PQ magazine AIA’s ‘ACCOUNTANCY MEDIA OF THE YEAR 2015’
www.pqmagazine.co.uk / www.pqjobs.co.uk
December 2015
INSIDE THIS ISSUE
LECTURERS’ CONFERENCE
PQ magazine attended this year’s CIMA event on your behalf. So what are the examiners saying?
AWARDS MATTER
HOT ACCA EXAM TIPS
We’ve just won one – and it could be your turn next
Advice and guidance from the UK’s top tutors for the upcoming exams
SPECIAL RELATIONSHIP MOVES TO NEXT LEVEL PQ magazine
EXCLUSIVE After more than three years of ‘courting’, CIMA and the AICPA have announced they are ready to take their relationship to the next stage! The two bodies started their joint venture way back in 2012, and when they came together the pair promised to keep things under constant review. It would seem that both parties are still talking and now want to take the partnership further. In an exclusive interview with PQ magazine, CIMA’s MD Andrew Harding explained that in order to take this next step with the American Institute of CPAs it is proposing the creation of a new association. Together, that means an association representing 600,000
current and next-generation professionals, creating what Harding believes will be a hugely influential, truly global body of professional accountants. Some 150,000 CIMA and AICPA members have already taken up the option to become Chartered
Global Management Accountant’s (CGMA). Harding stressed that CIMA members and students would continue to be served by CIMA. What is being integrated are the organisations’ strategies, management and operations, but
both will continue to operate as separate membership bodies. He felt students will be one of the main beneficiaries of the move, with better opportunities for employment and career prospects. Harding revealed that CIMA’s global reach was already seen a big attraction for students – some one in five new recruits mention the institute’s global influence as the key reason for choosing to study with CIMA. Members of both CIMA and the AICPA are now being asked to endorse this new commitment in 2016. Harding said that CIMA members were keen to keep hold of their royal charter, council set-up and mission, and have a strong affinity to their own brand. So any suggestion that this was a step on the road to a full merger was wide of the mark. There are no plans for further integration after this – so they will live together, but aren’t going to change their names!
TIME FOR AN ACCA STUDENT COUNCIL
Do ACCA PQs need a student council to represent the views of all students? That is just one suggestion coming from the fall-out over the announcement that the ACCA will no longer be publishing the exam papers and examiners’ answers after each sitting. Some students feel they haven’t been properly consulted about the move and liked the idea of a more formal arrangement for feedback, such as a student committee. However, the ACCA does work hard to engage with students through its active learning
community. It also has Learning Community Champions, who advise it on the best ways of improving the learning community. The ACCA has upped its game considerably in recent years to become more engaged with its PQs, but the news that the paper Q&As were no longer being published after each sitting just didn’t seem to filter through to students. When PQ magazine announced the change students asked: “When is this happening?” We had to tell them it already had! Students really don’t like the move. With exam
practice such a major factor in preparing for the real thing students just could not get their heads around the fact that they were no longer available. As one ACCA said: “As good as some books are, there’s no substitute for completing exam questions against the clock.” Students also want to go over the actual test they have sat, not an amalgamation of questions from the last two sittings. “That will mean nothing to me and the experience I went through,” a disgruntled PQ pointed out.
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CONTENTS
News 08CIMA OT change Institute set to introduce scaled scores 10ICAEW professional level Pass rates hold up well 12ACCA exams All the results from the first September sitting Features, etc 06Mind your Ps&Qs A heartfelt plea to the ACCA; trouble with getting qualified; and the very best of social media 14AAT case study Meet an English international cricketer who is studying with the AAT
16PQ Awards 2016 Stand out
from the crowd – win a PQ award! Best enter then‌ 18CIMA F1 Top advice on how to best approach this tricky paper
20ACCA exam tips The best tips from the best tutors just for you
22ACCA P2 This is the core ACCA paper, says Clare Finch. So how do you tame the beast?
23ICAEW spotlight Tackling scenario-based questions
24CIMA pre-seen We take you
by the hand and lead you through the Strategic level case
December 2015 28Let’s get technical Chattels,
and calculating capital gains tax 29CIPFA Student Network Meet new president Katie Goodall 30ACCA exam feedback What the examiners want from you 31Careers #1 Prepare now for your new job in 2016 32Careers #2 Life in the NHS; another PQ career ‘issue’ dealt with; and our Book Club 38Fun time A PQ marathon man; the kangaroo kid; Abbey Road adventures; and great giveaways The columnists Robert Bruce The long and the short of annual reports 8 Prem Sikka Can the big firms keep their audit monopoly? 10 Carl Lygo The devastating impact of the fall in oil prices 12 Subscribe to PQ magazine It’s FREE – see page 35 or go to www.pqmagazine.co.uk ABC July 2014–June 2015
32,233
25CIMA conference All the
action from the recent CIMA Lecturers’ Conference – and there’s more on page 26
27AAT focus How membership can help boost your career
Publisher’s statement: We have a digital issue of the magazine which is sent to 8,248 requested readers
Another winning month It has been a great month for PQ magazine. We won a major award and were acknowledged for helping another major accountancy body listen to what their PQs want. First up, PQ magazine won the ‘Accountancy Media of the Year Award 2015’ (see photo!), courtesy of the AIA in the wonderful surroundings of BAFTA. That’s two years in a row PQ magazine has picked up glassware! Thanks for everyone who voted for us. We also got a big shout out from Dr Noel Tagoe at the CIMA 2015 Lecturers’ Conference. The Executive Director of Education went out of his way to thank us for helping CIMA ‘listen’ to its students. We pushed for the institute to look at claims that the CBAs were failing good students. PQ has also been asking CIMA to let students use their calculators in the assessment centres. It may seem a small thing to some, but we understood how important it was. CIMA saw sense in both cases. OK, we didn’t get our way on percentages, but we are happy students will now receive their scaled scores. The controversy over the ACCA’s withdrawal of exam paper Q&As is still rumbling on this month. Some PQs are really hoping the ACCA will have a change of heart. It has given rise to a debate on how students engender real change and influence policy in their body. Unlike members, students appear to have little to no power, despite their annual subscriptions and fees adding millions to the coffers of their bodies. Without them and their money some of the bodies wouldn’t be able to function in the same way. Remember that the ACCA, for example, has over 400,000 students. How does it, and any of the others for that matter, ensure it is doing right by their fee-paying students? It has been suggested that it is now time for proper student representation. We have asked all the bodies how they engage with their students and you will be able to see what they say in next month’s PQ magazine. Bet you can’t wait. Graham Hambly, PQ magazine editor – graham@pqaccountant.com
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PQ have your say
email graham@pqaccountant.com My plea to the ACCA
questions that you could see in the real exam. Er… we can’t do that because the ACCA doesn’t release them any more. It is already difficult enough for students to trace back to where they went wrong – after spending so much money on an exam where you get no feedback and now not even the exam paper. I know we are supposed to be moving to computer-based exams next year, but isn’t that next year? We are still sitting the same papers, just more frequently. Why, then, am I and my fellow students paying for a system that isn’t even here yet? I
I really think the ACCA needs to rethink its new policy of not publishing exam questions and answers after each exam sitting (PQ, November 2015). At the very least it will need to tell examiners to change their advice to us all! I have just looked at the ACCA P2 study guide and it tells us to scan the most recent past exam paper, as this provides students with a clear picture of how P2 will be assessed and how the exam is structured, as well as the likely style and range of
can understand, sort of, why we can’t see the CBAs, but as the PQ editor said in his commentary last month we are only talking of 16 section B questions a year in most cases. I was also wondering if the examiners had perhaps said they didn’t want to/have the time to do four answers a year. If that was the case, couldn’t the ACCA have just paid someone to provide the answers? Please, ACCA, give us back our wonderful free resource. Name and address supplied The editor says: Over to you, ACCA
The writer of the star letter each month wins a fantastic ‘I § PQ’ mug!
Hot & Tweet
I just can’t pass
I am writing to express my dissatisfaction with my ACCA results – is there is anyone who can help? I have done everything in the book to pass my exams. I took three weeks out of my holidays as always, practised more past papers than before, yet nothing seems to work for me. I have two papers left, but it feels like I am stuck at a crossroads and don’t know where to turn. My marks for P7 and P5 have been 46% and 44%, and 44% and 30%. In my last exam I sat just P7 and received 46%. Does anyone have any constructive advice that will help me? A worried student, by email
Thank you PQ!
I am a PQ working in budgetary control for a local NHS Trust and recently won some e-books from EW Publishing through PQ magazine. Thank you all for that. The magazine is so user-friendly and informative. All the articles are digestible. Since I study P2 I track Martin Jones’ articles on IAS and IFRSs. I’ve got three exams to go – P2, P6 and P7. Keep up the good work. Patrick Gallagher, by email The editor says: Thanks for that, Patrick. Just to give you and other readers the heads up, we have a piece from Martin in the next issue.
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LinkedIn was red hot over the ACCA’s move to no longer publish the full exam papers and answers after each sitting. Worryingly, quite a few students “hadn’t heard about this”. Most saw the Q&As as an invaluable resource. One PQ felt that of all the things they do this must be one of the most simple to administer. Another said he thought the ACCA was trying to provide focus to help improve pass rates. Some PQs were also worried that the move would have a really big effect in developing countries where resources are scarce. Tutors who mark papers will also have access to the questions, giving them (and their students) an unfair advantage. Anything that creates a two-tier system is not good in the long run, said one top tutor.
We have been very busy tweeting away @PQmagazine. We got the ACCA September pass rates out there first (on 19 October) – thanks for all the retweets. One recent tweet that also got you going was: “Angry women lose the ability to influence people but angry men can increase their power of persuasion says research. That makes me angry.” No one knew whether they should get angry more or less often! We have been tweeting from a whole range of events this month. We were at the worldfamous Abbey Road Studios with the CIOT, the ICB’s bookkeepers’ summit and CIMA’s 2015 Lecturers’ Conference, and collecting our Accountancy Media of the Year award at BAFTA, courtesy of AIA. There is little doubt we get out and about more than any other accountancy magazine! 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 2015
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PQ news
ROBERT BRUCE The long and the short of annual reports It’s that time of year, when surveys of published accounts are produced and their findings dissected. The old chestnuts have been discussed once more. The length of annual reports is still growing, despite valiant efforts to cut stuff out rather than pile it in. Risk-averse lawyers are the main reason for clutter in reports; second to them come regulators. Not because they keep asking for more, but because preparers of accounts are terrified of ditching something and then getting a dressing-down from the regulators for having done so. Not that some of this is not richly deserved. A report from the Financial Reporting Review Panel lambasts companies anonymously (shame!) for putting in “accounting policies for items or transactions that were immaterial, no longer relevant or nonexistent”. Quite hard, that last one. They had a go at companies that had put in “accounting policies for hedges that the companies did not enter into” then criticised firms that included the “translation of subsidiaries in foreign currency where none existed”. It is no wonder that some investors have said that they really understand little of the highly technical stuff that financial sector companies tend to stuff their massive annual reports with. Their suggestion was that firms could happily print this stuff, but only if they also provided one paragraph up front that explained precisely what it was all about. We are, sadly, back to the old cliché of someone apologising for writing such a long letter because they had not had the time to write a short one. n Robert Bruce is an award-winning writer on accountancy for The Times
CIMA INTRODUCES OT SCALED SCORES
CIMA has introduced scaled scores into all its exam results, director of examinations Steve Flatman told the recent Lecturers’ Conference. From 1 November 2015, OT results included a grade of pass or fail, sectional performance feedback and a scaled score. Flatman said the OT scores will range from 0 to 150, with a score of 100 and above represents a pass. For the case study it is a little more complicated. A scale score will also range from 0 to 150, but here a score of 80 and above represents a pass. However, all candidates also need to achieve one-third of available marks in each competency (excluding leadership
at operational level). The exams director felt that new research showed that there wasn’t too much time pressure in the exams. Overall, 3.7% of OT exams sat have more than one item unanswered due to time constraints (see page 25 for the percentages). Another big announcement was the change in calculator policy (see page 25). There is not going to be a ban on students taking their own ‘approved’ non-programmable calculators into the Pearson Vue assessment centres. At one time there was a worry that students would be forced to use the onscreen version. • See pages 25 and 26 for more news from the recent conference.
