices. She found Tesco guilty of serious breaches in industry rules as it deliberately withheld cash from suppliers to improve its own financial performance.

Some small suppliers were forced to take out bridging loans just to survive and one supplier owed millions of pounds had to wait two years to be paid.

The GCA will be working closely with Tesco to implement her five key recommendations: 1) Money owed to suppliers for goods supplied must be paid in accordance with the terms of payments agreed.

2) Tesco must not make unilateral deductions.

3) Data input errors identified by suppliers must be resolved promptly.

4) Tesco must provide transparency and clarity in its supplier dealings.

5) Tesco finance teams and buyers must be trained in the findings from this investigation.

In brief Midlands mergers Leading Midlands accountancy firm PKF Cooper Parry has now completed a merger with Birmingham-based Clement Keys. The newly merged firm will trade as PKF Cooper Parry and has a combined revenue of £30m and a team of more than 350 people across its two offices in the East and West Midlands.

Cheating epidemic Nearly 50,000 students at UK universities have been caught 8

cheating in the past three years, according to a new report.

Using Freedom of Information requests, The Times newspaper discovered that students from outside the EU were more than four times as likely to cheat in exams and coursework.

The data from 129 universities found that 1,947 students at the University of Kent were found

cheating in the past three years – the highest of any university.

Average going down The average number of papers sat by ACCA December sitters was 1.5 papers.

That is up from the 1.2 in September 2015, but lower than the old average of 1.8 papers.

ACCA and tutors will be keeping an eye on this as a big change in the sitting pattern could have big repercussions for the bottom line!

Narrow-scope amendments The International Accounting Standards Board (IASB) has issued amendments to IAS 12 Income Taxes. The amendments ‘Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12)’, clarify how to account for deferred tax assets related to debt instruments measured at fair value. The amendments clarify the requirements on recognition of deferred tax assets for unrealised losses to address diversity in practice.

PQ Magazine March 2016

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PQ news

PREM SIKKA Why tax avoidance does untold damage to business Google, Facebook and other global corporations face the anger of parliament and press over avoidance of taxes. They claim to be socially responsible and ethical, yet the companies use complex structures and transfer pricing techniques to shift profits to low or no tax jurisdictions.

For years, the corporate lobby claimed that when corporation tax rates are reduced, companies will stop avoiding taxes. The rate has fallen from 52% in 1982 to 20% in 2016, but there is no end to tax games in sight. Some corporations are calling for abolition of corporate taxes. This would result in a £42bn hole in the UK public purse. To maintain status quo, the yield from income tax would need to increase by 26%. Higher personal taxes would erode consumer purchasing power and make it difficult for firms to sell their products and make profit. So companies would lose.

Alternatively, people may have to give up their hard-won social rights, such as those relating to education, healthcare, security, pensions and social security benefits. This is damaging to big business too; without an educated and healthy workforce, good security, transport and legal system they cannot make profits. Of course, companies will still want subsidies and taxpayer bail-outs, as in the case of banks. So we will move into the era of negative corporate taxes resulting in huge transfers of wealth from people to corporations.

Are people ready for this brave new world? Probably not.

CIMA pass rates: the lowdown As promised, CIMA has published the latest case study and OT pass rates.

Operational case study sitters will be pleased with November’s 61% pass rate – it was 34% in August.

What students in 2016 will be hoping for is less of a yo-yo in the pass rates.

The Management and Strategic case study pass rates were a healthy 78% and 62% respectively.

The Management 78% is the highest case study pass rate since CIMA CASE STUDY EXAMS – 2015 November Operational 61% Management 78% Strategic 62%

August 34% 77% 67%

the new exams were introduced.

Meanwhile, Strategic sitters will look longingly at the 70% achieved at the May sitting.

CIMA also released the OT overall, first time and total pass rates for the whole of 2015.

Looking at total exams passed, P2 has the lowest success rate at 41%. This is followed by P1 at 42% and F2 with 45%.

By contrast, E2 has an 83% pass rate and E1 is 76%.

The first-time OT pass rates also point to P2 and P1 being the big May February hurdles, closely 67% 44% followed by F2 62% 33% and F3. The E 70% 46% papers (and F1)

A short revision course will not guarantee you success in the ACCA P2 papers, says the examiner in the latest Examiner’s report.

What candidates need to do is “a significant amount of pre-course study”. The examiner went on to stress that knowledge and understanding does not come through rote learning but application and thought.

PQs then need to manage their own learning and stop relying totally on their tutors for knowledge.

The importance of The Conceptual Framework was also highlighted in the report. “Given the fundamental importance of the Framework, it makes sense for candidates to have a good

CABA updates website KPMG chooses AAT

10

seem much easier, with P3 sitting neatly in the middle.

CIMA’s Noel Tagoe felt that overall pass rates are “either remaining steady or are becoming higher”. He suggested that students are feeling increasingly comfortable with the new system.

How to pass P2 knowledge of it,” said the examiner.

Candidates also need a working knowledge of the fundamental principles of the standards and be able to apply them. Combine this with your Framework knowledge and you have a PQ who can see the inconsistences in the standards, it was ventured!

The report tries to clear up what ‘current issues’ means. Current issues are not simply the Exposure Drafts set out in the examinable documents. They also include problems with current accounting standards, recent IFRSs and practice and regulation uses. The examiner was shocked by the lack of detailed knowledge of IFRS 15 in question 4.

n Prem Sikka is professor of accountancy at the University of Essex

AAT has been chosen by KPMG as the qualification to be used in its KPMG360º apprenticeship programme. KPMG360º is an apprenticeship programme for school and college leavers and begins with a one-year Foundation Level, during which apprentices will study AAT level 3. They will then progress to a two-year technician level. Those wishing to continue their apprenticeship will then join the three-year professional level scheme. The first students join the KPMG scheme in March.

OT pass rates (2 Jan to 31 Dec 2015) Overall First Time Total E1 87% 78% 76% P1 63% 45% 42% F1 82% 74% 71% E2 92% 85% 83% P2 66% 44% 41% F2 66% 47% 45% E3 76% 61% 58% P3 69% 50% 47% F3 67% 48% 47%

You are expected to shine at work, pass your exams (first time) and still find the time to lead a ‘normal’ life.

However, it doesn’t always work that way and from the moment ICAEW PQs begin their training contract they can access CABA, the charity set up to help both students and members in trouble. So, if you are struggling to settle into an unfamiliar workplace, with student loan repayments or with mental ill-health, there is someone to talk to, 24/7, who is on your side.

CABA has just updated its website showing all the different levels of support available for ACA PQs. The service is free and offered in the strictest confidence.

CABA offers a unique service – we haven’t heard of anything offered by the other professional bodies that comes close!

• Take a look at www.caba.org.uk

The ACCA is now well ensconced in its new home at the Adelphi, just off the Strand. Staffers have a whole new world of places to eat, but PQ wonders how many people get past Smith & Wollensky, which is on the corner of their building. It serves American steaks and wines “focused on the high-end”, but members will be pleased to know that prices are more reasonable than we first thought!

HOW ETHICAL ARE YOU?

The Fédération des Experts Comptables Européens – Federation of European Accountants (FEE) – is looking for European young accountancy professionals (under 35) to give their views on ethical behaviour. Take 15 minutes to tell them what you think by taking the survey: go to https:// www.surveymonkey.com/r/YPethicalbehaviour Ethics, says FEE, is an essential component of being a professional accountant and the body is committed to continuously promoting ethical behaviour that helps to contribute to an efficient, transparent and sustainable economy.

Interestingly, one of the first questions asks respondents to give the three main reasons they choose accountancy. While opportunities to travel and good career progression are possible answers, ‘for the money’ isn’t! And, yes, you really could say you wanted to be ‘part of a regulated profession’ or you where ‘interested in the subject matter’.

The results are due out later this year.

PQ Magazine March 2016

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PQ news

CARL LYGO Singapore is a shining example to the world Singapore is a remarkable city state.

It is to Singapore that most AsiaPacific countries look. The legacy is that of former Prime Minister Lee Kuan Yew, who led Singapore from 1959-1990. In the space of 50 years Singapore raised itself from third world to gaining independence from the UK/Malaysia to becoming a first world nation of unparalled success.

Unemployment is 2%, Singapore is the world’s healthiest nation, 90% of Singaporean’s own their own home, it is one of the least corrupt nations to do business and the government runs a perpetual surplus.

The latest recognition came in the Business School INSEAD’s Global Talent Competitiveness Index, which placed Singapore second in the world in terms of its ability to attract and retain talent (Switzerland was top, the UK seventh). The survey covered 109 nations across all incomes and levels of development. The index looked at four pillars on the input side – Enable, Attract, Grow and Retain and two output pillars benchmarking national performances in Labour/Vocational and Global knowledge skills.

The current PM, Lee Hsien Loong (eldest son of Lee Kuan Yew), recently announced that Singapore would continue to invest in the future for its children while older economies in the West are creating massive debts for them. Student loan debt in the UK has now reached an all-time peak of £73.5 billion – an interesting contrasting legacy we have left our children in the UK. n Professor Carl Lygo is chief executive of BPP

The ACCA December exam results were released on 18 January, but what did we get? Just one paper from F5 to P7 had a pass rate of over 50% – that was F6 with 53%!

PQ readers had called F6 tough but fair.

Bizarrely, every Essential paper (that’s P1, P2 and P3) had the same pass rate – 47%.

