PQ magazine, June 2019 by PQ magazine

PQ magazine June 2019

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WHO IS LOOKING AFTER YOUR MENTAL WELLBEING? Do the accountancy bodies do enough to ensure the mental wellbeing of their students? Mental Health Awareness week took place from 13-19 May, and PQ was shocked at the lack of help and advice coming from the profession. As we have been told, there is no regulatory requirement for the bodies to support students with mental health issues. That responsibility

lies firmly with training providers, who have direct contact with the students, and their employers. There are expectations, and CIPFA appears to be leading the way. It is currently working with the South East Student Network to develop a programme of support that it plans to roll out to other areas. CABA, which works with ICAEW

students and members, has also been groundbreaking in this area. We can’t praise this organisation enough. It launched its latest mental health campaign in mid-April with the aim of boosting resilience, and helping people balance the pressures of work, life and exams. • Watch out for our ‘Wellbeing – State of Accountancy’ survey next month.

PRACTICE WILL MAKE PERFECT ACCA is introducing a new ‘Practice Solution’ platform that will shake-up the tuition market and directly help students manage the changeover to CBEs at the Strategic Professional level in 2020. As part of a wide-ranging package of support the practice solution will contain exam questions that replicate and mimic the exact look and feel of Pearson Vue software. All students will also be given access to specimen and past exams via ACCA ‘instance’. This will be free, and PQs will be able to access this as often as they like. James Patrick, ACCA Head of Professional Education, told the Global Learning Providers’ Conference that the practice solution platform “will help students understand the exam software inside out”, so they can demonstrate their finance ability in the live online exam. “We believe that replicating this live environment will really help students,” Patrick explained. In terms of timescale, the first practice solution will be available nine months before the first strategic professional CBE. The first exams (being piloted in UK, Ireland and Czech Republic) are in March 2020, so ACCA is

looking for launch date of June 2019. There are plans to then extend the platform to the Applied Skills Level. The practice solution platform is not just for students. Learning providers have been invited

to develop their own version of the ACCA platform, free of charge. They will be then able to host their own content and questions, mark these questions and provide feedback. ACCA told the GLPC that after the first wave of Strategic Professional CBEs it will be phasing in the CBE exams into other countries from September 2020. However, after listening to feedback it has decided there will be no parallel running of CBE and paper exams. “This only adds to students’ confusion,” said Judith Bennett, Director of Professional Qualifications. ACCA has also unveiled a new data analytics unit for the Ethics and Professional Skills model, and is looking to introduce an element of peer assessment capability in the case study unit. Students will have to submit a presentation, which will then be assessed by other students. So, all students are to become assessors! Further peer assessments are planned to be introduced in other assessments over time. Finally, two new technical performance objectives have also been added to part of ACCA’s PER. Business advisory, and data analysis and decision support are now areas PQs can focus on.

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comment PQ

CONTENTS News 06CIMA exam results Pass

24CIMA exam tips How to take

08ICAEW exams March sees an

26June ACCA exam tips Top

rates are holding up well

impressive set of results 10ACCA conference Learn to love IFRS, students are told Features, etc 04Mind your Ps&Qs OPBAS doesn’t know what it’s doing; ACCA lost my exam content; and why you are loving the apps 12Tech news An update on the digital world, including a roundup from Accountex 14Back to basics Net Realisable Value explained

15The audit market CMA calls for split in consultancy and audit funtions in the big firms

16Right of reply AAT’s Andrew Williamson explains how the association is aiming to improve students’ exam hall experiences

17ACCA update How the new qualification is working one year after its introduction

18Conceptual framework Knowing this will take the slog out of learning the IFRS

20Mental health Could study improve your wellbeing?

22AAT results The latest figures; plus apps to help you study

23ICAEW CBAs Why these assessments are nothing to fear

How’s your mental health?

June 2019 control of the exam process and cut out the stress advice from top tutors; and improving your word power

29Careers Life in a small practice; study resources for CIMA PQs; and our book review

30Fun stuff – and our giveaways The columnists Robert Bruce Time to applaud the profession’s unsung heroes 6 Prem Sikka UK company law helps facilitate economic crime 8 Zoe Robinson Why professional education offers value for money 10 Mike Day The 5G revolution is almost upon us 12 Subscribe to PQ magazine It’s FREE – see page 25 or go to www.pqmagazine.com JUNE 2019 ISSUE Total Distribution

30,506 Publisher’s statement: We send both a paper and digital issue to a controlled database each month. The above figure is the combined total of issues sent out this month. Free to subscribers who fulfil our terms of control Annual subscription: £35 (£50 overseas)