ICAEW delays introduction of computer-based exams The ICAEW has taken the sensible decision of delaying the introduction of the computer-based exams following the news that a rival is potentially acquiring its preferred supplier. The ICAEW had chosen learndirect as its partner, only to discover that Pearson Vue wants to now buy it. The Competition and Markets Authority are reviewing the proposed acquisition. ICAEW executive director Mark Protherough said: “Our priority is to maintain the rigour, structure and quality of the ACA qualification to ensure that our students continue to develop the skills needed to become ICAEW chartered accountants.” He promised the institute would keep students and training
Rise in students over-paying on student loans New figures from the Student Loans Company show there has been a 10% year-on-year rise in student loan over-repayments, leaving more than 70,000 borrowers out of pocket by on average £580. Figures obtained via a Freedom of Information request by accountancy firm RSM show that borrowers over-repaid more than £45.4m on income contingent repayment (ICR) student loans through their salary deductions in 2013-14 – a 10% rise over the £41.4m recorded in the previous year. RSM’s Lesley Fidler said: “It beggars belief that HMRC and the Student Loan Company can’t develop a more efficient system that takes the right amount of money at the right time from people wanting to repay their student loans.” Fidler felt for some people monthly loan deductions are a significant proportion of their income, and these overpayments could cause real financial hardship. The latest figures also show the problem is getting worse rather than better, she pointed out.
ACCA self-study guides
providers updated when “we know more”. Protherough also stressed that work on the computer-based exams’ delivery model will continue unabated.
A new suite of interactive self-study guides to help PQs through the ACCA qualification are now available via the ACCA’s website. The association has launched the guides for P1 to P7, completing the full range of self-study support from the Fundamentals Level through to Professional level. The guides follow other ACCA initiatives which include live web-chat events, Q&A sessions on Facebook and practice tests for F1 to F4.
In brief Stressed out It seems accountants are more vulnerable to emotional problems than any other profession. A study by AXA PPP Healthcare found a third of accountants had suffered from a mental illness. A sixth of chartered accountants have taken time off because of stress and half said they felt they were not supported to manage their workload, with many feeling isolated. 8
Goodbye Baker Tilly Baker Tilly is no more, and from the end of October staff at the UK firm became part of one name and one brand – RSM. It has been acknowledged that the change will be full of emotion, and as part of the relaunch RSM has announced its new brand position – ‘The Power of Being Understood’. The rebrand coincided with RSM World Day 2015, which is an annual
celebration. The new website can be found at www.rsmuk.com.
collaboration between both companies earlier this year.
New shared services body CIMA and The Hackett Group have joined forces to create a new global professional body – the Association of Certified Global Business Services Professionals. Together they have also announced a first-ever formal career development programme for the global business services and shared services sector. This follows the announcement of a strategic
CIPFA and PIPFA sign MoU CIPFA and the Pakistan Institute of Public Finance Accountants (PIPFA) have signed a memorandum of understanding (MoU) to help advance high-quality public financial management in Pakistan. The MoU creates a basis for collaboration between the two bodies, who will explore membership routes to give PIPFA members the chance to join CIPFA. PQ Magazine December 2015
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PQ news
PREM SIKKA What price an independent audit? After the Enron scandal auditors came under scrutiny for conflict of interests arising out of the provision of consultancy services to audit clients. The increased fees dependency exerts pressures to let the lying dogs sleep. It creates the perception that auditors are not sceptical enough and have compromised their independence. In the US, the Sarbanes-Oxley Act 2002 restricted the sale of some consultancy services to audit clients. The Big 4 mediated threats of further action by divesting their consultancy arms. Questions about conflict of interests also arose after the 2007-08 banking crash. Banning the sale of non-auditing services to audit clients was resisted with claims that these services were of lesser importance. It has all changed again. The firms have rebuilt their consultancy arms and are pursuing new business. They oppose a complete ban on the sale of consultancy to audit clients and claim that it does not impair auditor independence. Little evidence is provided to support such claims. Audit working papers would shed some light on auditor scepticism, but they are not publicly available. If the provision of other services does not impair auditor independence then there is no reason to restrict the delivery of audits to accountancy firms. Tesco, Marks & Spencer and others could employ accountants and enter the auditing market. The pursuit of consultancy income is likely to be accompanied by calls to end accountants’ monopoly of the external audit function. n Prem Sikka is professor of accountancy at the University of Essex
ACCA examiners report on first-ever September sitting
All ACCA P2 sitters have to look beyond their study texts and revision courses, says the examiner in the September report. A well-prepared student would have reviewed relevant websites, including those of the standard setters (IASB), the profession, and ACCA to maintain their knowledge and keep up-to-date with topical issues. One question normally focuses on a topical issue. The examiner stressed that the P2 exam requires candidates to display more than just rote knowledge of accounting standards, and it was emphasised that professional accountants need to be able to
advise clients with both the correct accounting treatment and also the reasons for this treatment. The P3 examiner ventured that time pressure in the exam is not caused by the paper itself but rather the result of the candidate’s unfocused response. Too many sitters provide lengthy explanations of theoretical models. Time could also be saved if PQs avoided quoting lengthy detail from the case study scenario. • For our take on the September Examiner’s Report go to page 30. Go to the PQ website for a breakdown of what subjects were covered in the September papers.
10
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Blooming in Bloomsbury
Double winner: PQ magazine’s reigning Distance Learning Student of the Year Esther Alum recently picked up another award from her own body – the AIA. The audit scholarship student was the star of the AIA awards held at BAFTA in London. She is now their Student of the Year
ACCA PQs in London have a new provider on the block, just around the corner from Holborn tube. From January 2016, Bloomsbury Accountancy is planning to offer part-time evenings classes in all 16 ACCA papers – that’s F1 to P7. Classes will run from 6.15pm to 8.45pm on Mondays to Fridays at Bloomsbury’s Southampton Place HQ. See page 17 for more on this.
Passing the professional test
The pass rates for the September ICAEW professional exams are in, and the Business Strategy paper sitters excelled themselves this time around with a 92% pass rate. Financial Management stood out, but only because it was the only paper that didn’t have a pass rate above 80% – it came in at 79.7%. In all, 3,440 students sat the
September 2015 session, with 6,548 papers being attempted. ICAEW PROFESSIONAL EXAM RESULTS Sep 15 Jun 15 Audit & Assurance 87.5% 82.0% FA & Reporting 83.2% 81.6% Tax Compliance 83.9% 81.7% Business Planning Tax 81.3% 78.9% Business Strategy 92.0% 91.8% Financial Management 79.7% 81.7%
Bookkeepers should have no fear
Wood: bookkeepers should move to fixed fees
JOB OF THE MONTH
Bookkeepers do not need to fear the rise of automation, claims Michael Wood, co-founder of Receipt Bank. He told a packed ICB Bookkeepers Summit that bookkeepers have the best relationship with their clients, and even when the software takes over some of the more menial tasks there will still be a need for an ‘administrator’ – and that will be the bookkeeper. He told the 700 delegates they need to move all their clients onto the cloud. Applications there are only going to get better and better. You also have to embrace automation and get yourself ahead of the curve. Wood had two other nuggets of advice – move to fixed fees and get closer to your client, so you understand what they need before they ask for it!
Some 79.2% of PQs who sat three papers passed them all. This compares with 75.3% of sitters who passed the one paper they attempted. There were 451 PQs who didn’t pass any of the papers they sat at this sitting. PwC students dominated the prizewinners list with top marks in three of the six papers.
Social mobility works for Grant Thornton
One in five of the 300 trainees taken on by Grant Thornton in 2015 would not have been considered prior to the firm dropping its academic barriers two years ago, according to CEO Sacha Romanovitch. Unveiling the firm’s results, she said Grant Thornton remained committed to the industry-wide social mobility initiative Access Accountancy. Revenue at the firm rose to £521m with profits before tax standing at £82m. That gave a distributable profit per partner of £398,00. PQ Magazine December 2015
PQ news
CARL LYGO Devastating impact of the falling price of oil The impact of lower oil prices on the world economy was brought home to me recently when launching a new initiative with the Malaysian Institute of Accountants. An austerity drive in Malaysia, brought about by oil price falls, has led to a freeze in the intake of public servants. The Malaysian Employers’ Federation (MEF) has expressed grave concern about the plight of graduates entering the jobs market; there are at least 200,000 who are unemployed and the number is expected to rise. The decision to freeze public servant openings means that 15,000 fewer students will leave university with a public sector job. Members of the MEF have also cut a further 10,000 graduate openings in the first half of 2015. A big initiative in the area is the development of the ASEAN Economic Region, which would result in free labour movement between ASEAN nations. This is seen as a major challenge and opportunity for local graduates. At the same time, the government in Malaysia estimates an additional 60,000 accountants are going to be needed for the local economy between now and 2020. Low levels of English language proficiency were said to be holding back many graduates and leading bodies such as the Malaysian Professional Accountancy Centres have responded by introducing English language courses to help graduates undertaking professional exams. While Malaysia rebalances its economy towards the private sector, it hopes for movement in world oil prices. n Professor Carl Lygo is chief executive of BPP
September sitting results are ‘mixed’ The first-ever September ACCA exams saw a mixed bag of pass rates, but it is way too soon to see any real trends developing. What is clear is that the P7 and F9 exam pass rates slumped in September to 29% and 35% respectively, when compared with the June stats (see table). Meanwhile, the P6 pass rate shot up by 11 percentage points and F7 by four percentage points. The pass rates of P1, P2 and P3 also dipped slightly, and students and tutors need to keep an eye on these pass rates over coming sittings. Overall, when compared with the summer exam sitting five paper pass rates went up, six went down, and one remained unchanged. Some 40,704 students across 15 countries took the opportunity to use
this new session, with many opting to sit just one paper. The ACCA had been forecasting for 30,000, so will be pleased with the take-up. ACCA’s new director of learning, Mary Bishop (pictured), said: “We are delighted with the response to
the first of our additional exam sittings. The number of candidates taking exams in September far exceeded our expectations, demonstrating there is a real demand from students and employers for our new exam sittings.”