The P5 pass rate remains worringly low: it’s 29% this time and was just 30% for September. PQs had called the December paper ‘horrible’, ‘difficult’ and a ‘disaster’, among other things! The worry for some is that they know they are waffling and what they write of ‘often meaningless’.

P7 saw a big jump on the September sitting (it was 29% in September). For December, the pass rate rose to 39%.

In all, some 162,603 students entered 243,660 December papers.

The session saw 6,950 students worldwide complete their final exams.

ACCA’s new director of learning, Dr Mary Bishop, said the ACCA exams remain demanding to ensure that its students meet employers’

12

ACCA EXAM RESULTS DECEMBER 2015 – WORLDWIDE Dec 15 Sep 15 41% 39% F5 Performance Management F6 Taxation 53% 47% F7 Financial Reporting 45% 44% 46% 42% F8 Audit & Assurance 45% 35% F9 Financial Managem’t P1 Professional Accountant 47% 48% 47% 44% P2 Corporate Reporting P3 Business Analysis 47% 45% 35% 36% P4 Adv Financial Managem’t P5 Adv Performance Managem’t 29% 30% 42% 45% P6 Adv Taxation P7 Adv Audit & Assurance 39% 29%

requirements and have demonstrated that they can deal with the challenges facing today’s finance professionals.

Quite a number of students are scoring 49% and missing out on passing by just 1%. On a leading noticeboard one PQ claimed that they had failed with a score of 49% for the third time. These students are obviously feeling demotivated.

Jun 15 37% 50% 40% 39% 41% 49% 48% 46% 36% 28% 34% 40%

Students may be wistfully looking at the current CBE exam results.

The F4 sitters, for example, managed a 74% pass rate. The knowledge paper pass rates ranged from 64% to 84%.

The ACCA will be extending the use of CBE exams to F5 to F9 later this year. Spreadsheets and other innovative question types are being introduced into these assessments.

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Stockport-based firm Hallidays was over the moon recently when one of their number, Katie Cheetham, finished 11th internationally and will be recognised at ICAEW’s annual prize giving ceremony in April. This is in fact her fifth award!

The quiz winners

THE ANSWERS ARE: 1.

Quantum of Solace 2.

U2 3.

Sweden 4.

Tennessee Williams 5.

Hashtag 6.

Timothy Spall 7.

Paddington 8.

A Beautiful Mind 9.

Patrick 10.

French national anthem (La Marseillaise) 11.

2003

ACCA’s pass rates struggle to hit 50%

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Congrats to Izabela Kaczynska from Warwickshire, Simon Parker, Preston, and Lisa Robertson, Croydon, winners of this year’s Annual Bumper Quiz

Many Clouds Chelsea Zara Philips (2006) Josef Martínez 13 Kaka Deontay Wilder Alastair Cook South Korea Kilimanjaro Stanley Edinburgh New York City

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PQ ACCA F9

‘WACCy’ milkshake needs no formula Jo Tuffill shakes up the WACC calculation

F

ormulae feature pretty heavily in the ACCA F9 syllabus and tend to send many students into a spin, prompting memories of dreaded school algebra lessons. Let’s face it, accountants really need to be numerical, not mathematical. So here is one way of throwing out that ‘WACCy’ formula.

The weighted average cost of capital (WACC) is basically like costing up a strawberry milkshake – you know, the ones from your local coffee shop that vary in both quality and cost.

Suppose we make 100 litres of strawberry milkshake as follows: • 50 litres of milk at 10p per litre • 40 litres of strawberry coulis at 20p per litre • 10 litres of cream at 15p per litre This makes 100 litres, so what is the cost of 1 litre?

Answer Milk Strawberry coulis Ice Cream Total Quantity

50 40 10 100 litres

x 10p x 20p x 15p Total Cost

£5.00 £8.00 £1.50 £14.50

Weighted average cost per litre will simply be £14.50 / 100 = 14.5p Now if you vary the mix keeping the total quantity fixed you can manipulate the cost. Adding more milk and less strawberry coulis will push down the cost per litre, and vice versa. So watch the mix (and don’t shortchange your customers on coulis at the counter).

You will be forgiven for thinking you are reading an article about F5 mix variances. Good spot! You can use methods learned in other modules to help with F9. Here is the trick…

When asked to calculate a WACC, replace the quantity in litres with Market Values of Finance and the cost in pence with their respective Percentage Cost of Finance.

Example Our Milkshake company is financed by a total of £100m as follows: • £50m of Debt at 10% • £40m of Equity at 20% • £10m of Bank loan at 15% What is the WACC?

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Answer Finance capital Debt Equity Bank Loan Total Market Value

Market Value £50m £40m £10m £100m

Cost of capital % x 10% x 20% x 15% Total Cost

Cost £5m £8m £1.5m £14.5m

WACC will simply be £14.5m / £100m = 0.145 or 14.5% Again, if you vary the mix you can manipulate the WACC. Adding more debt at a lower cost of capital will push down the WACC as follows: Answer Finance capital Debt Equity Bank Loan Debt 2 Total Market Value

Market Value £50m £40m £10m £20m £120m

Cost of capital % x 10% x 20% x 15% x 10% Total Cost

Cost £5m £8m £1.5m £2.0m £16.5m

WACC will simply be £16.5m / £120m = 0.1375 or 13.75% which is lower.

So there’s no formula required – leave it on the formula sheet. PQ • Joanne Tuffill, Vale Training

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ACCA exam tips PQ

Here are your tips for the first-ever ACCA March sitting, courtesy of top tutors from across the land. Don’t forget – the usual warnings apply!

First Intuition.

F5 • MCQs on the whole syllabus.

• Lifecycle costing.

• Environmental accounting.

• Limiting factors.

• Relevant costing.

• Flexed budget and budgeting discussion.

• Divisional performance.

• Mix and yield variances.

F6 • Basis periods.

• Loss relief for individuals and companies.

• Groups of companies.

• Employment/self-employment.

• PAYE. • Capital allowances.

• VAT invoice content and annual accounting/flat rate scheme.

• Entrepreneur’s relief, chattels.

F7 • MCQs on the whole syllabus.

• Extracts from single company accounts including non-current assets, taxation and IFRS 15.

• Interpretation of accounts including ratio calculations and written analysis.

• Consolidated SFP and/or SPL with associate, PUP and fair value adjustments.

F8 • MCQs on the whole syllabus.

• Ethics.

• Audit risk and auditor response.

• Internal control – deficiencies, implications and recommendations (revenue and receivables or purchases and payables cycles).

• Audit evidence and substantive testing.

• Subsequent events, written representations.

• Modified auditor’s reports.

F9 • Discussion of the economic environment and the impact on interest and exchange rates.

• Working capital management – receivables and payables plus operating cycle.

• Investment appraisal and cost of capital.

• Business valuations.

• Risk management (currency risk calculations).

P1 • 50-mark scenario question, to include: ethics, governance, rules versus principles, also corporate PQ Magazine March 2016

social responsibility.

• Optional questions to include importance of internal controls; structure of directors’ remuneration; business risks; environmental reporting; and embedding risk awareness.

P2 • Q1: group question on disposals or cashflows.

• Ethics.

• Revenue recognition.

• Leases – current issue.

• Deferred tax.

• Share-based payments.

• Pensions.

P3 Section A • Environmental analysis, people with financial analysis Section B • Project management.

• Strategic action.

• Information technology – pricing strategy.

P4 • International investment appraisal techniques focusing on risk management tools such as value at risk.

• Impact on WACC following hedging of interest rate risk.

• Company valuation based scenario, possible MBO finance to structure.

• Adjusted present value with link to real options and Black Scholes option pricing model.

P5 • Critique an existing performance management system and the performance hierarchy.

• Risk management and methods.

• Activity based principles.

• Performance management models (performance pyramid or building block model).

• Value based approaches to performance management.

• Effective use of information systems.

• Environmental accounting.

P6 • Business property relief.

• Use of second spouse nil rate band.

• Related property.

• Groups of companies, trading and capital losses.

• Double tax relief for companies.

• De-grouping charges.

• Incorporation relief.

• Furnished holiday lets.

• VAT partial exemption.

• Appeals and the four-track tribunal system.

• Benefits in kind or extra salary, income tax and national insurance implications.

P7 • Business risks in a scenario.

• Identifying ethical and other professional issues in a scenario.

• Matters to be considered and audit evidence for a couple of core accounting issues.

• Money laundering.

• Insolvency issues.

BPP .

F5 • Q1-3: any syllabus area.

• Q4-5: planning and operational variance and evaluation of company performance.

F6 • Employment benefits.

• Property income.

• Relief for pension contributions.

• Adjustments to profit to arrive at trading income for both companies and sole traders.

• Capital allowance computations.

• Likely to be 10-markers on VAT, inheritance tax and CGT. F7 Q1-2 • Interpretation or statement of cash flows, may be consolidation if Q3 is not consolidation.

• Conceptual framework; tangible assets and impairment; provisions and contingencies; revenue and grants; financial instruments; discontinued operations/assets held for sale; or earnings per share.

Q3 • Financial statement preparation.

• Statement of profit or loss and other comprehensive income and/or statement of financial position.

• Adjustments.

• Statement of changes in equity, statement of cash flows extract, earnings per share calculation or linked written topic.

• Consolidation question, including one subsidiary and often an associate, with adjustments. Think fair values, deferred/contingent consideration, PUP on inventories/PPE, intragroup trading and balances, goods/cash in transit.