PQ magazine recently wrote to all the accountancy bodies asking them how they support the mental wellbeing of their students and members. We know that employers and training providers have a duty of care, but I feel the bodies should also understand that they should be ‘part of the solution’, too. Some students spend many years becoming qualified, and along the way suffer numerous setbacks. How would you feel if you failed an exam 10 times? This got us wondering if the bodies had a duty of care here. We’ve had a great response from them, which we will feature next month, with the launch of our own fact-finding wellbeing survey. We want you to tell us how you are feeling, and you need to be honest with us. There’s a fascinating double-page spread this month to kick off our campaign (pages 20-21). An award-winning tutor talks about how education helped with her depression, and CIPFA’s Alison Sweeting gives some great advice on managing exam stress. Read these articles! Small world PQ magazine recently spent a few days at Accountex, and you can read some of our interviews and insights on the tech news pages this month (pages 12-13). However, it was while we were on the MyFirmsApp stand that we had our best meeting! As I was catching up with the team Muhammad Zuberi asked if he could say hello (see picture). He said he wanted to thank me for my advice 10 years ago, when he was a PQ in Pakistan. He now works for Pebble Accounting in London and is a hugely successful chartered accountant. While I wasn’t doubting my advice was sound, Muhammad was able to show me exactly what I had said 10 years ago on his mobile. So remember, whatever you say online can come back to haunt you – good and bad! Graham Hambly, PQ magazine editor (graham@pqaccountant.com)

WIN A FREE AAT MODULE PQ magazine has joined forces with Premier Training to offer this great giveaway Isn’t it time you discovered what an award-winning provider can do for you? You can choose any module from the AAT accounting or bookkeeping qualification (level 2-4). Send your name and address to graham@pqaccountant.com. Head up your email ‘Premier offer’ and we will enter you for the draw. The closing date for this great prize is 31 May 2019 * PQ magazine’s usual; terms & conditions apply

PQ email graham@pqaccountant.com

HAVE YOUR SAY A rocky road If, as the article in May’s PQ suggests, “AML supervisors still seem in denial about money laundering”, then what is OPBAS doing about it? That’s where the failure is. UK regulators on the whole are rubbish, only seeming to be interested after the event. A classic example concerns Northern Rock Building Society, when it entered the very dodgy US sub-prime mortgage market. They even announced that they were going to do so, at a time when many of us had looked at it and declined to invest in it. The regulator did nothing until the crash. The

chairman was OK – he resigned and took away his pension, leaving his workers in a financial mess. As to the London property

market, did the OPBAS review cover this? It should have done. There are documented cases of foreign government ministers decamping with public funds and investing in London property. Two of the most highlighted examples are the Ukrainian (or Georgian) health minister and the Nigerian oil minister. How did former PM David Cameron have the cheek to claim other countries were corrupt when we were making it easy for some of their leading citizens to be so? At the time of one of these cases a leading London estate agent was quoted as saying: “We don’t really do anti-money laundering.” David Hunt, by email

Our star letter writer wins a fantastic PQ mug! More missing marks I received the same email in February as the student featured on your letters page, who complained about poor service from ACCA (PQ, May 2019). In my case, some of the content of my June 2018 F6 exam paper was not presented for marking and had since been recovered. My mark increased from 67% to 89% – a pretty substantial increase, so it seems a whole section was missed! I did wonder at the time how ACCA would have responded if I had been told I’d failed the exam originally; if so, I definitely would have resat the exam before February. They did give an email address to respond to if I had any queries – which I did. I got the auto reply that my email had been received, which said they aimed to reply within three working days. It’s now nearly three months later and I’m still waiting a reply (even after resending the email in March). It would be interesting to know how many students received this email. I refrained from asking on the ACCA distance learning Facebook page as I know how disappointed students who’ve failed an exam are and didn’t want them

I need pqjobs.co.uk

to question whether part of their exam was not marked. Name and address supplied

Phone trouble I enjoyed your new column on study apps – there really are stacks of them out there (of varying

quality, of course). The trouble is, too many of us are already spending too much time staring at our mobile devices like zombies (me included!). It seems that that’s our fate now. Anyway thanks, and keep up the good work. Name and address supplied

social media ROUND-UP We loved a recent picture posted on one of our favourite Facebook groups showing how one student felt about passing her tax exams – those books went straight in the rubbish. A fellow student suggested it was now time to “burn them”, but we aren’t sure if that would be good for the bin!