‘Smart drugs do work’
Top cats: Institute of Legal Finance & Management award winners smile for the camera. They are, from left, Wendy Mayers, Marian Yates, Sally Siggers and Amie Lawrence
FRC acts on complaints PwC and one of its former accountants, Stephen Harrison, are to be investigated over their role in the auditing of social housing maintenance firm Connaught. The Financial Reporting Council has also issued a formal complaint against Stephen Hill, Connaught’s group FD, and David Wells, the deputy FD responsible for treasury management. The complaint is that their conduct fell significantly short of the standards reasonably to be expected of a member or member firm of the ICAEW. Hill and Wells have also allegedly breached the fundamental principles of integrity. Connaught 12
ACCA EXAM RESULTS SEPTEMBER 2015 – WORLDWIDE Sep 15 Jun 15 Dec 14 39% 37% 44% F5 Performance Management 47% 50% 43% F6 Taxation 44% 40% 43% F7 Financial Reporting F8 Audit & Assurance 42% 39% 45% F9 Financial Managem’t 35% 41% 40% 48% 49% 52% P1 Professional Accountant P2 Corporate Reporting 44% 48% 50% 45% 46% 48% P3 Business Analysis P4 Adv Financial Managem’t 36% 36% 33% 30% 28% 30% P5 Adv Performance Managem’t P6 Adv Taxation 45% 34% 38% 29% 40% 40% P7 Adv Audit & Assurance
went into administration in 2010 owing more than £200m to creditors. Meanwhile, PwC has settled a £1.6bn auditor negligence claim by subprime lender Cattles. The firm said PwC should not have signed off the 2006 and 2007 financial statements of the group. Final terms of the settlement have not been disclosed Steel closures: the repercussions Recent steel plant closures are a “crisis for the UK economy” that cannot be underestimated, says KPMG’s Stephen Cooper. He said that the metals sector is facing a bigger threat than in 2009 when the global financial meltdown sent shockwaves through the industry. News of up to 1,200 job
The drug Modafinil, which enables people to function with less sleep, also works as a ‘smart drug’, making the brain work better, say researchers. PQ magazine has highlighted the fact that Modafinil is already used off-prescription by students cramming for exams and by those working long hours. The study, by the University of Oxford and Harvard Medical School, found the drug helped non-sleep-deprived users to improve their decisionmaking and planning. With minimum side-effects, the study raises ethical question as to whether society wants people to be able to enhance their brain power with chemicals. Interestingly, Modafinil is approved in the US for shift-work sleep disorder as it helps reduce accidents. One expert said that there could be issues around the potential access to such drugs depending on individual wealth. cuts in Scunthorpe and Scotland followed the closure of the SSI steel site on Teesside (pictured) with the loss of 2,200 jobs. Simply the best EY’s school-leaver programme has been named best in the UK in the 2015 Rate My Apprenticeship (RMA) top employer ranking (up from ninth last time around). EY offers a five-year programme with a hands-on client experience and a starting salary of up to £21,500, plus the opportunity to study for two professional qualifications. Applications for the 2016 EY School Leaver programme are now open and school-leavers can apply online. PQ Magazine December 2015
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PQ profile
‘The more I study and progress,
the more I enjoy it’ Ajmal Shahzad was the first British-born Asian cricketer to play cricket for Yorkshire. Since then he has played Test, one day and T20 cricket for England. But he has another preoccupation – studying for his AAT exams Tell us a bit about your cricketing achievements. I’m lucky enough to have been a professional cricketer for the past 12 years, representing three county teams – Yorkshire, Nottinghamshire and currently Sussex CCC. I’ve also represented England in all three formats of the game and I was lucky enough to be part of a T20 World Cup winning squad in Barbados (in 2010), an Ashes winning squad in Australia 2010-2011, and to have participated in the 50-over World Cup competition that was held in India in 2011.
Howzat! Shazad in action for England
You had to choose between sport and study when you were younger. Cricket has been a huge part of life since the age of 17, when I turned professional and left my studies behind. But I have a passion for studying and studied pharmacology for a year at the University of Bradford prior to being selected to represent England. Your father is an accountant. How much influence has this had on you? Yes, my father is an accountant. After coming to this country and studying accountancy he worked for a business and soon after opened his own practice. This is what allowed me to not only receive the best education possible but to also participate in sports and not worry too much about the future. What prompted you to start studying accountancy? I recently turned 30 and as an experienced campaigner I know I’m coming towards the back end of my cricket career. At best I may have six or seven years. I had to start thinking about plans for the future. Where would my income come from? I’d be naive to think ‘all will be OK’. Hopefully, six years more cricket will give me time to plan and prepare for my future. My father came over from Pakistan and built his business from scratch, so it only feels right to be able to continue to take it forward. I also know this would make him immensely proud. His hard work allowed me to follow my dreams and play cricket without fear of failure, and I feel I owe it to him to study hard so he can enjoy his retirement years. 14
“
Playing professional cricket is a wonderful occupation, but if you don’t have a plan for your future then life can quickly become very difficult
We understand regular PQ contributor Philip Dunn also had an influence on you. Philip is a friend and keen Yorkshire cricket supporter, and I speak to him on a regular basis. After I’d explained how I felt about my years after cricket, he suggested that I should get back into studying and think about the accountancy courses the AAT offers to get me on the accountancy ladder. All I can say now is that I feel it’s the best decision I’ve made regarding my future. Where are you with your studies? How do you find time to study? I’m currently studying Level 2 AAT. I’ve completed all but one chapter of this course (I should have it completed by the time this article is published). I feel that to get where I want to be in accountancy I need to start here to grasp the basic principles that will give me a solid foundation to build on. The Kaplan Home Learning course has allowed me to study part-time in and among all my cricketing commitments, and sit my exams when I feel I’m ready. No pressure! I’ve found it immensely stimulating and refreshing. I also feel it’s brought an element of
freshness to my cricketing game. It allows me to switch off away from the game and concentrate on other goals. Passing assessments on the Level 2 AAT course, I feel I’m getting closer to my end goal and that motivates me even more. The more I study and progress, the more I seem to enjoy it! What does the future hold? Times have changed – 10 years ago studying anything other than cricket was seen as unnecessary energy expenditure! When I was coming through the cricketing system, school, college, university was seen as a waste of time. Cricket was everything. But as time has gone on, and the financial climate has changed, it seems we are getting paid less and everything costs more! Playing professional cricket is a wonderful occupation, but if you don’t have a plan for your future after cricket, then life can quickly become very difficult. A cricketer’s wage doesn’t come close to a professional footballer’s. For that reason, my peers in cricket not only appreciate and support what I’m doing, but are also proud of me. Likewise my family and friends. PQ PQ Magazine December 2015
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Find out why FI is the only college to have won PQ Magazine's College of the Year award three times in the past five years. *First Intuition is offering one free course to any student who has not previously studied with First Intuition. The course can be a classroom or online course for any core CIMA module (Case Study courses not included). This offer applies to 2015 courses booked with the Bristol, Cambridge and London centres.
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PQ Awards 2016
THE CATEGORIES • PQ of the Year • NQ of the Year • Distance Learning Student of the Year • Student Body of the Year • Training Manager/Workplace Mentor of the Year • Accountancy Team of the Year • Accountancy College of the Year – Public Sector • Accountancy College of the Year – Private Sector • Lecturer of the Year – Public Sector • Lecturer of the Year – Private Sector • Innovation in Accountancy • Study Resource of the Year • Accountancy Body of the Year • Accountancy Personality of the Year • Editor’s Special Award • Online College of the Year NEW • Best Use of Social Media NEW
Who will it be in 2016? Some top names have graced the PQ awards, including (clockwise from top) Paul ‘The Sinnerman’ Sinha, who hosted in 2015; Shaun ‘Barry from EastEnders’ Williamson; Stephen K ‘Find the Funny’ Amos; and Richard ‘Donkey’ Blackwood
Stand out from the crowd
Do you know someone who deserves one of our awards? Well get nominating then – perhaps it’s you!
D
o you have that ‘X factor’? Perhaps you are struggling to make your CV stand out from the hundreds of other CVs hitting employers’ inboxes? Well, one sure way to get to base camp would be to become the 2016 PQ of the Year! We also understand that sometimes you need to blow your own trumpet as no one else will, so we actively encourage you to nominate yourself! But, remember, there isn’t just one award up for grabs. How about nominating someone who really helped you get to where you are now – a lecturer, or maybe your mentor/training manager? All we need is 250 words, plus any supporting evidence, on why your nominee (or you) should be shortlisted for one of our
categories. You can download our application form directly from the website at www.pqmagazine.co.uk – just go to the ‘pq awards’ bar and click to download the form. Or email us your entry directly, making it clear which category you are nominating for. Once you have it all ready send it to awards@pqmagazine.com, or you can post your wise words to: The Editor, PQ magazine, 4th Floor, Central House, 142 Central Street, London EC1V 8AR. Deadline for nominations is Friday 18 December 2015. So come on all you PQs out there, we want to see you at the Café de Paris in February. Remember, if you get on our shortlist we will send you an invite to the best night out in accountancy. PQ
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16
PQ Magazine December 2015
Awards 2016 PQ
TIME TO INNOVATE We take a look at last year’s winner of the Innovation in Accountancy category – KPMG and BPP
I
nnovation in Accountancy is one of the more hotly contested categories at the PQ awards, and 2015 was no different. The winner was the ACA Intensive Programme launched by BPP and KPMG. We spoke to Sarah Mackey, who helps run the programme at BPP. She described the scheme as very different from anything out there at the moment in accountancy. It works a bit like a law course; students do three years at university, followed by a year’s postgraduate study, all before stepping into work full-time. The programme allows KPMG PQs to complete most of their ICAEW qualification within 10 months of joining the firm. After that students have just the case study to complete. A real innovation comes from replacing the ICAEW professional level with a graduate diploma in accounting (GDA), developed by BPP University. The diploma includes a bespoke ‘theory in practice’ module to help trainees bridge the gap between the classroom and the workplace, although these fast-track students do have two work placements in the business, in February and August. In the first year just 60 students went down this route. Last year that figure grew to 100 and
PQ Magazine December 2015
KPMG’s Michael Walby with ICAEW director of learning Mark Protherough and BPP’s MartinTaylor this year it will be 155. And these numbers could increase, suggested Mackey. The course fits in well with the changing resource demands at KPMG. It needs people to be upskilled quickly because of the changing nature of work – we are talking automation and shared services here. Students, too, love the fact that they can just focus on their exams. KPMG has created a USP with this innovative
programme, of that there is no doubt, and our judges agreed. What they really liked was how well the programme was supported by BPP tutors, who share their experience (they are all qualified chartered accountants) with the PQs. Each trainee is supported by a performance coach, who provides proactive support for both high performers and those that are struggling. It is hardly surprising that the pass rates are regularly 95%-plus. PQ
17
PQ CIMA F1 paper
A NUMBERS GAME taxation. They should demonstrate an understanding of the differences between tax avoidance and tax evasion. PQs will also be required to produce computations for corporate income tax as well as for capital tax and should ensure that they are able to do both.
• Pass rate: 73% • Technical difficulty: 8/10 • Weighting of calculations: 65% (approx) • Weighting of discursive elements: 45% (approx) • Exam technique: 9/10
The syllabus . The F1 exam builds on the knowledge acquired in Certificate level, in particular C02. F1 covers the regulation and preparation of financial statements. F1 will provide the competencies required to produce financial statements for individual entities and for groups using appropriate IFRS. This knowledge will be used as a basis for more complex adjustments and group structures as you go on to F2. In addition, F1 gives insight into how to effectively manage cash and working capital, with the final part of the syllabus focusing on the basic principles of business taxation and the application of these principles. The knowledge you gain in F1 will be developed further in F2 and F3 and as such you should ensure you have a good understanding of all of the areas of the syllabus before moving on. The syllabus is broken down into four areas: Regulatory environment for financial reporting and corporate governance (10%): This introduces students to the idea of regulations for financial reporting and requires students to explain and understand the need for regulation in financial reporting when dealing with incorporated entities. Students should be able to demonstrate an understanding of the roles and structures of key bodies such as the IFRS foundation, the IASB, the IFRS Advisory Council, the IFRS Interpretations Committee and the IOSCO. This area also incorporates the duties of the external auditor and the introduction of the audit report. Students will also need to have a good grasp of the key principles of corporate governance and the need for corporate governance regulation. They will be expected to understand the approaches to corporate governance in primary markets around the world, in particular the US and UK.