• Single entity, could be preparation from a trail balance or restatement of given financial statements with the usual adjustments for depreciation, revaluation and current/deferred tax, plus a mixture of adjustments on other syllabuses areas, such as leases, substance over form issues, financial instruments, share issues, government grants, inventory valuation, revenue recognition or construction contracts.

F8 Q1-4 • Ethical threats and safeguards.

• Corporate governance and internal audit.

• Audit planning • Materiality.

• Audit procedures, especially substantive procedures.

• Audit finalisation.

• Audit reports.

Q5-6 • Audit risk.

• Internal control.

• Audit procedures, both substantive procedures and tests of control.

F9 • Calculations on improvements to receivable management – early settlement discounts and factoring.

• Weighted average cost of capital calculations – including its component parts.

• Ratio analysis to support financing decisions.

• NPV calculations – correcting an incorrect NPV given by the examiner, which includes incorrect tax and inflation calculations.

Continued on page 18 17

PQ ACCA exam tips Continued from page 17 P1 • Use of stakeholder, ethical and other CSR theories.

• Risk and governance relating to board directors, remuneration and reporting.

P2 Section A • Preparation statement of financial position and/or a group statement of profit of loss and other comprehensive income or statement of cash flows – may include foreign subsidiary, discounted activities, disposals and/or acquisitions.

Possibly financial instruments, pensions, share-based payments and impairments.

• Accounting adjustments and social/ethical/moral aspects of corporate reporting.

Section B Q2 & 3 •One multi-part question covering deferred tax, foreign currency transactions, financial instruments, pensions, share-based payment, non-current assets, borrowing costs, the effect of accounting treatments on earnings per shares or ratios.

• Test of a range of standards such as accounting policies and the framework, leases, grants, IFRS for SMEs, reorganisations, provisions, events after the reporting period and related parties.

Q4 • Current developments in corporate reporting and problems with existing standards, such as revision of the conceptual framework, regulatory issues over adoption and consistent application of IFRSs. P3 • Project management.

• Time series, relevant costing, decision trees and decision making techniques.

• Role of the corporate parent, including BCG matrix/Ashridge.

• Business process change including the POPIT model and Harmon’s Process-Strategy Matrix.

• E-business, e-marketing and the impact of big data on areas like the 7Ps and CRM. P4 Q1 • Project appraisal – domestic and overseas.

• Business valuations – cost of capital.

• Risk management – hedging.

Q2-4 • Risk management – currency or interest rate.

• Business re-organisation.

• Real options.

P5 Q1 • Transfer pricing, ratios, analysis of 18

quality related costs and ABC all need to be mastered.

• Performance management frameworks – building blocks model or the balanced scorecard.

Q2-4 • Quality management.

• Information reporting – CSFs and KPIs. • The application of strategic models – PEST, Porter’s 5 Forces, the value chain.

• HR frameworks – reward and appraisal systems.

• Risk management.

• Environmental management accounting.

P6 • Groups of companies involving overseas aspects.

• Unincorporated business, particularly loss relief or involving a partnership.

• Capital gains tax versus inheritance tax.

• Overseas aspects particularly the new rules on residence.

• Personal service company.

• Company purchase of own shares.

• Enterprise investment schemes/ venture capital trusts.

• Change in accounting date.

• Takeover.

• VAT partial exemption.

• Transfer of trade versus sale of subsidiary.

• Disincorporation relief.

• Pension contributions.

• Patent box, research and development expenditure.

P7 Section A • Planning, risk assessment, evidence gathering and practice management issues.

• Non-audit engagement such as prospective financial information (PFI) or due diligence.

• Audit completion or consolidated groups.

Section B • Audit evidence and financial reporting issues.

• Practice management – ethics and quality control.

• Reporting – completion and communication.

Becker.

F6 • Corporation tax – a more traditional question could involve group situation with loss reliefs and chargeable gains.

• Income tax – multiple income sources, employment (and benefits) and/or self-employed, as well as investment income. Cash basis and related expense claims and property income could also come up here.

• VAT, CGT, NIC and compliance all key.

HEALTH WARNING

These tips should only be used in conjunction with proper study. We cannot guarantee that these topics will appear in the actual exam as we have not seen the exam papers. Examiners are not predictable so it is vital that all core syllabus areas are revised fully.

• IHT – calculating on death, with preceding lifetime gifts.

• Transfer of a spouse’s unused nil rate band.

• Property taxation.

• Commencement/cessation rules.

• Wildcards: PAYE compliance, RTO reporting, VAT special schemes, ethical issues, pension allowances, child benefit income tax charge, principal private residence exemption.

F7 • Consolidation issues.

• Revenue recognition.

• Substance versus form.

• Convertible instruments (IFRS 9).

• Accounting for taxation, as part of final accounts question.

• Accounting for assets – IAS 16.

• Provisions and Contingencies.

F8 • Judging past examiner’s reports audit risk and auditor’s reports are ‘bee in the bonnet’ subjects.

F9 • NPV and IRR. • Rights issues.

• Equity and debt valuation.

• SME finance – supply chain finance, P2P lending, crowdfunding.

P1 • Corporate governance (CG) concepts, underlying fundamentals and arrangements.

• CG in other organisations (e.g. public sector, NGOs).

• Types and forms of CG (e.g. rules based, principles based, insider, outsider systems, UK Corporate Governance Code, SoX).

• Agency theory, stakeholders, Mendelow.

• Board structures, CEO/chairman, directors, NEDs, committees.

• Internal control and business risk, Turnbull.

• Ethical theories and business codes – Kohlberg, Gray, Owen and Adams,

Tucker, AAA. • Professions and the public interest.

• Corporate social responsibility, corporate citizen, footprints and sustainability.

• Integrated reporting, social and environmental auditing.

P2 • Consolidations in Q1.

• Disposals.

• Step acquisitions.

• Cash flow.

• Foreign sub.

• Complex group.

• Consolidated profit or loss was examined for the first time in over three years in the June 2014 paper.

• Financial instruments (IFRS 9) to include hedge accounting, questions on this topic tend to appear in most exams.

• Employee benefits (IAS 19).

• Leases (IAS 17).

• Share-based Payments (IFRS 2).

• Impairment of assets (IAS 36).

• Deferred Tax (IAS 12).

P7 • New audits, tendering.

• Planning, materiality, sampling, analytical review.

• Audit, business or material misstatement risk.

• Group audits, goodwill, joint audit, joint ventures.

• Assurance services, PFI, KPI, due diligence, forensic audit, reviews, insolvency (UK & Ireland students).

• Ethics, practice management and other professional issues.

• Any audit matter covering IFRS (IAS 1 to 40 and IFRS 1 to 15 – see P2 syllabus).

• Close down procedures, opening balances, comparatives, other information, going concern, subsequent events, representation letter, emphasis of matter, audit reports.

• Outsourcing, service providers, use of an expert.

• Corporate governance, internal audit (relating to ethics, outsourcing), audit committees.

• Current issues (e.g. quality control and professional scepticism) including integrated reporting.

LSBF.

F5 • Lifecycle/target costing with a touch of environmental costing.

• Linear programming/decision tree.

• Zero based/incremental budgets.

• Sales mix and quantity variances (or planning and operational).

• Non-financial performance measures.

F6 Q1 • Capital gains tax question with shares including matching rules, bonus/rights issue, and with part PQ Magazine March 2016

ACCA exam tips PQ disposals and gift relief, due date for payment; or • Corporation tax (i.e. company making disposals) with rollover and holdover relief.

Q2 • VAT – due date for deregistration, errors/surcharges, calculation of VAT payable, the flat rate scheme. Group registration for VAT. Q3 • Inheritance tax.

• Calculating IHT on lifetime gifts into a trust when the donor is alive.

• Calculating IHT on the death estate when the donor dies.

Q4 • Property business profits/losses for an individual, including furnished holiday letting.

• Self assessment for income tax including payments on account or balancing payment.

• Residence rules.

Q5 • Income tax.

• Adjustment of profit for a sole trader/partnership, including capital allowances, for a sole trader in the middle of the trading cycle or ceasing to trade.

• Calculating income tax payable, with trading income, interest income and dividend income, and perhaps employment income.

PQ Magazine March 2016

• Contributions into a pension scheme and annual allowance rules.

• Child benefit/ISA rules.

Q6 • Adjustment of a trading profit/loss, including capital allowances.

• Calculating corporation tax possibly including a straddling CAP. • Large company and instalment payments.

• Self assessment for firms (due dates for payment/submission).

F7 • Section A: MCQs will be about half on standards and published accounts, the remainder spread between consolidations and interpretations/cash flow. Some recent MCQs have been on obscure areas, so leave nothing out.

Section B • Ratios and interpretations (15 marks).

• Consolidations (15 marks).

• Published accounts (15 marks).

• Published accounts or consolidations (30 marks).

• Expect discussion on standards or some cash flow calculations in the big 30 marker.

F8 • Confidentiality.

• Conflict of interest.

• Audit risk and response, including ratios.

• Internal control deficiencies and tests – sales cycle.

• Substantive procedures on receivables, revenue, provisions.

• Audit report scenarios.

• Roles and benefits of audit committees.

• Advising company on improving its governance.

• Role of internal audit including VFM, fraud.

• ISA 230, 240, 260, 560, 720.

F9 • Investment appraisal – NPV with tax and inflation, possibly asset replacement or ROCE. • Cost of capital – WACC, possibly with capital structure theory.