However, everyone is different, and one AAT admitted to keeping all her books, even the out-ofdate tax ones. Others thought they might need to refer to them at some point in the future, although admitted they never have. Others wondered if recycling might be a better option, or just giving them away. A debate on of how useful they would be ensued. The bin option still looked good. On another site Samad Niazi created a poll asking whether it was possible to pass the ACCA SBR exams by self-study. Some 64% of PQs felt it was. Noorali Samnani was among those who said yes, but you need to “focus on past papers, examiner comments, and still have a skill for discussion”. He said that there is a lot of free material available on YouTube you can access, too. The Competition and Market Authority’s report on audit really put the cat among the pigeons. Talha Siddiqui wondered: “Wouldn’t splitting off the audit business bring more objectivity to the whole external audit process? It is an interesting debate in my opinion.” Replying, Boo said: “I think it’s more profit and internal havoc EY are thinking of. If they were concerned about objectivity we wouldn’t be where we are, I still think FRC has got it wrong. These changes leave too many loopholes.”

PQ Magazine Unit 3a, Kingfisher Heights, 2 Bramwell Way, Royal Docks, London E16 2GQ | Phone: 020 7216 6444 | Email: graham@pqaccountant.com Website: www.pqmagazine.com | Editor/publisher: Graham Hambly graham@pqaccountant.com | Associate editor: Adam Riches | Art editor: Tim Parker | Contributors: Robert Bruce, Prem Sikka, Mike Day, Tony Kelly, Phil Gammon, Edward Netherton | Subscriptions: dom@pqaccountant.com | 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

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PQ news

ROBERT BRUCE Time to hail some unsung heroes

There was a huge disconnect between the climate change Extinction Rebellion disruptions in London recently and those who have been steadily putting reform measures in place for over a decade. Extinction Rebellion, a mass of law-abiding and mostly middle-aged folk with pink boats at Oxford Circus and playing cello on Waterloo Bridge, made no mention of any other efforts to slow climate change, if not halt it. And there was no reason why they should. Their message was that they were the only game in town. And certainly they were dead right if they were referring to the pitiful efforts made by all the political parties in this country, with the noble exception of the Green Party, to deal with climate change. But to suggest that no one else has got a grip is nonsense. Business, and accountants generally, have been bringing about change. It is all about ensuring that if you want something to change you need to measure its effect and make the implications plain. This is how a small group working on accounting for sustainability has grown into a worldwide movement in the past 15 years. All of the efforts have been devoted to changing the way that climate-related risks are reported and so made plain in corporate reporting. A system of integrated reporting creates outcomes that makes climate risk plain to see. And being out there and obvious makes it very hard for companies to avoid acting on the consequences. It has been slow, steady but brilliant progress. And not a pink boat in sight. Robert Bruce is an award-winning writer on accountancy for The Times

CIMA pass rates holding up well PQ magazine

At 89%, the E2 OTs has the highest pass rate for first time sitters. Meanwhile, February case study success rates seem to be holding The latest batch of CIMA pass rates steady, with all the papers hovering show the pass rates seem to have between 57% and 61%. finally found their level. CIMA’s VP examinations, First-time OT sitters seemed to Steve Flatman (pictured), struggle most with the P1 test, with told PQ magazine: “Our just over half (52%) passing it at students continue to the first time of asking. Compare demonstrate strong this with E1, which has an 81% professional skills and first-time pass rate. competencies through their performance CIMA CASE STUDY EXAMS 2018/19 – PASS RATES in the February case Feb 19 Nov 18 Aug 18 May 18 study exams, and we are Operational 57% 60% 49% 43% pleased with their overall Management 61% 57% 75% 72% good results.” Strategic 58% 60% 59% 67% He was aware that

EXCLUSIVE

CIMA OT PASS RATES Overall First time E1 88% 81% P1 71% 52% F1 85% 76% E2 95% 89% P2 76% 56% F2 79% 57% E3 87% 75% P3 77% 61% F3 81% 62%

Total 77% 48% 72% 87% 50% 52% 71% 55% 55%

students will now be looking at the start of the new exams, which begin in November 2019. He wanted to encourage all students to access CIMA’s transitional tool, which is designed to help student transition to be as seamless as possible. Flatman explained: “The tool provides personalised advice based on individual circumstances depending on your study method, the time you have available and support level you receive from your employer.”