A
B
Financial accounting and reporting (45%): This part builds on your knowledge from C02 and will be used as a base to build upon when moving on to F2. An understanding of this area of the syllabus is fundamental to students when preparing for the F1 exam but also when preparing for the case study. Students will need to demonstrate a good understanding of and be able to generate appropriate accounting entries for each of the examinable adjustment IFRS/IAS such as: • IFRS 5 – Non-Current Assets Held for Sale and Discontinued Operations. • IAS 21 – The Effects of Changes in Foreign Exchange Rates. • IAS 12 – Income Tax. • IAS 19 – Employee Benefits. 18
Lee-Anne Shema explains how you can to pass the Financial Reporting and Taxation paper • • • • • • • •
IAS 16 – Property Plant and Equipment. IAS 23 – Borrowing Costs. IAS 38 – Intangible Assets. IAS 40 – Investment Property. IAS 20 – Government Grants. IAS 36 – Impairment of Assets. IAS 2 – Inventories. IAS 10 – Events After the Reporting Period. Students also need to be able to produce a set of consolidated statements in accordance with IFRS 10 and IAS 28. Although they will not be asked to produce a set of financial statements a working knowledge is required of producing single company and consolidated financial statements both for individual elements being tested in OT and in preparation for the case study.
C
Management of working capital, cash and sources of short-term finance (20%): F1 requires that students should be able to describe the sources of short-term finance available to an entity as well as opportunities for cash investment to be made when available. Students should also demonstrate an understanding of how to evaluate the working capital position of an entity with supporting calculations such as analysis of trade receivable days, trade payable days and inventory holding period ratios. It is likely that the calculation of these ratios will form part of the OT exam.
D
Fundamentals of business taxation (25%): This area covers taxation both in the theoretical and computational sense. Students need to be able to discuss the types of taxation that apply to an incorporated entity, including the main features of direct and indirect
Sitting the F1 exam . The F1 exam, as with all objective test exams, is a mixture of multiple choice, multiple response, drag-and-drop style questions and selecting from drop-down menus. Students will also be required to type in numerical answers. Before the exam: Practise as many questions as you can prior to the exam. Practise them under exam conditions, to time and without notes. Not only will this ensure that you have learnt and understood the syllabus and how different topics might be tested, it will give you the confidence to tackle the questions on the day. As with so many things in life, practise makes perfect! The OT questions are notorious for having one word in the question that will change your entire thought process, so you must prepare yourself for the way the questions will be asked. Revise the whole syllabus: All of the syllabus learning outcomes will be tested in the OT exam. It is therefore imperative that you study the whole syllabus and do not selectively learn. During the exam: Read the question first and read it carefully – there are a range of different types of questions and it is easy to assume that the question says something when it actually requires the opposite. For example, you may assume the question asks you to select the statements that are true when it actually asks you to select the statements that are false. Timing: You have 90 minutes to answer 60 questions, 1.5 minutes per question. Some questions will take a little longer but this should balance out with those that can be answered more quickly. However, it is important to make sure that you keep on track throughout the exam. Checking the clock to make sure that you have answered another batch of 10 in no more than 15 minutes is a way of doing this. Flag for review: The software enables you to ‘flag’ questions for review at a later stage. As you work through the questions and come across ones that you are not entirely sure about or perhaps you have lost your way in the calculations and are wasting too much time, flag them for review. You can then revisit these questions quickly and easily at the end. Particularly with calculation questions, try not to erase the workings you have done previously from your ‘whiteboard’ notepad so that you don’t have to waste time re-doing them later. Guess! There is no negative marking and so if you are unsure of the answer at least guess. A good way to do this with multi-choice questions is to eliminate any answers that you know are not correct and then make a choice from the remaining two or three that you do have. PQ • Lee-Anne Shema, F1 Content Specialist, Kaplan Financial PQ Magazine December 2015
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PQ ACCA exam tips
Here are our tips, courtesy of top tutors from across the land, for the December sitting of the ACCA exams LSBF.
F5 • Lifecycle costing with environmental accounting. • Relevant costing/decision trees. • Budgeting theory/flexed budgets. • Mix and yield/sales mix and quantity variances. • Divisional performance (ROI, RI). F6 • Q1: Capital gain tax question with shares including bonus/rights issue and chattel rules or maybe corporation tax with rollover and holdover relief. • Q2: VAT – deregistration due date, surcharges, accounting for VAT, the annual accounting scheme and contents of a VAT invoice. • Q3: Inheritance tax – including lifetime gifts into a trust, the diminution in value principle and the death estate. • Q4: Property business profits/ losses or maybe a sole trader, with adjustment of the trading profits and opening or closing year rules. • Q5: Income tax – computing income tax with employment income with car benefit, fuel benefit and accommodation benefit, interest income/dividend income. • Q6: Calculating corporation tax possibly including a straddling CAP or maybe a long period of account with capital allowances and possibly adjustment of a trading loss with loss relief and group relief. F7 • Expect one of the 15 markers to be on ratios and interpretations with (possibly) adjustments to be reflected before a valid comparison. • Expect the big 30-marker and the 15-marker to be on consolidations and published accounts with standards. F8 • Ethics, threats to independence. • Confidentiality, when to breach. • Audit risk and response, written scenario. • Internal controls objectives/ procedures/tests on sales cycle. • Inventory and stocktaking – controls and substantive tests. • Substantive tests on receivables. • Advise company on improving its governance. • Role/benefits of audit committees. • Roles of internal audit and comparison with external audit. • Know your ISAs, especially 210, 250, 260, 450, 560, 570, 720. 20
F9 • WACC, maybe with capital structure theory thrown in. • Investment appraisal NPV with working capital and tax, possibly also asset replacement. • Risk with forward market hedge and money market hedge and a bit of yield curves. • Working capital management with inventory and cash, overtrading. • Theory questions possibly on EMH, sources of finance (including Islamic finance), economics. P1 • Rules vs principles. • Importance of stakeholders. • Internal control disclosure. • Risk diversification. • AAA model. P2 • Q1: There are only three possibilities: p/l or b/s or cfs, so to ignore one seems foolish. However, given there was a p/l in September it does seem reasonable to focus less on that. Perhaps 20/40/40. • Q2 & 3: There are subtle differences between these two. But essentially both require a discussion of key FR applied to a scenario. Expect the usual suspects – goodwill, groups, NCA, revenue, HFS, EARP, FI and so on. • Q4: Only in the last question does tipping become meaningful. Here are some hot current issues: revenue, financial asset impairment, equity accounting, changes, SMEs. P3 • Strategic analysis. • Strategic choice and financial implications of a strategic choice. • Evaluating software and controls over IT. • Project management.
P4 • Investment appraisal using adjusted present values/net present values or capital rationing. • Valuation of business using free cash flows and price-earnings ratio methods, defensive tactics or cash offer or share exchange. • Cost of capital using principles of Modigliani & Miller prepositions or geared and ungeared betas. • Hedging exchange rate risk using forward contract, futures contract and options contract. • Capital reconstruction schemes – designing a capital reconstruction scheme or assessing the success of a given scheme. • Real options – option to abandon, expand or delay using the BlackSchole option pricing model. P5 • Balanced scorecard. • Non-financial indicators. • Assessing impact upon performance management systems. • Value management systems. • Technology and the change of PM systems. P6 • IHT with the death estate including BPR and APR and lifetime gifts into a trust and gifts with reservation. Domicile including deemed domicile. • Group question involving losses, group relief and consortium relief. • Transfer pricing, overseas branch vs overseas subsidiary. • Partnership with a partner joining/ leaving with opening year rules, choice of accounting date and conditions for a change of accounting date. • Personal pension schemes versus occupational pension schemes.
• SEIS, EIS and VCT conditions and tax advantages. • Capital gains tax including entrepreneurs’ relief, shares matching rules. • SEIS reinvestment relief. • Group registration for VAT and overseas aspects of VAT. • Purchase of own shares. • Share options schemes – tax implications. • Ethics. P7 • Audit risk/risk of material misstatement. • Matters and evidence (accounting issues and audit work on those issues). • Audit report scenarios/ implications. • Discussion of benefits of new style audit report. • Assurance on prospective financial Info. • If sitting International stream, audit of public sector performance information. • Threats to independence. • Advertising. • Reliance on work of internal audit. • Know your ISAs, especially more interesting ones such as 250, 402, 540, 550, 560, 600, 720. • If sitting UK Stream, insolvency.
First Intuition.
F5 • Lifecycle costing. • Environmental accounting. • Limiting factors. • Relevant costing. • Flexed budget and budgeting discussion. • Divisional performance. • Mix and yield variances. F6 • Employment/self-employment. • PAYE. • Opening years and change of year-end for sole traders. • Capital allowances. • VAT default surcharge and VAT invoice content and annual accounting. • CGT: Entrepreneur’s relief, chattels. • IHT lifetime and death transfers. F7 • Extracts from single company accounts, including non-current assets, taxation and IFRS 15. • Interpretation of accounts including a statement of cash flows. • Consolidated SFP and/or SPL with associate, PUP and fair value adjustments. F8 • Ethics. • Audit risk and auditor response (including ratio calculations). • Internal control – deficiencies, PQ Magazine December 2015
ACCA exam tips PQ implications and recommendations (revenue and receivables or payroll cycle). • Audit evidence and substantive testing. • Subsequent events, written representations and going concern. • Modified auditors 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, single v. two-tier board structures, also corporate social responsibility. • Optional questions to include internal controls, governance committees and directors’ remuneration, business risks, integrated reporting and environmental reporting. P2 • Q1: group question on foreign subsidiary. Will contain a variety of non-group topics, too. • Ethics. • Revenue recognition or leases – current issue. • Deferred tax • Share based payments. • Pensions. P3 • Environmental analysis, people with financial analysis. • Project management. • Strategic action. • Information technology – pricing strategy. P4 • International investment appraisal techniques focusing on risk management tools. • 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. • Transfer pricing. • Activity based principles. • Performance management models (performance pyramid or building block model). • Value based approaches to performance management. • Effective use of information PQ Magazine December 2015
systems. 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.