• Valuation of debt.

• Risk management including PPP/IRP. • Working capital management including cash management.

• EMH. P2 Q1 • Usual CFS or BS or PL in that order of 'hotness'.

Q2 & 3 • Goodwill.

• Impairment.

• Financial instruments.

• Leases.

• Revenue.

• Non-current assts.

Q4 • FA impairment.

• Equity accounting.

• Changes or sustainability.

P3 • Strategic analysis.

• Strategic choice.

• Scenario planning.

• Implications of corporate governance/ethics.

• POPIT model of change.

• Controls over IT. P4 • Hedging interest rate risk using forward rate agreement, interest rate futures, options on interest rate futures and collars. Explanation of the Greeks.

• Real options – option to abandon, expand or delay using the BlackScholes option pricing model.

• Investment appraisal using adjusted present values.

• Cost of capital using the principles of Modigliani & Miller prepositions or geared and ungeared betas.

• Calculation of project specific WACC or WACC of combined activities.

• Valuation of business using free cash flows and Price-earnings ratio methods. Evaluation of the best mode of payment - cash offer or share exchange.

Continued on page 20

19

PQ ACCA exam tips

Top tips

Continued from page 19

P5 • Building block approach.

• Eva. • Technology and performance management.

• Reward.

P6 • IHT with the death estate (BPR and APR and lifetime gifts into a trust and gifts with reservation). Domicile, including deemed domicile and election treated as UK domiciled.

• Group question, involving losses, group relief.

• Research and development options for a large enterprise.

• Controlled foreign company rules.

• Partnership with a partner joining/ leaving with opening year rules with losses.

• Change of accounting date.

• Capital gains tax including entrepreneurs’ relief, shares matching rules and gift relief.

• Group registration for VAT and overseas aspects of VAT. • Purchase of own shares.

• Personal service companies.

• Employee shareholder scheme/share option schemes.

• Ethics.

P7 • Planning question for group audit, with business risks, risks of material misstatement, audit tests on specific areas.

• Giving assurance on forecast information.

• Audit work on a forensic case.

• Accounting matters and audit evidence, 2 or 3 small scenarios.

• Ethics and Professional issues including tendering, quality control, threats to independence.

• Audit report scenarios.

• ISA 250, 550, 560, 600, 610.

• Pros and cons of new style audit report. PQ

P1 .

Some candidates are still not completing the whole paper, which seems to worry the examiner! For December there were also limited attempts to respond to the professional marks. This time around you had to write an article – simple, surely!

Q1: Looked at two-tier boards and diversity and diversity targets on boards. The roles of risk committees and strategies to manage the risked faced were all covered. The ‘comply or explain’ principle was also examined.

Q2: Corporate citizenship appeared (it has been examined before). Part B asked about differing options on integrated reporting. The final part of this question wanted to know the theory behind the integrated reporting initiative and the six capitals in integrated reporting.

Q3: Technology risk and environmental changes. How to control risks, and how to avoid mismanagement were also looked at here.

Q4: An ethical question, including bribery and corruption.

P2 .

The IASB is spending a lot of time updating and improving all aspects of The Conceptual Framework, so it makes sense to the examiner that you too have good knowledge of it.

When it comes to the marking credit is given for application of the Framework to the questions asked.

The example given is the understanding of the qualitative characteristics.

Candidates also need to have a working knowledge of the fundamental principles of the standards and be able to apply them (the ones set out in examinable documents).

Q1: Preparation of a consolidated statement of financial position of a group with an overseas subsidiary.

What examiners expect from you

We take a look at the December Examiner’s reports to see what was examined and how students fared property and a defined pension scheme.

Q2: The practical application of several accounting standards, namely IFRS 5, IAS 36, IFRS 13 and IAS 17.

Q3: Joint arrangements, decommissioning and accounting for irrecoverable gas. IRFS 9 and IAS 16 and IAS 10 all came into play.

Q4: Current issues – IFRS 15.

There was an impairment of goodwill in the subsidiary and an interest free loan, the purchase of

A QUICK LOOK AT...

The Office for National Statistics estimates that the average hourly pay for full-time employees differs between men and women by 14.2%. So it is not surprising that the UK government is proposing legislation to require all large organisations that employ more than 250 employees to publish data on pay by gender.

The question is, why is there still a pay gap in 2016? Some of the gap may simply be because women tend to work in lower-paid professions like social care. However, there are other factors to consider, including: • the pay gap significantly increases for those over 40 years old because women take time out to have children.

20

• women’s careers are further affected by the fact they take a greater share of the day-to-day responsibility for bringing up children.

• women are less motivated by money and pay which, for example, is thought to affect the bonuses they earn.

The discrimination in pay is therefore in part because employers are not supporting working mothers enough, that men are not doing an equal share of child care, and that women are not taking the opportunity to discuss their pay and prospects with their employers in an informed and motivated way.

More and more women are getting to the highest levels in the biggest companies (every

P3 .

Candidates are reminded there are only a few marks available for theoretical answers, the bulk of the marks are for interpretation of the information provided, said the P3 examiner.

Q1: Acquisition of a company (this has been a theme of many P3 questions). Many candidates used the SAF framework in their answers, which the examiner said was perfectly acceptable. Among the models discussed were Balogun and Hope Hailey’s contextual model, the culture web and Mintzberg’s organisational configurations.

Q2: Investment appraisal was tested here. A cost-benefit analysis was needed. The second part of the question covered project planning.

Q3: Organisational change and the analysis and redesign of processes.

Q4: Environment threats using a SWOT analysis. The second part looked at corporate charitable donations – ethics and corporate governance. PQ

PAY DISCRIMINATION FTSE100 company now has at least one woman on their board). More women are now graduating from university than men, and more women are rightly expecting to be able to manage both a career and family life in a balanced way. There is every reason to believe the pay gap will fall in future. The added transparency from the proposed legislation will put further pressure on large employers to ensure they are paying women equally.

• Jim Keane is an AIA Achieve e-tutor. The AIA Achieve team is producing a series of ‘A Quick Look at…’ articles throughout 2016.

More articles can be found on the AIA website: www.aiaworldwide.com/a-quick-look-at.

PQ Magazine March 2016

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PQ ACCA exams

THE FAB

FOUR ACCA has moved from two to four exam sittings this year. Rebecca Evans outlines what this means for you

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ollowing a successful pilot last September, the ACCA has now formally moved to four exam sittings a year. These will be in March and September, in addition to the traditional June and December sittings. This will affect all students studying subjects F5 to P7 (F1 – F4 are already on-demand computer-based exams).

This move creates much more flexibility for students, but also much more uncertainty around when to study and how many subjects to study at one time. It is important that this additional flexibility does not delay your progression because the temptation to defer to the next exam sitting, in just three months, is significantly greater. To avoid this you should plan your studies over the next year to help you remain motivated.

Tuition providers have always recommended that students sit four papers a year and this advice remains unchanged. Up to and including 2015, this would mean sitting two papers each exam sitting, meaning that a student would qualify within two-and-a-half to three-and-a-half years, depending on any exemptions they may have. A reduction in the number of exams taken each year will extend the period until qualification and therefore delay any increase in earnings as a result of receiving the ACCA accreditation.

With the aim of still sitting four papers a year, what are your options?

Study two subjects every six months, to June and December or March and September This will give you 12 to 16 weeks to prepare for your exams and still allow you to know the results from your previous exam sitting before moving onto the next. This means you can really focus on your new subjects without the worry of the looming results day.

Taking this approach gives you the time to ensure you fully understand the material you are studying, giving you both a greater chance of passing and retaining the knowledge. This is essential when you move on to the higher level papers, for example as you move from F7 to P2. It also provides you with the opportunity to apply your knowledge to the workplace and complete your Practical Experience Requirement (PER).

Studying to two sittings a year provides natural breaks in your studies for you to recharge your batteries or focus on getting on top of things at work.

If you happen to be unsuccessful in an exam you can use the additional exam sitting, while your knowledge is still fresh in your mind, to take your resit without delaying your studies (and that pay rise!).

The downside is that you will be studying two subjects at a time, which can be demanding, particularly at the Essentials and Options levels.

Study one paper at all sittings This approach gives you the opportunity to focus on one subject at a time, which you may find beneficial as you progress to higher level papers.

However, it may be that you have to start studying for your next paper before you have the results of your most recent examination. Some students may find it hard to focus on the new subject without knowing their results. Studying after results are released means an intensive period of study of just seven weeks!

You might find you have less choice over which subject to sit at a particular exam sitting if your tuition provider isn’t running all course options four times a year. Planning your studies will be critical to ensure you keep on track.

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Resits could become more difficult as you have no ‘spare’ exam sittings, so you may find yourself resitting alongside a new subject, increasing your workload. Alternatively, you might defer a subject you have just started studying, putting you at risk of delaying your path to qualification.

Some employers might be concerned at the prospect of this continuous approach to study as it may negatively impact your work performance or take you out of the office at busy periods. Many employers report that the first quarter of the year is their busiest time so taking time out to study may be inappropriate.

However, you may find that your employer prefers you to be out of the office little and often, rather than for intensive periods. It is always worth a conversation to determine your employer’s preferences.

A combination Some students may decide to take a more unpredictable approach, and vary the number of subjects they choose to study sitting by sitting, avoiding peak work period or events in their personal lives.

It is, of course, possible to sit a mix of the two approaches outlined, perhaps sitting one subject to March, two to June and another to December.