Tattoo stories please! A few years ago PQ magazine asked you to send us your tattoos. We wanted to show that accountants aren’t all grey suits and shiny shoes! We were recently told that one ICAEW member wanted to put his accountancy body logo on his body, but when he asked them to send

him a copy of the logo so he could give it to the artist he was refused. Apparently, the ICAEW felt having its logo on your body might bring you – and it – into disrepute! If anyone out there would like to send us their tattoo pictures we will print the best ones. Send them to graham@pqaccountant.com

Is ACCA’s AAA just one long bore? Is the ACCA Advanced Audit and Assurance (AAA) study material the most likely to send you to sleep? Students are saying they are really struggling to concentrate on the lectures. “I felt like taking a nap,” said one studier after a long session. Other students studying AAA have revealed they were feeling the same. Many studying towards the June exam said they just plan to move quickly onto answering questions. “It might make it a bit easier to

stay awake,” explained a hapless PQ. Strategic Business Leader (SBL) was also deemed “a dry dull subject.” For one PQ caffeine was their new best friend. Short bursts of study with regular breaks and a reward at the end of a study session were the best suggestions from fellow sufferers. The worry for some is that they have started to snack on biscuits. “ACCA absolutely ruins my diets,” said one ACCA studier.

In brief ACCA texts for £1 ACCA PQ magazine readers shouldn’t forget they can buy ACCA study texts from Emile Woolf for just £1 when they sign up to its ACCA Club. The e-books cover the syllabus but “without excessive detail”. Written in clear English, they have simple layouts and a large bank of practice questions and comprehensive solutions. Emile Woolf also has Revision Question Bank for some papers for £9.99. See www.emilewoolf.com/ book-shop/acca/ 6

Masters degrees on the rise More than a quarter of a million master’s degrees were awarded in 2018, the highest on record. It is being suggested that young people want the extra qualifications to help them stand out in the job market, with the increase in first and 2.1 degrees being awarded meaning that having a BA or BSc may no longer be enough for employers. In 2018, some 255,135 students completed a taught master’s degree.

Study-drug use increasing The number of students misusing prescription drugs to boost their performance is on the rise, says a new survey. One in six pupils who have sat GSCEs in the past year admit they have taken drugs for attention deficit hyperactivity disorder or narcolepsy

to help with concentration. Ten years ago the figure was one in 20. The worry is that these drug-taking habits will be taken into higher education and professional exams. Win a free AAT module PQ magazine has joined forces with Premier Training to offer one lucky reader the chance to win a free AAT module. You can choose any module from the AAT accounting or bookkeeping qualification (levels 2-4). Check out page 3 for all the details. PQ Magazine June 2019

PQ news

PREM SIKKA Company law facilitates economic crime The UK will remain a favourite destination for the proceeds of economic crime because it provides the key ingredient – secrecy. Anyone from anywhere in the world can form a company in the UK. Companies House rarely checks the authenticity of the names and addresses of the directors. The UK permits nominee shareholdings and directors, which conceals the identity of the ultimate controllers and beneficiaries though accountants, lawyers and banks acting as nominees collect fees. Private companies need at least one natural person as a director and that person need not be from the UK or the EU. Public limited companies must have at least two directors and one of these needs to be a natural person. Some corporate directors are based in offshore tax havens that do not publicly identify the names of directors or shareholders. Foreign shareholders and directors, even if known, can’t be forced to comply with the UK laws. Companies are required to file information about persons with significant control (PSC) – anyone holding more than 25% of the shares, who can be called to account. A 2018 report found that 335,000 companies do not have a PSC. Some 208,000 UK firms are registered at a company ‘factory’ – a location that is the registered address of more than 1,000 companies. Some 4,000 PSCs were under the age of two. Controlling company formations is the first necessary step in combatting economic crime and the UK has failed in that task. Prem Sikka is Emeritus Professor of Accounting at the University of Essex

ICAEW’s impressive results PQs from ‘rival’ accountancy bodies will surely look with envy at the latest ICAEW professional exam results! The lowest pass rates for March 2019 was for the Business Planning – Taxation papers, where

just 77.7% of first time sitters passed. All the other pass rates for first timers was above 80%, and for the Business Strategy & Technology paper it was an impressive 92.8%. Students ICAEW PROFESSIONAL LEVEL RESULTS also impressed MARCH 2019 All First time Audit & Assurance 78.9% 82.2% in the Level 4 Financial Acc & Reporting (IFRS) 81.1% 84.6% Accounting Financial Acc & Reporting (UK GAAP) 79.4% 83.3% Technician Tax Compliance 80.7% 86.0% apprenticeship Business Planning: Taxation 74.3% 77.7% end-point Business Strategy & Technology 89.2% 92.8% assessments. Financial Management 80.3% 85.6% Some 100% of

students passed in the Portfolio and Reflective Statement module and 81.6% in the Role Simulation exam. A total of 2,743 students sat the March exam, with 4,301 exams sat (an average of 1.56 papers). In all 2,034 ACA PQs passed all the papers they sat. Some 75.8% of students who sat three papers passed all three, with another 12.3% passing two out of three. This compares to the 73.2% of sitters who sat one paper and passed it!