The full unexpurgated guidance from BPP for this December’s sitting can be found in the PQ magazine study zone on our website. Here are some highlights 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. F7 • Q1 & Q2: One likely to be an interpretation or statement of cashflows; the other may be a consolidation question if Q3 is not a consolidation. • Other possibilities – conceptual
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.
framework, intangible/tangible assets and impairment, provisions and contingencies, revenue and grants, financial instruments discontinued operations/assets held for sale or earnings per share. • Q3: could be a single entity or a consolidation (statement of profit ort loss and other comprehensive income and/or statement of financial position). • Statement of changes in equity, statement of cash flow extract, earnings per share calculation or linked written topic. • Consolidation question with adjustments, eg fair values, deferred/contingent consideration, PUP on inventories/PPE, intragroup trading and balances, goods/cash in transit. F8 • Ethical threats and safeguards. • Corporate governance and internal audit. • Audit planning. • Materiality. • Audit procedures (especially substantive procedures). • Audit finalisation and audit reports. • Audit risk. • Internal control and audit procedures (both substantive procedures and tests of controls). F9 • Calculations on improvements to receivables management (eg early settlement discounts and factoring). • Weighted average cost of capital calculations (including its component parts). • Ratio analysis to support financing decisions. • NPV calculations. P1 • Corporate social responsibility strategy – check out recently published article. • Ethical and other CSR theories – apply them to the scenarios. • Use of risk and governance – board of directors, remuneration and reporting. P2 • Preparation statement of financial position and/or a group statement of profit of loss and other comprehensive income or statement of cash flows – including a foreign subsidiary, discounted activities, disposals and/or acquisitions. • Linked accounting adjustment and social/ethical/moral aspects of corporate reporting. • Q2 &Q3: deferred tax, foreign currency transactions, financial instruments, pensions, share-based payment, non-current assets (recognition and/or impairment of tangible and intangible assets),
borrowing costs, the effect of accounting treatments on earnings per share to ratios. • Other question will test 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: revenue recognition, revision of the conceptual framework, regulatory issues over adoption and consistent application of IFRSs, implementation issues, application of the definition of control and significant influence (equity accounting) , improvements in performance measurement, classification in profit and loss vs OCI, integrated reporting. P3 • Value chain. • Critical success factors and KPIs. • Role of the corporate parent, including BCG matrix/Ashridge. • Managing strategic change, including force field analysis. P4 • Q1: expect core subjects such as project appraisal (domestic or overseas), business valuations (cost of capital calculations), and risk management (hedging). • Q2-4: risk management (currency or interest rate), business re-organisation, real options. P5 • Q1: performance management frameworks (building blocks model or the balanced scorecard). Also need to master transfer pricing, ratios, analysis of quality related costs, ABC. • Q2-4: common tested areas include quality management, information reporting (CSFs and KPIs), the application of strategic models (such as PEST, Porter’s 5 forces, the Value Chain), HR frameworks (reward & appraisal systems), risk management and environmental management accounting. P6 These are on the PQ magazine website (www.pqmagazine.co.uk). P7 • Test planning. • Risk assessment. • Evidence gathering and practice management. • Non-audit engagement, such as prospective financial information (PFI) or due diligence. • Audit completion. • Consolidated groups. • Audit evidence and financial reporting issues. • Quality control and reporting, including completion and PQ communication. 21
PQ ACCA P2
TAMING THE BEAST C
orporate Reporting is surely considered to be the core ACCA paper. It is, after all, the paper where we get asked for things like balance sheets (statement of financial position) and cash flow statements (statement of cash flows). It is a paper about accounting! So why did 66% of entrants – who are after all very near to being qualified accountants – manage to fail the equivalent paper in September 2015? Why do students describe it as ‘the beast’ And what do you need to do to pass it in December 2015?
Clare Finch explains how you can pass the P2 Corporate Reporting paper
“Too much revision time is spent on the topic of consolidation” It is true that there will be a compulsory consolidation on the paper. In section A we are guaranteed either a statement of financial position (balance sheet), an income statement (profit and loss account), a combined statement of financial position and income statement, or indeed a statement of cash flows (cash flow statement). There is a ‘but’. In the section A question, although the requirement is to ‘prepare the consolidated x’ (for 35 marks), just over half of the marks are usually for the mechanics of consolidation. The other marks are for knowing the accounting standards! “Students try to pass without learning their accounting standards” When putting your final revision plan together, a big mistake is to focus only on consolidation and cash flow – you need to learn your accounting standards. On top of the section A issue, section B of this exam is actually full of requirements like ‘discuss’, ‘advice’ and ‘explain’. You will have to write stuff about accounting and accounting standards (for around 50% of the marks). Key to a pass at P2 is knowledge of your accounting standards. It is essential you know the basics of them all. First, go for breadth – there are key ‘need to learn’ parts. However, for December 2015, there are some ‘three-star’ accounting standards – ones you really need indepth knowledge of: • IAS 24 Related Party Transactions. • IAS 38 Intangible Assets. • IFRS 15 Revenue from Contracts with Customers. • IAS 19 Employee Benefits. • IFRS2 Share Based Payment. • IAS 36 Impairment of Assets. • IAS 12 Income Tax. • IAS 32 Financial Instruments: Disclosure and Presentation. • IFRS 9 Financial Instruments. 22
• IAS 21 The Effect of Changes in Foreign Exchange Rates. Remember, each of the section B ‘mixed transactional’ questions can involve up to six different transactions. “Too much time is spent making notes and not enough on question practice” It is now time to stop reading through files, highlighting and making notes. It is essential to practise with past questions. Hopefully, you have been working past questions throughout tuition. On exam day you will get an answer booklet – blank pieces of paper, the questions and a ticking clock. You must practise – try to answer the questions on blank pieces of paper. After you have given it your best shot, and not before your time is up (1.8 minutes per available mark), then review your answer. If you have found a weakness go back to your file, review the topic and try another question. Only with question practise will you be successful. Imagine you were training for a marathon. Would you study books about the route and read explanations of how to run a marathon? No, you would put your trainers on and get out there
and actually practise! Well, now is that time – you need to put on your trainers and start to practise, practise, practise. “And then there’s the current issue…” Question 4, for 25 marks, can only be prepared for by looking forward, not back at previous papers. So even if you have done all the past questions you will usually not be prepared for the current issue. Think about things that are very current. You must read, digest, learn and understand the recent articles. If you don’t, ask your tutor to explain and simplify, then read it again. Key articles from students’ newsletters for December sitters are Revenue revisited part 1 and Revenue revisited part 2. Remember, the syllabus just says ‘current issues’, so it could be anything really – it will be a choice question though. Ideally, you will always be able to choose the other two – if you know your accounting standards that is! PQ • Clare Finch teaches at HTFT Partnership, where she is a partner. She is the author of ‘A Student’s Guide to IFRS’ PQ Magazine December 2015
ICAEW spotlight PQ
IN WITH THE NEW
Scenario-based exam questions have been gathering pace for two years. Here the ICAEW looks at how this approach will work with the ACA Certificate Level Principles of Taxation and Management Information modules
H
ow can we make studying for the ACA a more seamless experience? How can exams be closer to your work experience? Scenario-based questions are the way. Until now, Principles of Taxation has comprised 50 objective test questions in a variety of formats – multiple choice, multi-part multiple choice, multiple response and numeric entry. However, from January 2016, there will be 42 questions to the exam. It will start with two new scenario-based questions worth 10% each, followed by 40 objective test questions worth 80% in the same format as previously. The new scenario-based questions test two main syllabus areas – income tax and NIC, and corporation tax. One of the main aims is to replicate what you will find in the workplace as your experience grows, namely computer-based computations. Complexity of the workings . Let’s use the corporation tax question as an illustration. In the exam you will be asked to prepare a standard corporation tax computation using a pro forma template set up on screen. Within the question you may need to calculate a figure for, say, adjusted trading profits, capital allowances and/or non-trading loan relationships. These calculations may be worth one, two or possibly even three marks depending on the complexity of the workings required. This will be a multi-part question using the same set of facts. But not everything is changing. The syllabus and weightings are to stay the same. The pass mark will stay at 55%. Sitting the exam and the time it takes to receive results also stays the same. There are many opportunities to practise the new style of questions. Sample questions that reflect the look and feel of the exam are PQ Magazine December 2015
available at icaew.com/examresources. ICAEW’s learning materials have been revised to incorporate the new scenario-based questions and approved by the examiner. The study text contains pro formas similar to the real exam, and the question bank contains hundreds of exam-standard questions including an assortment of scenario-based questions. A scenario style of question will also be introduced to the Management Information assessment from January 2016. One scenariobased question will be worth 20% of the marks, with 32 objective test questions worth the remaining 80%. The scenario-based question will have a series of requirements linked to a single scenario and you will need to enter either calculated data – for example, a cost per unit, a percentage mark-up or a variance – or select from a drop-down menu which requires you to make a choice – for example, whether a calculated figure represents an ‘under’ or ‘over’ absorption of overheads. Only certain areas of the Management Information syllabus are suitable for scenario based questions. The scenario-based question will be drawn from either: • Syllabus area 1 – costing and pricing OR • Syllabus area 2 – performance management The exam’s remaining questions carry equal marks. The style of objective test questions will stay the same as those already used, namely multiple choice, multi-part multiple choice and multiple response questions. The study materials have been fully updated to reflect the new scenario-based questions. The study manual chapters covering the detailed topics in syllabus areas 1 and 3 have also been updated to include examples. The question bank for 2016 has been updated with 15 scenario-based questions. This, and three sample papers, will
give you plenty to prepare you for the exam. Sample questions will also be available within the Management Information exam resources at icaew.com/examresources As in the Accounting assessment, there are rules to be followed when entering answers to the new scenario-based questions. In particular: • only whole numbers can be entered – rounding up or down doesn’t matter, as marking allows for both; • commas may or may not be used as a thousand separator, so 1000 and 1,000 are both acceptable; • negative values can be entered using either a minus sign or brackets; and • a zero or a dash must be used where no value is required in a field. Practise scenario questions . A specific example of this final point arises when entering cost, price or volume variances in a scenario-based question. The numeric value for a favourable variance is entered in the appropriate data entry field in the favourable variances column, and a zero or a dash in the corresponding adverse variances column. Practising the scenario based questions will make this clear. If you are planning to take Principles of Taxation and/or Management Information, there will be no parallel running of the assessments in the current format. From 1 January 2016, there will be only one assessment available for each, which will include the new scenario-based questions. Access support and guidance is available at icaew.com/examresources. PQ Reproduced with the permission of ICAEW, this article was first published in Vital (October 2015). Vital is the quarterly magazine for ACA students. © ICAEW 2015 (icaew.com/vital)
23
PQ SLCS pre-seen
DON’T GET LOST IN
THE WODDS…
communities; the government of Marland; the FSCM (Forestry Stewardship Council of Marland); the Forestry Authority; its customers; and a trade union. The company is also committed to a wide range of sustainability (page 8) and CSR (page 9) pledges. These are rolled into the company’s strategic objectives (page 10) and code of conduct (page 11). Accreditation by the FSCM (page 23) seems to be a critical CSF for the company to maintain. Evaluating strategic position/strategic options There are numerous revenue streams mentioned in the pre-seen, and expansion/contraction of existing activities and/or diversifying into new activities is a distinct possibility for Wodd. For example, aside from managing new plantations, grants and income can be generated from tax/grant advice, carbon storage, biomass production, leasing land to wind farms, hunting/fishing leases, recreational space and conservation services. Evaluation of the competing uses for land could form the basis for a request on advice on how to make a decision over the use of land or assets. Net present values are expressly referenced on page 26.