This would allow a student to sit four exams in a year (and have a summer holiday).

This route gives the benefit of flexibility and spreading the volume of study throughout the year while still allowing for study breaks.

It doesn’t, however, give a clear window for any resits. If choosing this approach, it will be essential to obtain your tuition provider’s timetables to ensure you can sit the subject combinations you want at the time you want. It may be that you need to be more flexible with your method of study.

There is no one best approach; everyone faces different circumstances, but before you make up your mind there are a few important things to consider: • Your workload: do any of the exam sittings clash with busy periods at work?

• Your personal life: do any of the exam periods clash with holidays, etc?

• Your employer: what is their preference and when will they give you time to study?

• What suits you and your approach to learning: would you prefer an intense period of study with breaks or continuous study?

• What courses is your tuition provider offering to each sitting and are these offered via your preferred study method?

Taking time to think through these questions will help you to develop the most suitable, and successful, study approach for you. PQ • Rebecca Evans is Head of ACCA at Kaplan Financial PQ Magazine March 2016

AAT exams PQ

LET’S GET TECHNICAL

Gareth John explains the costing terminology you need to understand if you going to get that all-important pass

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y colleague Nick and I have regular disagreements about which type of accounting is the best. I remind him that management accounting is exciting, glamorous and sexy whereas financial accounting is dull, mechanical and could be done by a trained monkey. He replies that management accounting is often based on guesswork and estimate while financial accounting is an important process in recording historic results, protecting shareholder value and ensuring corporate accountability. He has yet to realise that he is unwittingly proving my point.

Management accounting is a key aspect of your AAT studies and there are a number of specific topics you will cover (including budgeting and forecasting, performance evaluation and variance analysis, and decision-making), but the area that I would like to talk about here is costing.

Costing Management accou nting is Costing is the process of identifying the cost per unit of production. If I am a manufacturer of cars (or cakes or chairs for that matter) it is incredibly useful to know how much each unit costs me to produce for a number of reasons, including: • Valuing units of inventory at the end of a period.

• Identifying where cost savings can be made.

• Perhaps most importantly, setting a profitable selling price.

A typical starting point of this process is to start breaking down the costs of the business into a variety of sensible categories.

Classifying costs There are a number of different ways that you can break down costs into different groups; this is the process of ‘classifying’ costs.

Classifying costs by function: When we classify costs by ‘function’ we are thinking about in which location within the business they were incurred.

• Production costs are incurred in the factory where physical production occurs.

• Non-production costs are incurred elsewhere in the business, for example: – Administration costs are incurred as part of the administrative function.

– Selling costs relate to the process of PQ Magazine March 2016

stimulating demand and advertising products.

– Distribution costs are incurred in the process of delivering finished goods to customers.

– Finance costs would be those incurred as part of raising finance and paying interest.

Classifying costs by behaviour: When we talk about the ‘behaviour’ of a cost we mean the way that the cost is affected by changes in the volume of production.

• Fixed costs are unaffected by the volume of production, so stay the same whether you make 5,000 units or 10,000 units.

• Variable costs change in line with any changes in production volume so if you double production you double the cost.

One thing to note is that when we describe a cost as ‘fixed’ that doesn’t mean it will never change, just that it is not affected by changes in volume. For example, your factory rent can go up each year but your landlord isn’t interested in how many cars you make.

Classifying costs by element: • Material costs are the purchase of anything physical.

• Labour costs are when we pay for the time of a member of staff.

• Expenses relate to anything other than material and labour.

Classifying costs by nature: This is often the hardest category for students to get their heads around.

• Direct costs can be ‘traced’ to a single unit of production. The total of all direct costs is the ‘prime’ cost.

• Indirect costs cannot be traced to a single unit of production but are ‘shared’ over many units. Indirect costs are often called ‘overheads’.

You have to remember that categories of cost overlap. For example, the purchase of wheels used in assembling cars can be thought of as: • Production costs as they are used in the factory.

• Variable costs as an increase in the number of cars made will mean more wheels being bought.

• Material costs as the wheels are a physical product.

• Direct costs as you could trace four wheels to a single car assembled.

The monthly salary of a factory supervisor could be seen as: • Production costs as the supervisor works in the factory.

• Fixed as the monthly salary paid will be the same no matter how many cars are made.

• Labour costs as they relate to paying for someone’s time.

• Indirect, as you cannot trace the monthly salary paid to a single car.

The quarterly electricity bill for lighting the accounts department would be: • Non-production costs as the accountants don’t work in the factory.

• Fixed as the bill will have no link to the number of cars being assembled in the factory.

• An expense as it is not material or labour.

• Indirect as a bill for three months will be shared over all of the production in that quarter PQ • Gareth John is a tutor/director with First Intuition and helps to manage their AAT distance learning programme. He was PQ’s Accountancy Lecturer of the Year in 2011 23

PQ CIMA case

RIO: WHAT TO EXPECT Clare Finch gives you the lowdown on the Strategic Integrated Case Study

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he SICS for February 2016 sitters is proving to be a challenging but interesting test. Entrants need to be solid on the underpinning requirement of ethics, integrity and professionalism.

You then are set a series of tasks as your variant moves through time, challenging you to prove you have competence in each quadrant of expected skills: • Technical skills • Business Skills • Leadership skills • People skills

Ethics, intergrity and professionalism The answers you give will be long form and typed into the exam system, they will consist of all forms of modern communication, including e-mails, reports and briefing notes. In November 2015, (variant 4) students even had to draft a press release. This is not classically what an accountant expects to be training for, but be prepared!

Read the unseen daily!

You need to be 100% familiar with the Rio unseen material. Time pressure is significant in this exam and you should not expect to have time to look things up.

You need to use the pre seen, the unseen and your own skill as a nearly qualified accountant to structure your answers.

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Example of a Rio potential trigger You get an e-mail from Rita: From: Rita Oliveria, CEO To: Senior Finance Manager Subject: A new franchise model for the US Dear SFM Ralf has come up with a proposition to expand RIO into the USA using a franchise only strategy. Apparently US franchisees expect things to work a little differently than we are used to so he has suggested the following: • Open 25 franchise shops across the USA main cities over the course of the next twelve months.

• RIO will provide loan finance to assist individuals wishing to purchase a franchise, the average cost of which will be $100,000. Loans will also be available (up to a maximum of 50% of the purchase price) to cover the cost of the franchisee acquiring suitable freehold or leasehold premises. The total sum required for the property loan facility is estimated by the treasurer of RIO to equal $4.8 million.

• RIO to charge commission to the franchisees at a rate of 1% of sales revenue, and also to charge a net margin of 12% (of retail value) on the products supplied to the outlets.

• Planned sales from the new USA outlets are estimated to equal $26 million over the next twelve months.

• It is estimated that 60% of the new outlets will deliver income on plan, 10% will deliver 10% below plan and 30% will deliver 20% below plan.

• It is estimated that there is a 40% probability of no loan defaults, with the worst case being a 30% probability of 4 franchisees defaulting on their loan.

• The USD is expected to strengthen against the euro by 5% over the next 12 months.

SM… Could you write me a report containing your views of the risks that RIO might face in choosing to expand into the USA via the use of Ralf’s new franchising model.

Kind Regards Rita

To earn a ‘Strong’ on this task you need: 1. Familiarity with the unseen • Business aim 4 (page 15) ‘To deliver growth through the development of new market opportunities’.

• The five-year business plan (appendix 7). What is the planned new number of franchise stores in 2016, planned revenue growth, planned profit margin growth?

• What is the current ROCE that Rio is achieving? (From your analysis of the accounts in Appendix 4).

• The Franchise model employed currently for the Asia growth (page 7).

• Who is Ralf?

2. Ability to analyse the unseen • Can you identify the task (here it’s a single but each section on the day will have more than one task of course).

• Recognise that the franchise model suggested is very different to the pre seen model. A new different risk profile emerges.

• Think upside as well as downside risks.

3. Have the technical capabilities needed • Basic risk mapping knowledge.

• Understanding loans to the franchisees are assets not liabilities from Rio’s perspective.

• Recognise the credit risk.

• Basic risks of franchises.

• Use of expected values.

• Currency risk – strengthening implication of the USD. 4. Write in a professional, flowing and appropriate manner • Your communication needs to appropriate, check your audience. Are you getting the tone appropriate?

• How much depth is needed and how technical should you be?

• Be wary of making generic points.

You answer must be relevant to Rio. • Use examples throughout to explain and illustrate your points.

Probably the most important skill on the day to master is to answer the tasks set with sufficient application to the company concerned. If you address the tasks in hand you will pass as a good answer will automatically cover the competencies.

Remember, a good answer is not necessarily a long answer. Quality is key and planning leads to quality. If you would like to see my suggested answer to this trigger and task please email me: Clare.Finch@htftpartnership.co.uk PQ • Clare Finch is a partner in HTFT Partnership and P3 tutor on the HTFT SICS team. HTFT’s Strategic case team is led by the experienced and award-winning tutor Jenny Hughes. Jenny was PQ Lecturer of the Year in 2010 PQ Magazine March 2015

student society PQ

SIG: AAT STUDENTS ARE GO! The AAT Distance Learning Group on Facebook has changed its name to the AAT Students Independent Group and has big plans ahead for 2016

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he AAT Distance Learning Facebook Group has a new name – it has gone all ‘independent’. PQ magazine spoke to one of the groups founders, Joanne Parry, who empathised the group continues to go from strength to strength, with their sights set on reaching 5,000 members by this summer.