Dave Halford helps you see the wood for the trees when it comes to the CIMA strategic pre-seen
I
n this article we summarise the key themes from the Wodd pre-seen for the November Strategic Case Study sitting, and take a look at the role that aspects of the E3 syllabus could play as the stories unfold in the exam. The pre-seen company is a listed forestry company, called Wodd, based in the fictional European country of Marland. The north of Marland has a climate that is well suited to growing timber. Wodd’s activities are based on forestry management. Wodd manages both its own forests and those of its clients, and is accredited for its management of sustainable forests (all its forests are accredited). Forestry management may involve: • Advising on the grants and tax breaks that may be available for investors. • Planting and harvesting timber. • Project work aimed at creating public amenities, e.g. cycle paths. Wodd has struggled in recent years but stabilised in 2014, and is gaining an excellent reputation for forestry management. Some of Wodd’s markets are volatile or cyclical, and Wodd is now benefiting from a recovery in construction and housing and from the resulting rise in timber prices. Wodd is a listed company and is committed to providing steady, long-term returns for its shareholders. However, it also has a clear public 24
commitment to sustainability and to social responsibility, and aims to be a leading player in the industry in this area. Stakeholder trust (in Marland) is described as ‘the foundation of our business’ (page 12). Wodd is a profitable company, although its profits (and revenue) are lower than in 2014. Its cost of sales are far lower than one of its major rivals (Darrell). Most of Wodd’s profits were paid out as a dividend in 2015. The company appears to be relatively stable in financial terms, and has a substantial cash surplus and low levels of gearing (although we are not given any industry standards to compare against). A fictional article on pages 27-28 of the preseen (based on a 2011 article in the Guardian called ‘Forest companies of the future’) suggests that successful companies in this sector will grow by offering related services, such as energy, and non-timber services, such as wind farm leases and selling licenses for hunting and fishing. There is evidence (page 21) that Wodd is already successfully moving into service and consultancy areas. E3 sets the scene for the strategic level case study exams (SLCS) and students usually need to start their thinking in the E3 syllabus for the first part of Task 1 in the exam, before branching out as the storyline takes them across all of Strategic Level, returning to E3 along the way. Some ideas as to the role E3 will play are provided below. Interacting with the organisation’s environment – managing relationships with a diverse set of stakeholders – will be a challenge for the executive team. Several groups are namechecked including investors; employees; local
Leading change The diverse opportunities set out above make change a distinct possibility. Some proposed changes could upset existing stakeholders (hunting and wind farms are controversial developments) and so the Board may value advice on how to implement new strategies. Aside from this the presence of a unionised workforce, with the power to bring logging activity to a halt (page 16), means that any significant changes to working patterns will need to be introduced with the backing of the union, probably necessitating some collaborative negotiations. Implementing strategy The diverse revenue streams open to Wodd will in all likelihood yield differing rates of return. As a listed company the Board is duty-bound to maximise returns, making measures such as RI and ROI relevant. However, for a business so wedded to sustainability, the broader range of measures resulting from a Balanced Scorecard would seem an obvious alternative or complementary control mechanism. Role of IS in organisational strategy There is a conspicuous absence of information on IT/IS in the pre-seen. This can be interpreted in two ways. First, this may be a signal that the examiner does not view this as an area of great interest for this case study. Second, it may be that there will be opportunities for Wodd to improve its financial and sustainability efficiency by harnessing relevant systems, such as environment reporting software to record and report on relevant factors such as carbon emissions/capture from different actives, or tree types. For example, while it grows quickly and yields the highest investor returns, does the Sitka spruce have the best overall ecological impact? PQ • Dave Halford, Strategic Case Study Expert, BPP PQ Magazine December 2015
CIMA lecturers’ conference PQ
SCALED SCORES ARE HERE CIMA used the 2015 lecturers’ conference in London to announce the introduction of scaled scores and a calculator policy change. PQ magazine was there to record it all
Stand and deliver: Flatman said CIMA will take raw scores and translate them into scaled scores
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rom 1 November, the CIMA OT results will include a grade (pass/fail), sectional performance feedback and a scaled score, announced director of examinations Steve Flatman at the recent Lecturers’ conference. He pointed out that with the new 2015 regime CIMA has introduced multiple versions of the exams. Each case study in each exam window, for example, has five forms (five versions) of the exam. There are also multiple versions of the OT tests, the content of which will change regularly over time. The challenge for CIMA was to find a way to present candidates’ performance in a consistent way when, despite best efforts, each exam or assessment may have a slightly different level of difficulty. So percentage pass rates are out, and Flatman has opted for scaled scores, which are the industry standard way of resolving this challenge. New passing criteria . OT scaled scores will range from 0 to 150. A score of 100 and above represents a pass. CIMA states: “A candidate scoring 100 has reached the minimum level of competence required.” For the case study, the scaled score will also range from 0 to 150. Here a score of 80 and above represents a pass. However, in addition, candidates also have to achieve one-thirds of available marks for each competency (excluding leadership at the operational level). Flatman stressed that CIMA will take raw scores and translate them into scaled scores. That means student who took a slightly harder version of the exam and achieved a raw score of say 98 will get the same scaled score as a student who took a slight easier version of the exam and achieved a raw score of 99. Both would, in his example, be awarded a scaled score of 148/150. Publishing pass rates . CIMA used the conference to formalised the release of pass rates. In future, the case study
pass rates will be released within two weeks of the strategic level case study results being released. Publication of OT pass rates will be synchronised with the publication of case study results. In 2015, OT pass rates will cover the time periods: January 2015 to a specific date. In 2016, OT pass rates will cover the preceding 12 months – a rolling reporting period. Calculator policy change . CIMA part qualifieds will also be permitted to take non-programmable calculators from the pre-approved list into CIMA exams at Pearson VUE exam centres. This policy is not ‘timebound’, said Flatman, and the new policy will be applied for the foreseeable future. This applies to all CIMA professional exams. If you bring a calculator to the exam, then the exam administrator will check that it matches a model from the pre-approved list. That said, students do not have to bring a calculator to the centre, as a computer-based one is available as part of the exam. Students can practise using the onscreen calculator using the Question Tutorials hosted by Pearson VUE or by downloading the practice exam tutorial (installable MSI version) from Pearson VUE. Myth busting . Flatman revealed statistics that he felt showed that the majority of candidates have sufficient time to complete tests. Overall, 3.7% of OT exams sat have more than one item unanswered
due to time constraints. This can be broken down further. At operational level, the percentage of assessment with one or more items left unanswered is 2.3%. For management it is 3.3% and for the strategic papers it is 5.6%. How ready are you? . The conference heard that every student needs to be familiar with the technology used to deliver the exams. That means taking the exam tutorial! Candidates also need to use the question tutorial hosted by Pearson Vue, which is accessible over the internet. This will make you familiar with the types of questions you will encounter in the exam. Another resource comes via CIMA Aptitude, with its formative tests and mock exams. Students can use these tests to help gauge their exam readiness and identify their areas of weakness. These test are produced by third parties, with support from CIMA, and cost £15 in the UK. You can take these tests either in ‘practice mode’ or under ‘timed assessment’ mode. In practice mode, PQs attempt questions at their own pace and get instant feedback to answers and an explanation of the correct answer. With timed assessment, sitters are tested under exam conditions and then get a full report and links back to any incorrect answers. • PQ will be reporting the reviews of the management and strategic levels in the coming months – so keep an eye out! PQ
GIVE YOUR #CIMA STUDIES A HEADSTART First Intuition Birmingham is offering one lucky student free tuition for a year. To be in with a chance of winning email birmingham@firstintuition.co.uk with #winningnevergetsboring in the subject field. Full terms and conditions apply PQ Magazine December 2015
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PQ CIMA lecturers’ conference
THE OPERATIONAL LEVEL E1: pass rates 2015
Overall exam pass rate: % of students who have passed the exam after one or more attempts First time pass rate Total exam pass rate
Jan–May 83%
Jan–Sept 86%
. Variance +3%
78% 76%
78% 76%
0% 0%
CIMA said it was ‘satisfied’ with a E1 pass rate that is over 75% for firsttime sitters. There is one clear area that students are struggling with – managing the finance function. This is, however, just 15% of the syllabus. But it is one area that your tutors (and you) need to look at more closely. The worry is that if you don’t master this area you might struggle when it comes up in the case study. The first-time pass rate is higher than the overall pass rate and it was suggested that old students were not looking properly at the changes in the syllabus. Managing the finance function is a new area, introduced in the 2015 syllabus. P1: pass rates 2015 Overall exam pass rate: % of students who have passed the exam after one or more attempts First time pass rate Total exam pass rate
Jan–May 56%
Jan–Sept 62%
. Variance +6%
45% 43%
46% 44%
+1% +1%
With P1 it seems that sitters either know their stuff or don’t. The two areas that have a higher proportion of candidates being not proficient are shortterm decision making and dealing with risk and uncertainty. Much of the syllabus relating to short-term decision making is from the previous P2 syllabus, so students should ensure they are fully prepared for this section. F1: pass rates 2015 Overall exam pass rate: % of students who have passed the exam after one or more attempts First time pass rate Total exam pass rate
Jan–May 79.9%
Jan–Sept 80.7%
. Variance +0.8%
75.2% 73.5%
75.5% 73.8%
+0.3% +0.3%
CIMA felt there has been fairly consistent student performance across the entire syllabus. Students who pass have a balanced knowledge of the four syllabus areas. Those that fail seem to be struggling with financial accounting and reporting in a big way. This is a core F1 area and will be where the examiner takes most of the questions. One tip given at the conference was to focus on the learning outcomes rather than just looking at the content alone. Operational case study Exam session Industry February 2015 Bottled water production May 2015 Bicycle manufacture August 2015 Supermarkets & food retail
Company Valley Spring Batton Bicycles Merchants
Pass rate 44% 67% 34%
.