The impressive membership, along with a 2015 PQ award, has all happened before the group’s third birthday – and to think they had just 100 members when they celebrated their first birthday!

The group has attracted a diverse range of AAT students and the new name represents just how the group has evolved. Parry felt it was the right time to change the name for two main reasons.

She said AAT Students Independent Group better reflects that all students studying AAT use the group, not just distance learners as was originally intended. The other big reason is that Facebook doesn’t allow you to change the name of a group once it has reached

PQ Magazine March 2016

5,000 members. Parry added that the name shows it represents all AAT studiers but is independent of the AAT itself, training providers and colleges.

That is really key for her.

She said: “Our members are no longer just distance learners. We have been very keen to welcome members from classrooms and online, and students with or without training providers, along with representation from AAT staff members, training providers, career advisors and specialists in their field. Many of these very generously give their time to help the students and make the group the success it has become.”

She explained that as well as general

Prize guys: Joanna Parry at the PQ Awards 2015

discussions, the group also hosts live Q&As with specialist guests covering subjects from specific modules to selfemployment to course and event discounts. Most importantly of all, members have access to people who are ready and armed with answers 24/7.

Parry didn’t want to forget the fun side and “the usual banter among the jokers of the pack”.

So if you’re studying AAT find them on Facebook and join the growing group where students support students.

Perhaps the best endorsement for the group came from a student user who just said: “I am not bothered by the name change just as long as it is here!” And you have to love how someone else described it: “The helpful and sometimes crazy support group for AAT students”.

You would be crazy not to join! PQ

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PQ ATT winners list

THE ASSOCIATION OF TAXATION TECHNICIANS Awards The Association of Taxation Technicians, the oldest and largest body concerned solely with tax compliance, has announced the results of its examination taken by 1,018 candidates in November.

The Association reports that a high standard of performance was achieved by many candidates. Its President, Michael Steed, commenting upon the results, said: “It gives me great pleasure to congratulate the successful candidates from the November sitting of our exams.

“In total candidates sat 1,478 papers and 1,077 passes were achieved with 78 distinctions awarded for exceptional performance.”

As a result 79 candidates have now completed the exam requirements for membership and a further 173 candidates have completed the exam requirements for membership by passing the two e-assessments since the last pass list was issued in July 2015.

The ATT’s modular system allows candidates to study at their own pace, whether they are working towards full membership by sitting the two compulsory and one optional paper together with its two e-assessments or simply wishing to obtain one or more Certificates of Competency in their specialist area.

Medals and Distinctions are awarded for each examination paper subject to the discretion of Council and the attainment of a satisfactory standard, regardless of whether the examination requirements for membership have

been met (with the exception of the Association Medal): • The Association Medal for the best overall performance taking three written papers at one sitting, including having passed both e-assessments in Professional Responsibilities & Ethics and Law: Amy Wallace (Deloitte LLP, Reading) • The Ivison Medal for the highest mark in the paper on Personal Taxation: Nora Markova (EY, London) • The Jennings Medal for the highest mark in the paper on Business Taxation & Accounting Principles: Rajandeep Singh Nandha (Blick Rothenberg LLP, London) • The Collingwood Medal for the highest mark in the paper on Business Compliance: Rebecca Claire Ellis (EY, London) • The Stary Medal for the highest mark in the paper on Corporate Taxation: Liam Nicholson (RSM, Stoke-on-Trent)

• The Kimmer Medal for the highest mark in the paper on Inheritance Tax, Trusts & Estates: Geoffrey Thomas Randall (Prince Evans Solicitors, London) • The Gravestock Medal for the highest mark in the paper on VAT: Colin French (Hart Parry Cyf, Bangor) • The Johnson Medal for the best overall performance when passing both the Professional Responsibilities & Ethics and Law e-assessments within a six month period: Rebecca Anne Elizabeth Ward (EY, Newcastle Upon Tyne) • The LexisNexis Prize for the highest total marks when taking three written papers at one sitting and obtaining the highest total marks on those three papers: Rebecca Claire Ellis (EY, London) • The President’s Medal is awarded at the discretion of the President to an outstanding candidate or candidates not otherwise eligible for a prize: Christopher Gaunt (Northampton)

Adam Palmer (Chepstow) Lewis Richardson (Wakefield) Terence Sivakumar (Westleton Drake, London) Kerri Thornton (Morgan Cameron, Witney) Amy Wallace (Deloitte LLP, Reading) Alice Whalley (London) Stephen Wright (Lubbock Fine, London)

James Groutage (London) Georgina Haynes (Cheltenham) Harpreet Kaur (Brebners, London) Aaron Mehta (Hounslow) Solomon Steven Muhumuza (Wolverhampton) Kristiana Newton (Deloitte LLP, Southampton) Liam Nicholson (RSM, Stoke-onTrent) Hannah Reason (Old Mill Accountancy LLP, Wells) Terence Sivakumar (Westleton Drake, London) Sophie Theodosiou (Mazars LLP, Milton Keynes) Matthew Tomlinson (RSM, Stokeon-Trent) Amy Wallace (Deloitte LLP, Reading)

Distinctions 1 – Personal Taxation Kerry Louise Annand (Edinburgh) Amy Louise Armitage (Edwin Coe LLP, London) Hannah Louise Bulley (Wokingham) Felicity Butler (Southfields) Rebecca Claire Ellis (EY LLP, London) Christopher Gaunt (Northampton) Rebecca Glass (Doynton) Angela Greenhough (Angela Greenhough Accountancy, Saltash) Natalie Hallett (Dorchester) Christopher William Harden (Grant Thornton UK LLP, London) Lucy Anne Howley (Duncan & Toplis Ltd, Melton Mowbray) Judah Blaise Daniel Lyons (Castleford) Penelope Mary MacDonald (Jeffrey Crawford & Co, Edinburgh) Jessica Charlotte Mander (Dickinsons Chartered Accountants, Rickmansworth) Nora Markova (EY LLP, London) Benjamin Stuart John Oliver (Field Seymour Parkes LLP, Reading) Reshma Patel (London) Vasiliki Peirounaki (EY LLP, London) Daniela Monica Radu (Park Lane Accountants, Chippenham) Lewis Richardson (Wakefield) 26

Pam Romanis (Addlestone) Jane Thomas (Salford) Amy Wallace (Deloitte LLP, Reading) Suzanne Elizabeth York (Kettering) Abbie Lorna Yule (Mazars LLP, London) Lei Zhang (Buzzacott LLP, London) 2 – Business Taxation & Accounting Principles Hannah Louise Bulley (Wokingham) David Kazimierz Paul Emery (Brebners, London) Christopher Gaunt (Northampton) Emma Charlotte Gilbert-Smith (SWAT UK Ltd, London) Sara Giralt Arres (Deloitte LLP, London) Fiona Kathryn Grange (Preston) Heather Griffin (EY, Reading) James Groutage (London) Susan Halsall (Northampton) Gareth Jones (Bicester) Katherine Malone (PwC, Cardiff) Jessica Charlotte Mander (Dickinsons Chartered Accountants, Rickmansworth) Jiten Mistry (Harrow) Rajandeep Singh Nandha (Blick Rothenberg LLP, London) Kristiana Newton (Deloitte LLP, Southampton)

3 – Business Compliance Darren David Alcock (EY, Newcastle Upon Tyne) Laura Bills (PwC, Aberdeen) Sinead Carvill (KPMG, Belfast) Rebecca Claire Ellis (EY LLP, London) Alison Greer (KPMG LLP, Glasgow) Christopher William Harden (Grant Thornton UK LLP, London) Rebecca Louise Hreben (EY LLP, London) Laura Hume (PwC, Edinburgh) Mandisa Libazi Ndebele (EY LLP, London) 4 – Corporate Taxation Sarah Marie Bloomfield (Grant Thornton UK LLP, Cardiff) Stefan Burgess (Ashford) David Clark (London) Christopher Gaunt (Northampton)

5 – IHT, Trusts & Estates Sarah Jane McBrearty (Alex Picot Ltd, St Helier, Jersey) Geoffrey Thomas Randall (Prince Evans Solicitors, London) Nicola Whyte (PwC, Newcastle Upon Tyne) 6 – VAT Colin French (Hart Parry Cyf, Bangor) Kishen Patel (EY, London) PQ Magazine March 2016

Two choices for tax!

dĂdž ŝƐ Ă ŵŝdžƚƵƌĞ ŽĨ ůĂǁ ĂĚŵŝŶŝƐƚƌĂƟ ŽŶ ĂŶĚ ĂĐĐŽƵŶƚĂŶĐLJ ĂŶĚ ŝƚ ĚƌĂǁƐ ŽŶ Ă ŚƵŐĞ ƌĂŶŐĞ ŽĨ ŝŶƚĞůůĞĐƚƵĂů ƉƌĞƐĞŶƚĂƟ ŽŶĂů ĂŶĚ ƉĞƌƐŽŶĂů ƐŬŝůůƐ ƚĂdž ƉƌŽĨĞƐƐŝŽŶĂů ǁŽƌŬƐ ǁŝƚŚ ĐŽŵƉĂŶŝĞƐ ĂŶĚ ŝŶĚŝǀŝĚƵĂůƐ ƉƌŽǀŝĚŝŶŐ ĐŽŵƉůŝĂŶĐĞ ĂŶĚ ĂĚǀŝĐĞ dŚĞ ĐŽŵƉůĞdž ĂŶĚ ĚŝǀĞƌƐĞ ŶĂƚƵƌĞ ŽĨ ƚĂdžĂƟ ŽŶ ŵĞĂŶƐ ƚŚĂƚ ƚĂdž ƉƌŽĨĞƐƐŝŽŶĂůƐ ƌĂƉŝĚůLJ ĚĞǀĞůŽƉ ĂƌĞĂƐ ŽĨ ƐƉĞĐŝĂůŝƐƚ ŬŶŽǁůĞĚŐĞ dŚĞ ĐŚŽŝĐĞ ŝƐ LJŽƵƌƐ &Žƌ ƚŚĞ dd ĞdžĂŵƐ LJŽƵ ĐĂŶ ƌĞŐŝƐƚĞƌ ƌŝŐŚƚ ĂǁĂLJ ďĞĐĂƵƐĞ ƚŚĞƌĞ ĂƌĞ ŶŽ ĞůŝŐŝďŝůŝƚLJ ƌĞƋƵŝƌĞŵĞŶƚƐ ǁǁǁ ĂƩ ŽƌŐ ƵŬ ƐƚƵĚĞŶƚƐ dŽ ďĞ ĞůŝŐŝďůĞ ƚŽ Ɛŝƚ ƚŚĞ d ĞdžĂŵƐ LJŽƵ ǁŝůů ŚĂǀĞ Ă ƉƌĞǀŝŽƵƐ ƉƌŽĨĞƐƐŝŽŶĂů ƋƵĂůŝĮ ĐĂƟ ŽŶ ǁǁǁ ƚĂdž ŽƌŐ ƵŬ d ƋƵĂůŝĮ ĐĂƟ ŽŶ

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PQ ICAEW spotlight

To BPT or not to BPT? The ICAEW is introducing two new papers this summer, covering banking and insurance. Martin Johnson explains all

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rom June, the ICAEW ACA qualification will offer students two alternatives to the current Business Planning: Taxation (BPT) paper.

The launch of the Business Planning: Banking (BPB) and Business Planning: Insurance (BPI) papers will provide the ACA with the greatest level of early-career sectoral specialisation of any UK accounting qualification.

Bringing back sexy It is not the hardest thing in the world to create an accountancy paper that is more exciting than a taxation paper. Even so, the ICAEW’s choice to offer specialisms in banking and insurance appears to be targeted at the ‘sexier’ end of the financial services market. Following the credit crunch there has, arguably, never been a greater need for qualified accountants possessing expert knowledge of the latest banking and insurance regulations.

The decision to target these specific markets rather than the many other sectors that could have been chosen (Business Planning: Farming or Business Planning: Manufacturing anyone?) is also probably part of a strategic ICAEW plan to appeal to a sector which (once fully recovered) will surely serve as one of the principal sources of industry demand for qualified accountants.

The option to study BPB and BPI will therefore be welcomed by ACA students: ICAEW has targeted markets that are set to grow, offering many job opportunities.

It will, however, take some time before employers and recruiters in these markets become fully aware of the way in which the ACA has become differentiated from the alternatives.

Different employers are likely to take different approaches, so we expect to see plenty of discussion within the student community once it becomes clearer whether employers will require specialised ACAs.

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Studying strategically BPT has traditionally enjoyed a fearsome reputation among students, regularly achieving the lowest pass rate of any ACA professional level paper. The syllabus is long, difficult and often not of much relevance to the student’s day-to-day work (unless they work in tax, of course!).

Based on our review of the sample papers now available on the ICAEW website, both BPI and BPB will be much more focused on audit, financial reporting and strategic analysis than the BPT paper (which is obviously exclusively about tax).

This is crucial for students to bear in mind because audit, financial reporting and strategic analysis are the bread and butter of both the Corporate Reporting and Strategic Business Management advanced level papers – whereas UK taxation is not tested in any form after BPT. Looking in particular at the strategic analysis questions in the BPB sample paper, one could almost be reading a Strategic Business Management question. The detailed review of IFRS rules on financial instruments in the BPB and BPI syllabuses will also be useful for the IAS39/IFRS13-style questions, which are a favoured area for the Corporate Reporting examiners.

Overall, if you have a free choice as to which paper to sit, and you also have no particular need for detailed tax planning knowledge, it may be worth considering whether you can study strategically by taking one of the new papers, thereby becoming familiar with question styles and technical content which, unlike BPT knowledge, can be ‘recycled’ in your next level of exams.

The guinea pigs No one likes to be among the first group of students to sit a new paper: the first set of BPB and BPI ‘guinea pigs’ will have no past papers to guide them as to

how to revise and answer the questions.

The relative lack of provision of BPB and BPI courses by tuition providers in 2016 is also likely to be a concern for students.

We would expect this to lead to some unusual pass rates for the first three sittings in 2016, but it will be interesting to see how these compare with BPT over the longer run – with potentially easier syllabus content and the advantage of greater potential to ‘recycle’ knowledge and techniques for subsequent papers, a noticeably higher pass rate for BPB and BPI could see many tax tutors out of a job! PQ • Martin Johnson is the founder of ACA Simplified

PQ Magazine March 2016

careers PQ

I

f you are starting to get itchy feet or feeling a little less motivated when Monday mornings come around it can be difficult to decide whether it’s time to act on those feelings and see if the grass is greener elsewhere. How do you know whether you would be happier if you changed jobs, or whether you’d be better off staying put? Here are five things to consider…

Challenge If you look back over the past couple of years and you are still in the same routine producing the same work, it is probably time to consider your options. You may like the routine and consistency of the job, but that can turn to boredom.

At this point your enthusiasm for your role is likely to wane, and this can ultimately affect your performance, too. Finding opportunities to develop your skills and expertise in your current role or taking on more responsibility elsewhere in your organisation will ensure that you are challenged. Start to consider an external career move if these opportunities are not available to you where you are.

Performance Sometimes a poor performance review, or feeling downbeat on your own accomplishments, can spur you to look to move jobs.

If you are in this situation you should try to remove the emotion from the situation and consider whether you can improve your performance in your current role. Of course, this may not always be possible, so if you do decide to move look for an environment where you feel you will be able to thrive.

Promotion Is there scope to progress in your current organisation? You told us in the Hays Salary & Recruiting Trends 2016 report that career development is most important to you (36%) when considering a new role, so this is something you should think about carefully as you move along in your career. You also told us (99%) that you feel you have the skills to fulfill your current role, but that nearly half of you (46%) don’t feel that there is scope for progression in your current job.

This is where your career plan comes into place. Think about where you want to be in the long term or even just where you want your next but one job to be, and if there is a way that you can take a step towards that in your current organisation. If you can’t see a way to move upwards, then it might be time to move elsewhere.

PQ Magazine March 2016

SHOULD I STAY OR

SHOULD I GO?

Karen Young discusses how can decide whether to stay or to move on to a new job Team Sometimes a change in team, or team dynamic, can influence your decision to stay or go. A new boss, new colleagues or a restructure can change the dynamic of the team and environment that you had known. In this instance, consider whether this will settle down or if permanent changes are under way. Staying in a job where there are extreme conflicts can be stressful and demoralising. Don’t let things get this bad before you decide to make a move – it will impact your confidence and your ability to secure another role.

Reward If you are enjoying your role but feel you are underpaid – over half of PQs (55%) told us they weren’t satisfied with their salary – arm yourself with knowledge of the market.

Benchmark your salary with the Hays UK Salary & Recruiting Trends 2016 report. The online tool lets you compare your salary with your peers and prepare for a conversation

with your boss about your next step.

Always try to address this first before deciding to look at the external job market as you will then know for sure where you stand.

Remain professional and put a business case together if necessary and your boss will respect your professionalism for bringing this to their attention even if they can’t offer you immediate results.

Don’t discount other benefits they might be able to consider such as a performance related bonus, flexible or home working or further support for training and development that could improve your current role as well as future prospects.

If you are unsuccessful in your requests for increased pay, benefits and cannot see room to develop, it may be time to look elsewhere to continue your career journey. PQ • Karen Young, Director, Hays Accountancy and Finance About Hays UK Salary and Recruiting Trends 2016 Data compiled using data gathered during 2015 from Hays offices across the UK, based on job listings, job offers and candidate registrations. Survey responses from over 20,000 employers and employees from organisations of all sizes throughout the UK. Go to www.salaryguide.hays.co.uk

29

careers PQ

YOUR CAREER PROBLEMS SOLVED – THANKS TO

Q

Blocked for promotion? Talk to the boss, says Walker Dendle’s Jordan Dodds

I have worked at the same firm for two years as a PQ and I am half way through my exams. I started life as an AAT then moved to ACCA. Recently a part qualified ACCA was appointed above me and now seems to be blocking any chance of promotion. I’m a bit miffed. They don’t seem to be that work-savvy, although they are more examqualified than me. Should I hang around and see if the new PQ stays or should I start looking for pastures new? I do believe I could change, but also feel the pressure of exams and a new job might be too much to handle. This is my first proper job, so I still feel loyalty to everyone here.

J

ordan says: I understand the position you find yourself in, having seen a couple of candidates in similar scenarios. First, I would strongly recommend you air these concerns to your manager. It’s not a bad thing to be ambitious and see yourself progressing within the company, so be honest in your (confidential) conversation with your line manager. A new person coming in should not be a block to your development, and it may be there was a specific business requirement for someone with a certain level of qualification.