So far, the operational case study has concentrated on two manufacturers and one retail business. Students must remember that the case study is all about application, said the chief marker. In the first case study in
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February, there were some very good answers, but a significant number of very poor ones, which pulled down the pass rate. In February, there was some good application on E1 aspects, especially market segmentation, quality circles and outsourcing. Students were also strong on working capital aspects of F1. Students’ answers were more limited on the more technical areas, and a lack of P1 and F1 technical knowledge was evident. There was also evidence of rote learning, too. For May, there were far fewer really poor answers, which helped pull up the pass rate. Application on the whole was also much better and there were more completed answers. Candidates showed they were good at ABC to the painting process, variance analysis, outsourcing and SLAs, brand importance and assessment of creditworthiness. That said, there was still a lack of some technical knowledge, especially F1 accounting issues. Another criticism was the lack of balanced arguments in answers when discussing the suitability of a suggestion. CIMA case study students are generally poor at suggestions of how information presented to them could be improved. August saw a disappointing drop in the pass rate. Here the application to the scenario, in relation to the less technical aspects, was again reasonably good. The lack of technical knowledge was very poor. There was also evidence of pre-prepared answers that were not always relevant or applied. Markers also felt that some sitters are not stating the obvious and missing easy marks. PQ
PQ Magazine December 2015
AAT focus PQ
AAT MEMBERSHIP CAN HELP Y
ou’ve worked hard to get where you are today. At AAT we believe that everyone should be recognised for their achievements and commitment to their industry. That’s why our professional membership is open to part qualified students from other bodies who are looking to gain recognition and professional status while they are working towards their next goal. As an AAT professional member you’ll use the internationally recognised designatory letters MAAT after your name to show your expertise and dedication to employers, colleagues and clients. You will join our community of over 50,000 members, and gain access to a wide range of career tools to help you achieve your career ambitions. Don’t just take our word for it. Annie-Lee Cox MAAT, who workes in corporate tax at Arnold Hill & Co said: “AAT will help boost your career as it has world recognised status. AAT membership has increased my confidence, raised my profile and elevated me to a more senior position.” And did you know that you don’t have to be chartered to offer self-employed services? We have over 4,000 members who are regulated by AAT to provide accountancy, taxation and consultancy services to the public. If you’re planning on continuing your chartered studies, we help you to gain the
Membership of AAT is open to part qualifieds signed up with other accountancy bodies. Here AAT explains how this can benefit your career
Annie-Lee Cox: ‘AAT membership has increased my confidence’
experience and confidence you need in your role, ensuring you keep your practical skills up-to-date. And to support you further, we offer 50% off our membership fee while you study. Our professional membership is open to finance professionals who are part qualified, fully qualified and full members with other professional accountancy bodies. Employers and clients expect high standards from AAT members, and so we will ask you to demonstrate the same level of education and experience as all AAT professional members. For further information visit aat.org.uk/joinus or call the AAT’s Customer Service team on 020 3735 2401. PQ
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PQ AAT exams
LET’S GET TECHNICAL
Nick Craggs explains what a chattel is and how to calculate capital gains tax on the sale of chattels
F
ew AAT students will have heard of the word ‘chattel’ until they reach the Personal Tax unit. It isn’t a word you would usually find in the lexicon of the average AAT student. Unless, that is, they live in Bridlington, on the east coast of Yorkshire. The harbour is the location for a sign – which I am sure is the only place you will see the word chattel outside of a taxation text book – which explains that visitors can’t “exhibit, place or maintain any chattel” without the Bridlington Harbour Commissioners’ sanction. I would be interested to see if any PQ readers have seen ‘chattel’ out in the wild, so to speak (well, not really). Anyway, what is a chattel? A chattel is defined as a tangible, moveable item – which isn’t very descriptive. Basically, it is anything you can touch other than land and property. Any gain on a chattel, which is calculated as the proceeds when it is sold, less the cost when it was originally bought, is usually taxed under capital gains tax, using the normal rules of proceeds from sale less cost of purchase. Chattels exempt from CGT . However, certain chattels are exempt from capital gains tax; these are mainly cars and wasting chattels. Cars are exempt as they are normally sold for less than they cost, and it stops those who otherwise would not normally do so from completing a tax return just because they have changed their car. Or, if you are cynical, from creating losses they could use against gains! Note that there is no distinction made between classic cars and any other types of car. Wasting chattels are chattels that are not expected to last 50 years; usual examples are racehorses and greyhounds (and arguably some of the boats in Bridlington harbour!). The rest are subject to the chattel rules, which are based around the magic number of £6,000. There are four different scenarios, which are dependent on whether the proceeds of the disposal and the original cost of the chattel are above or below £6,000. The first and easiest scenario is where the proceeds of the disposal and the original cost of the chattel are below £6,000. In this case, the disposal is exempt. This saves a lot of people having to submit a tax return for 28
Nice work… Nick Craggs enjoys a ‘99’ at Bridlington Harbour, all in the name of education
making a small gain that would probably be covered by the amount of capital gains they can make tax free each year anyway. The second scenario is if the proceeds of the disposal and the original cost are both above £6,000. If so, the gain is calculated as normal, which is the proceeds less the original cost. So, for example, if your great Aunty Mable sold a sideboard for £20,000 which cost her £7,000, her gain would be £13,000. This is simply the proceeds less the original cost. If you sell an item for less than it originally cost you make a capital loss. However, if the chattel was originally purchased for more than £6,000 and the disposal proceeds are less than the £6,000, then this triggers the third set of rules. Here the proceeds are deemed to be £6,000, no matter what you actually sold the asset for. This will reduce the amount of your loss. For example, you bought a signed Gareth Gates photo for £9,000. However, since you bought it the value of the photo has fallen, and you sold it for £3,000. The loss for capital gains purposes is not £6,000, it is the deemed proceeds of £6,000 less the original cost of £9,000, resulting in a loss of £3,000. The final and most complicated scenario is where the proceeds are above £6,000 but the original cost is below £6,000. In this
scenario, we may need to restrict the gain. The gain cannot exceed 5/3 of the proceeds less £6,000. If using the normal gains computation, the gain is higher than the restriction, then it is the amount of the restriction which will be taxed. Saul sold his 1959 Les Paul Standard replica guitar for £10,000; he originally purchased this for £2,000. The gain using the normal computation will be £8,000. However, we need to check to see if the gain is restricted. The restriction will be calculated as 5/3 x (£8,000 – £6,000), which is £3,333. Saul’s gain will therefore be restricted and the chargeable gain will be £3,333 as this is lower than £8,000. However, if Saul sold his Gibson Flying V guitar, which originally cost him £2,000, for £15,000, the unrestricted gain will be £13,000. He will still need to check to see if he needs to restrict the gain. The restriction will be 5/3 x (£15,000 – £6,000), which is £15,000. This is greater than the gain, so the chargeable gain will be the £13,000 normal gain. Why don’t you have a go at calculating the gains on the disposals of the following chattels? • A piano bought for £4,000 and sold for £8,000. • A signed Kylie LP bought for £4,000 and sold for £14,000. • An antique mirror bought for £3,000 and sold for £5,000. • A dinner table bought for £12,000 and sold for £4,000. You can see me work out the answers at: http://www.firstintuition.co.uk/category/aat/ • Nick Craggs, AAT Distance Learning Manager, First Intuition PQ Magazine December 2015
CIPFA spotlight PQ
Putting students at the forefront
wouldn’t volunteer if I didn’t enjoy it. What is the best event the network put on in the past 12 months? Every year, CSN organises the student conference day at the national conference. Last time we had a packed room full of over 100 students where we focused on inspiring them as they continue with their careers after they qualify. Feedback suggested attendees found the session on emotional intelligence and demonstration of the new e-assessments really useful.
Meet Katie Goodall, the new President of the CIPFA Student Network and assistant manager, public sector audit, at KPMG
Why did you want to run for president? I was really encouraged to get more involved by CIPFA’s regional president in Yorkshire and Humber, Jayne Stephenson. She highlighted the benefits of volunteering; not only is it good for the soul, it also gives you the chance to be exposed to learning new skills. You also get to talk to interesting people, many who are at the top of their careers and, of course, there are the opportunities for career advancement. After all it does look great on the CV! It also made sense to me to take an active role in shaping and giving back to the institute; to make it more than just the four additional letters of CPFA that would go after my name. In terms of membership, student members are the future of the institute – I wanted to take part in ensuring that future. How much time do you dedicate to the CIPFA Student Network (CSN)? Obviously it is more work on top of the day job, and for most of us on top of our studies as well. It does mean giving up a few weekends or lunch
PQ Magazine December 2015
Goodall: ‘amazing opportunity’
hours at work to support the institute and develop the events, such as the annual student conference. Recently, I gave up a couple weekends to sit e-assessment mock exams so that we could provide robust feedback. We’re also active regionally as well, developing the offer the regions can give to students. So yes, it is extra work, but it’s an amazing opportunity and I
Do you think PQs appreciate the work the network does for them? As long as they enjoy the events we organise and the work we do helps them in their learning experiences, such as our work in supporting the development of regional student networks, that’s all that matters. Is CIPFA doing a good job of keeping its PQs informed of the changes ahead? I think so. For instance, CIPFA’s biggest change for students is the introduction of e-assessments for a couple of exams from December, with the remainder to transition to e-assessments for the June sitting. This has been publicised in newsletters that we emailed to students, and with events put on at both the national conference and out in the regions to demonstrate the new systems to students. PQ
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PQ ACCA exams
What ACCA examiners want So how do you impress the people that matter – the examiners? Here’s what they thought of your September efforts – straight from the horse’s mouth
F5 . Candidates scored better in section A than section B. The examiner felt the calculation aspects in section B were also ‘encouraging’, showing that the technical side of this paper can be overcome with good preparation and practice. Too many candidates do not apply the information given in the scenario to their answers in the written sections, and instead try to rely on knowledge alone. The examiner said that while the size of the F5 syllabus may be daunting, good exam technique is just as important as learning the management accounting methods and techniques. To this end, candidates must review past papers to identify the skills required in applying their knowledge.
F6 . The examiner was pleased that almost all candidates attempted all of the questions. PQs were advised to work through the specimen paper, past exam papers and sample questions in the report and to carefully review how each of the correct answers were derived. F9 . This was an unsatisfactory performance, said the examiner. It appears too many sitters were under prepared. PQs who rely on question spotting will lose out. Candidates were also told to take greater care and be more precise in presenting answers to numerical questions in section B. Finally, all workings should be shown and the requirement read more carefully. P1 . There is a temptation for candidates to simply draw on their knowledge rather than apply this knowledge in their answers and reproduce remembered notes, said the examiner. If you take this approach you are unlikely to be rewarded. P2 . The examiner stressed that this exam requires a deep understanding and knowledge of the Conceptual Framework, 30
IFRSs and code of ethics. You can expect the questions at this level to challenge you to show this knowledge and this requires extensive preparation. Students need to review relevant websites, including those of the standard setters (IASB) and even the ACCA’s own website.
P3 . The examiner felt there was evidence that candidates are reliant on covering a few key topics in their preparation, and then attempt to fit these topics to the question rather than provide what the question actually requires. Time management remains an issue for some candidates. A way of resolving this would be to avoid quoting lengthy detail from the case study scenario, said the examining team. Instead, PQs should be focusing their response to the requirements. Lengthy explanations of theoretical models also rarely add value. So it has been ventured that the time pressure is not caused by the exam itself, but the result of the candidate’s unfocused response. P4 . Spending too much time carrying out relatively simple calculation tasks was a major reason for candidates performing less well, according to the examiner. Why can’t students use appropriate rounding for calculations, for instance? It is also felt that candidates are not using the reading time effectively, to plan a strategic approach to tackling the paper and to choose the optional questions wisely. P5 . The examiners continue to be concerned by the quality of answers. This has been the case for the last nine diets of P5! Students must remember that the questions here demand that scenarios are ‘evaluated’ and ‘assessed’ rather than described. The difference is fundamental and crucial, as analysis involves a study of applicability rather than a description.
P6 . The examiner was concerned about the number of students who made no, or very little, attempt at Q1 (a) (i). It was also felt too many poorer performing candidates don’t take time to read the question carefully and think before they started to write. P7 . A good understanding of both audit and financial reporting issues is required in order to perform well in this exam. The examiner said some weaker students attempt to present answers in a columnar format. This typically scores fewer marks, as more often than not they lack the depth needed. Candidates are also writing too little for the marks available and are failing to develop points beyond simple identification of the facts given in the question. PQ PQ Magazine December 2015
careers PQ
Make 2016 a happy new year Karen Young gives her top tips on preparing for a new job in 2016
A
s we head towards the end of the year it’s a good time to reflect on your achievements over the past 12 months, and also to consider your career goals for 2016. If you are hoping to find a new job in the New Year, now is the time to prepare for your search. So what do you want to do? Where do you want to work? Think about your motivations for wanting to leave your current role and what you hope to achieve by moving; you want to ensure you are making the change for the right reasons. Ask yourself: what do I enjoy? What industry do I see myself working in? In what type of environment would I like to work? Researching organisations and roles will ensure that you are equipped with the information you need to target your job search. This applies whether you are hoping to apply for internal jobs or taking your CV to the external job market. Meeting with an expert recruiter is helpful as it allows you to discuss your options with someone who knows the industry and ensures you have a clear understanding of the different job roles, sectors and work environments available. A good mentor can also help to give you an invaluable external perspective on your career path and your next move.
What are your strengths and weaknesses? A key element to being successful at securing a new job is to understand what you are good at so you can effectively sell yourself. It is also a good idea to note some of your weaknesses and
think about how you can develop these going forward; you may realise you need to take a training course to learn new skills or refresh old ones. You may be asked about your strengths as well as your weaknesses when you go for
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interview, so the sooner you can identify these, the better.