If it becomes apparent that you aren’t going to be able to progress as you wish you need to do what is right for the development of your career, and it might be best to move on.

Don’t forget, a new company should fully support your transition into the business, and will do everything they can to ensure you pass upcoming exams at the first attempt. Candidates I have recently placed have suggested their transition into the new role was smooth and that no disruption to their studies took place.

I’m confident that if you do make the decision to move on you shouldn’t find it too difficult to adjust to pastures new!

• Got a problem at work, or worried about your career path? Contact PQ magazine with your ‘issues’ – email graham@pqmagazine.co.uk 30

Life at Acuity stockbrokers Samalka Athuraliya, 24, a senior associate based in Colombo, Sri Lanka. She got CIMA qualified in just two years, having switched from equity research to investment banking.

Her claim to fame is that she recently became CIMA’s 100,000 member!

What time does your alarm clock go off? I try to wake up as early as possible to get a few hours of work done in preparation for my CFA exam in June. I also swim or go for a run.

What’s the first thing you do when you get to your desk?

Read the news. It’s important to stay on the ball.

What’s on your desk? Just my laptop and my notepad.

What’s the best thing about where you work? The location, in the heart of Colombo.

Where’s your favourite place to go for lunch? I usually take a snack from home.

What (or who) can you see when you sit at your desk? My boss!

Which websites are your

favourites and why? News websites and YouTube.

Which websites do you use for work? No specific ones, but the internet is crucial for my work.

How many hours a week do you spend in meetings? It ranges from a couple of hours a week to perhaps 5-6 hours during a busy week.

What time do you leave the office? I leave as soon as the tasks for the day are done.

How do you relax? With a good book or movie. I also help underprivileged people by volunteering at various events.

What’s your favourite tipple?

Gin and tonic.

How often do you take work home? I try not to take work home but do occasionally.

What is your favourite TV show? Game of Thrones and Grey’s Anatomy.

Summer or winter? Living in the tropics I’ve never had to work in winter but I doubt I’d enjoy it.

Pub or club? I like unwinding midweek at a pub and the end-ofthe-week celebration at a club!

Who is your hero? My mother – the strongest and most talented woman I know.

If you had a time machine, where would you go? Back to when I spent the holidays with my extended family. Nothing beats a laugh with the cousins and story time with the grandparents.

If you hadn’t chosen accountancy, where might you be? A social worker.

company’s rules and his employer had the right to check on his activities.

because they are not happy with the manual, repetitive work.

BlackLine’s CSO, Mario Spanicciati said: “RTI is a growing concern for accounting. The next generation of accountants are digital natives with advanced technology at their fingertips. In order to retain staff and entice the next generation into the profession, finance departments need to move away from outdated manual processes.”

In brief Can they read that?

European judges have ruled that employers can read workers’ private messages sent via chat software and webmail accounts during working hours. The European Court of Human Rights said that a firm that read its employee’s Yahoo Messenger chats sent while at work was within its rights to do so. The judges explained that the employee had breached the

Suffering with RTI UK accountants appear to be suffering from Repetitive Task Injury (RTI) as finance departments fail to automate repetitive tasks. A survey by BlackLine found that nearly twothirds (64%) admitted that accountants often leave jobs

The PQ Book Club: books you should read Work it Out With a Pencil: Outrageous Tales from Twenty Years as an Accountant by Timothy Timpkins (Xlibris, £13.99) Author Timothy Timpkins, for more than 20 years a management and project accountant, proves himself a natural story-teller and raconteur in this funny and surprisingly moving book.

The opening chapter is possibly the weakest; it sets the scene but the comedy is gentle (at best). But once Timpkins hits his straps the stories comes thick and fast, with some laughout-loud, and even occasionally shocking anecdotes. An example: in one of the earlier chapters, our hero is being interviewed for a position he

very much wants. All is going swimmingly until he is taken aback by a request from the interview panel to “tell us a joke”. Not being burdened with a huge repertoire, the author comes out with a gag that is involves a husband, wife, dog and fishing trip that is far too filthy to be repeated here (with the emphasis on gag).

Timpkins’ memoire (which is more concerned about the personal and the social than the nitty-gritty of accountancy) is a candid affair. Boys will be boys, and numerous nights on the town with colleagues are described in lurid detail, with no punches pulled. These boys cannot be described as politically correct.

The main narrative of this work traces the author’s career

path, and it is interesting to note how one role led to another, and then another. And while there are plenty of laughs to be had, this autobiographical book is laced with sadness and poignancy too.

It embraces whistle-blowing, infidelity, divorce and mental illhealth; the author writes movingly of his heartbreak when his wife leaves him for a colleague at her workplace.

Timkins has now quit accountancy; it seems he has, despite this book having some rough edges, a promising career as a writer ahead of him.

PQ rating 4/5 A great read for accountants and nonaccountants alike, funny and moving in equal measure PQ Magazine March 2016

staying one step ahead Management Accountant

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PQ jobs pqjobs.co.uk

ARE YOU HAPPY WITH YOUR SALARY? If you’re one of the 55% of part-qualified finance professionals who aren’t, check out the Hays UK Salary & Recruiting Trends 2016 report.

With responses from more than 20,000 employers and employees, this is the most comprehensive review of pay, benefits and market conditions across the UK, including: • Salary data across a range of finance professions and locations • Personalised salary comparison tool specific to your role and location • Detailed market insights • Expert opinion from respected UK institutes and professional bodies • Personalised job search To find out more and discover what will satisfy you, visit salaryguide.hays.co.uk

salaryguide.hays.co.uk © Copyright Hays Specialist Recruitment Limited 2016. HAYS, the Corporate and Sector H devices, Recruiting experts worldwide, the HAYS Recruiting experts worldwide logo and Powering the World of Work are trade marks of Hays plc. The Corporate and Sector H devices are original designs protected by registration in many countries. All rights are reserved. NQ-14670

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PQ got a story, funny or serious, you want to share? Email graham@pqaccountant.com

PQ MAGAZINE HAS THE TOP QUIZ

Our annual bumper quiz always goes down well with readers.

Perhaps it was the fact that they could win a Beats Pill speaker that helped this year. Well done to our three winners: Izabela Kaczynska from Warwickshire; Simon Parker, Preston; and Lisa Robertson, Croydon. They are now the proud owners of a new speaker in PQ red! Our quiz was so good this year one reader even asked to use it for their local pub quiz!

EARLY START Last year we introduced you to Caitlin, probably our youngest reader, who was pictured engrossed in her PQ magazine

DAVID JONES ‘THE

A DUTCH SANDWICH PLEASE

If you want to know how a ‘Dutch sandwich’ works then you need to watch The Town That Took on the Taxman on ‘catchup’ TV. The programme follows a group of small businesses from Crickhowell as they try to get the same corporate tax benefits as those offshore companies such as Google and Amazon. They decide to go offshore in the Isle of Man and use intellectual property rights as a way to avoid any tax. This is where Holland comes in, as the country has no withholding taxes. We discover nearly 15,000 companies have set up subsidiaries in Holland just for this reason. Well worth a look.

rather than The Gruffalo! Her mum and dad (David and Julia Airey) are both CIMAs, for their sins. Caitlin has a brother now, Dominic, who also seems to love the office life! He was recently taken to work to help make some big decisions at Apatech in Elstree, Herts.

We have a picture of him advising Julia’s colleague Anatilde. We note that like his father he chews his pen to aid his concentration!

OH YES THEY ARE…

Over 200 PwC staff are taking bean counting more literally for one week only as they take to the boards in Jack and the Beanstalk, the firm’s 30th annual charity panto production. The sell-out

’ WEV E Memory stick

ACCOUNTANT’

One story told after the sad news of David Bowie’s death was a trip he made to his childhood home in Brixton in 1991. He reportedly told guitarist Eric Schermerhorn: “It’s a miracle, I probably should have been an accountant. I don’t know how this all happened.” We are just glad it did! There seems to be a theme developing here – south London rapper Tinie Tempah revealed recently that he too dreamed of being an accountant.

production runs for eight days at London’s Peacock Theatre before upping sticks to Birmingham. Some 8,000 children, many from inner city schools, will get to see this year’s show. More than 130,000 children have seen PwC pantos during its three-decade run.

GOT THE L OT

Our stock of ‘I Love Tax’ t-shirts has gone, and we only have a few ‘I Love PQ’ mugs hanging around! But what we do have for you is a PQ magazine memory stick. Our stick has 2GB of memory and each one comes with its own lanyard so you can never lose it. We are giving away five sticks this month.

To be in with a chance of being sent this great giveaway send your name and address to graham@pqaccountant.com. Head up your email ‘PQ Memory Stick’.

Just be mindful

Feeling exam nerves? Well, we have a way of reducing all that stress with a wonderful ‘Colour Yourself to Calmness’ book from award-winning artist Sue Coccia.

We have three copies of this stress-reducing animal motifs colouring book in this great giveaway.

Email graham@pqaccountant.com along with your name and address. Head up your email ‘Colour in calm’.

Terms and conditions: One entry per giveaway please. You must send your name and address to be entered for the draw. All giveaway entries must be received by Friday 11 March. The main draw will take place on Monday 14 March 2016.

TO ENTER THESE GIVEAWAYS EMAIL GRAHAM@PQACCOUNTANT.COM 34

PQ Magazine March 2016

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