Preparing your CV Reviewing and updating your CV and getting yourself ready for the interview stage is very important. Remember, your CV is your sales pitch to potential employers; you want to stand out from the competition. Your CV needs to be up-to-date with your experience, training and qualifications, and you want to make sure your previous employment dates are accurate, explaining any gaps in your employment history. Always check there are no spelling or grammar errors – although this seems obvious you would be surprised how many people don’t proof read and you never know if a potential employer will pick up on your mistakes. You can ask a recruiter to look over your CV for you, too. That way they can suggest, if necessary, how to make this the best it can be before you start searching and sending it to potential employers. So if you want that new job in the New Year get prepared now. Be ready to take 2016 head on; take the next steps to get the role you want. PQ For more information and access to job opportunities visit www.hays.co.uk/accountancy. • Karen Young, Director, Hays Accountancy and Finance
To apply now visit www.mmu.ac.uk/PQ or for more information contact Yvonne Rennison: y.rennison@mmu.ac.uk PQ Magazine December 2015
31
careers PQ
YOUR CAREER PROBLEMS SOLVED – THANKS TO
Q
You should pull out all the stops to get qualified, says Walker Dendle’s Jordan Dodds
What are the disadvantages to ‘just’ being part qualified? I don’t want to sit any more exams but I am wondering if I am committing career suicide.
A
This is a very valid question. I can understand why you may at times feel unsure of the benefits of pushing on and achieving full qualification. Having regularly consulted with hiring finance managers, the emerging theme appears to show questions being asked of both the motivation and the calibre of an individual who isn’t focused on becoming fully qualified. Obviously, there will be times when extenuating circumstances dictate that becoming qualified simply isn’t possible or necessary, in which case, this will be less of a priority. If this isn’t the case, and it is perfectly plausible (with some hard work and potentially long days studying and working combined!) to qualify, then I would urge you to do so. Right now, you may not see the benefits but a qualified accountant has far more clout when applying for roles than a PQ. No doors will be closed by becoming qualified, but a lot more will open. Think about it logically: if you are a part qualified accountant with similar experience to another candidate who is qualified and also going for the same role, immediately you are at a disadvantage. You will really have to impress at interview (or hope the other candidate doesn’t perform well!) to get the job. It will take hard work and it won’t be easy, but you will see the benefits long term. Do you really want to find yourself hitting the glass ceiling five years down the line because you were relatively comfortable in a position and didn’t see the need to complete your exams? I’ll leave you to answer that one. • Contact PQ magazine with your career ‘issues’ – simply email graham@pqmagazine.co.uk Next month: Can taking on an interim role help boost your experience and CV and help you move into a different sector? 32
Life in the NHS Siobhan Elliott is a finance and contracting assistant accountant working within an NHS Clinical Commissioning Group, based in Runcorn. She recently became MAAT qualified and is now studying ACCA. Siobhan is Chair of the FSD North West Student Forum What time does your alarm clock go off on a working day? Depends if I am going to the gym, so between 6am – 7am. What’s the first thing you do when you get to your desk? Say hello to my colleagues, respond to e-mails and check my diary for the day. What’s on your desk? Trinkets, one with an uplifting quote: “When it rains look for rainbows, when it’s dark look for stars”. What’s the best thing about where you work? My colleagues. What or who can you see from my desk? My finance and business intelligence colleagues, as well as a lovely view across the gardens. Where’s your favourite place to go for lunch? I generally
bring my own lunch, so goats cheese and honey on rice cakes would be my all-time favourite! Which websites are your favourites and why? Local news, FSD Network, HTFT and myACCA. Which websites do you use for work? Oracle, BI, FSD Network, and in-house e-learning. How many hours a week do you spend in meetings? Between work and FSD it averages two to three hours. What time do you leave the office? Any time between 4pm– 6pm depending on if it is month end. How do you relax? Training, yoga classes, football and I love reading. What’s your favourite tipple? Coconut water or Tia Maria.
How often do you take work home with you? Work and home are separate, so if I have work to do I stay later or go in earlier. What is your favourite TV show? The Big Bang Theory. Summer or winter? Both! Summer for the sunny long evenings and winter for wrapping up warm. Pub or club? Depends what mood I’m in, but generally pub with friends! Who is your hero? My Nan. If you had a time machine, where would you go? In to the future to see what the world is like and what’s changed. If you hadn’t chosen accountancy, where might you be right now? A line of work to do with health and fitness.
differentiate people from one another.”
In second place was technology hub Cambridge.
Start up in Brighton Brighton is the best location to start up a small business in the UK, according to new AAT research. The city came out top because of its high number of small business start-ups and its high density of small and medium-sized businesses. Brighton also ranked well for digital connectivity, coming second only to Luton for its superfast broadband penetration.
Back to business PwC has launched ‘Back to Business’, a 12-week programme to help people back into the workplace after an extended career break. The programme offers a chance for client-facing work based on the returner’s expertise, interests and skills, and there is the opportunity to explore a range of careers offered at PwC, with a view to returning on a more permanent footing.
In brief Time for blind faith HSBC, Virgin Money, Deloitte, KPMG and the NHS, among others, have agreed to recruit on a ‘name blind’ basis to address potential discrimination issues. Under the new agreement names won’t be visible on graduate job applications. Deloitte’s David Sproul said: “We want to show that everyone can thrive, develop and succeed in our firm based in their talent, regardless of ethnicity, gender, sexual orientation, or any other dimension that can be used to
The PQ Book Club WE REVIEW THE BOOKS YOU SHOULD BE READING
Persuade: using the seven drivers of motivation to master influence and persuasion by Philip Hesketh (Capstone, £12.99) How well we do at work – and in life generally – is dictated by the influence we can exert over the people we encounter. What motivates your boss? Your CEO? You? The key lies within these pages, as Hesketh teaches us how to understand what makes other people – and ourselves – tick. Underpinning all this are the ‘seven drivers of motivation’ – namely, that we want to be
loved, we want to feel important, we want to belong, we need to believe we can achieve, we need both uncertainty and certainty, we need ‘a place’, and we need to grow and improve. The author explains how each of these motivating factors affects us, and how through a little self-analysis we can all better our lives and our lot. If we can understand what drives us, we can also understand what drives the people around us. A large part of how successful we become is down to the image
we give others, says Hesketh. His advice in these pages will help you project yourself better without appearing arrogant. This is a very enjoyable and easy read; the author’s prose is concise, packed with case studies from the worlds of psychology and business, and chock-full of pithy one-liners (“I once had a job picking asparagus. The pay was lousy but the tips were great”). The ‘top 50 questions to ask’ chapter is really useful, as is the one on how to improve your communication skills. PQ rating: 4/5 You could read this book in an afternoon – time that would be very well spent. PQ Magazine December 2015
investing in people Group Reporting Analyst
Assistant Reporting Analyst
Health & Pharmaceutical, Surrey
Private Equity, Surrey
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HAVE YOU GOT THE RIGHT SKILLS? OPINION IS DIVIDED The Capability Gap 2015 report – lifting the lid on how finance professionals are rated and how they rate themselves. There’s a lot to be positive about in finance. Salaries are rising, bonuses are back and companies are hiring – all pointing to more career opportunities. But despite this, only 42% of finance professionals are focussed on where your profession is heading and developing skills in these areas, with only 29% working towards additional qualifications. By not developing your skills, you could be afecting your career prospects. To add to this, employers rate their staf’s proficiency in key skills much lower than their employees rate themselves. We call this diference of opinion the ‘capability gap’.
Rate your skills now at skills.hays.co.uk © Copyright Hays Specialist Recruitment Limited 2015. 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-14133
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MORRISONS SUED BY STAFF
A RUNAWAY SUCCESS
PQ reader Mitesh Dhimar is another step closer to his goal – running the world’s six big marathons. He ran London in 2012 and Berlin in 2014. This year it was New York, which he completed in a time of seven hours and 12 minutes while wearing a sumo outfit! Dhimar qualified as an ACCA this year, so is moving on to our sister magazine NQ. He runs for Soft Power Education, a charity based in Uganda, his father’s home country. Mitesh’s next stop will be Tokyo – if you want to support him go to JustGiving: www.justgiving.com/mitesh1986
One of the stranger stories this month was the news that several thousand Morrison employees plan to sue their supermarket chain bosses after their personal and financial details were leaked. It was, in fact, auditor Andrew Skelton who leaked the data of thousands of staff because of a grudge. He had been disciplined for sending personal eBay packages via the company mailroom, and as an act of revenge he had released the salaries, NI numbers, dates of birth and bank account details of staff. The data breach cost the company more than £2m to fix. That grudge saw Skelton eventually jailed for eight years in the summer. Morrisons denies it is responsible and says the legal action is fundamentally misconceived.
KEVI N ‘ROO-FUL’ AFTER AUSSIE DEFEAT CIMA’s information solutions manager, Kevin McCuaghan, had high hopes for the England rugby team in the World Cup. He made one fatal error – he bet new head of UK, Paul Turner, that they
would beat Australia in the group phase. Paul, who moved from head of CIMA Australasia to head CIMA UK in July, was happy to take the bet! And here we have the evidence of poor Kevin’s forfeit.
HERE COMES THE TAXMAN EP FOR MEGAN DALLAS CIOT’s president Chris Jones chose the perfect venue for his farewell reception, and the great and the good in tax turned out for the tour of Abbey Road Studios. For those not in the know, Abbey Road was the Beatles second home during the Sixties and Pink Floyd recorded Dark Side of the Moon there. So did we get a band singing ‘Taxman’ and ‘You Never Give Me Your Money’? Or even ‘Money’? Well, no – we had a trio of choral singers warbling the CIOT’s charter. Nice though.
W E ’V E
Basildon (that’s Essex) accountant Megan Dallas didn’t make it through boot camp on this year’s X Factor. However, that has not squashed her dream of spending less time behind a desk and more time behind a mike. She has just released a new five-track EP called Tattoo, and very sweet it is too.
NO CHEATING PLEASE Trainee analysts at leading investment bank JP Morgan were recently sacked for cheating in their accountancy training exam. Three UK analysts apparently flew to New York to take the test, and had to pay for their own flights home after being caught sharing answers and using notes.
GOT THE L OT
PERSUADE BY PERSUASION! Whether it’s asking for a pay rise, pitching to win a client, going to a job interview or asking a friend for a favour, you have to learn how people think, explains Philip Hesketh in his new book ‘Persuade: Using the seven drivers of motivation to master influence and persuasion’. Hesketh believes it’s possible to find out what’s going to get them to agree and so can you – we have three copies of his book to give away! Send your name and address to graham@pqaccountant.com – head up your email ‘Persuade giveaway’
A STUDENT’S GUIDE PQ magazine has teamed up with Kaplan Publishing and author Clare Finch to offer you three copies of ‘A Student’s Guide to International Financial Reporting Standards’. This is the third edition of Finch’s must-read tome. You really do need to get to grips with accounting standards to pass accountancy exams and this book is a breath of fresh air. Yes, we have found a readable book on accounting standards and want to give you a chance of winning a copy, worth £25! To be in with a chance of winning this great prize simply send your name and address to graham@pqaccountant.com, with ‘A student’s guide’ in the email heading
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 December. The main draw will take place on Monday 14 December 2015
TO ENTER THESE GIVEAWAYS EMAIL GRAHAM@PQACCOUNTANT.COM 38
PQ Magazine December 2015
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