Celebrating ICAEW successes Do you want

a career in films & TV? ICAEW students from all over the world descended on Chartered Accountants’ Hall in London for the institute’s annual International Prizegiving Ceremony. Among all the sucess stories three students stood out for getting 100% in their Professional level exams: Yi Sze Ng from Malaysia; Thomas Thoma from Cyprus; and the UK’s Natalie Bowmaker

White sent to prison

Do you have a desire to work in film and TV production accounting and have previous experience of working in a junior position in accounts or finance? The Production Guild are seeking to recruit and train 10 people across the UK to become Assistant Production Accountants. The programme will last from September 2019 to May 2020 and will consist of a month of classroom training at Warner Bros. Studios, Leavesden Park, followed by up to three paid work placements on film and high-end TV productions in the UK. Applicants must have a permanent UK address and be eligible to work in the UK. For more information go to https://bit.ly/2KnSHm6

Former accountancy student Thomas White has been jailed after being found guilty of helping to operate a dark web business dedicated to the sale of illegal drugs, and for hoarding a catalogue of horrific child sex abuse imagery. After dropping out from an accountancy degree at Liverpool John Moores University (the 24 year old managed one term), the former Silk Road administrator

launched Silk Road 2. The FBI had closed the original and notorious dark web site in 2013. White (pictured) was finally sentenced in April 2019 to five years and four months after he pleaded guilty to drug trafficking, money laundering and making 464 category A indecent images of children. National Crime Agency investigators also confiscated 50 bitcoin, currently valued at £192,000.

what they said. You should also google the company to see if they have been in the news, she said.

experience requirement to gain full CIPFA membership.

Read her advice on passing the final level exams on page 17.

Time management is key ACCA Strategic level candidates are spending too long on Q1, says Judith Bennett, ACCA director of professional qualifications. It means they are often answering it really well, but then subsequent questions just get bullet point answers. She said: “Time management is essential to show the marker what you are capable of throughout the exam.”

Where’s the annual report? Food giant Kraft Heinz has been forced to restate nearly three years of financial results after discovering evidence of employee misconduct. In a filing to the US SEC, it said an internal probe had revealed the fabrication of a number of procurement and supplier transactions. The firm still hasn’t filed its 2018 annual report (as PQ went to press).

In brief Google it! Tottenham Hotspur Foundation CEO (and accountant) Sarah Ebanja (pictured) was the star turn at the recent ‘Step into Accounting conference’ at the College of Haringey, Enfield and North East London. She said if you going for an interview then the least you must do is google the company’s financial report and accounts. Read the chair’s report and at the interview ask a question about 8

CIPFA signs Irish deal CIPFA has signed a mutual recognition agreement with the Chartered Accountants Ireland (CAI). The move provides a new route for CAI students to qualify as both an ACA and CPFA through a public sector elective. The public sector elective is based on CIPFA’s Strategic Public Finance module. On passing there will still be a work

PQ Magazine June 2019

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PQ news

ZOE ROBINSON Professional education is good value for money

The fee cap for a UK undergraduate is £9,250 for full-time study, which means a three-year degree will cost £27,750. This is certainly a large amount of money but with graduate numbers increasing many must believe it to be value for money. In his book ‘The Case Against Education’, Bryan Caplan, economics professor at George Mason University, challenges the value added by universities in terms of skills learned and return on investment. Although his calculations are based on the US market, his arguments are worth considering here in the UK. Which leads to a more relevant question: how would a professional accountancy qualification stand up to the same level of scrutiny? Here are a few numbers. In 2018, Accountancy Age undertook a survey that showed those with an accounting qualification earned an average of £18,246 more than those without (£64,220 qualified £45,974 not qualified). Sitting alongside this is the cost of a threeyear part-time course, which is about £15,000. This is a very simple comparison and as we know averages can be misleading, but it offers some insight. But does what students learn while studying genuinely improve their skill set? Although I am clearly biased, I think it does. The professional bodies work hard to ensure examinations assess the skills most valued by employers, motivated perhaps by the need to ensure their qualification remains relevant but, perhaps most importantly, is of value. Zoe Robinson is Learning and Programmes Director at Kaplan Financial

Love your standards! ACCA FR candidates need to get to love their standards, or perhaps find a lecturer who is passionate about them. The FR examiner told attendees to the Global Learning Providers conference that there are 25 of them, and you “don’t need to be afraid to tell people the standard you love”. His favourite is IS38 intangible assets, and he feels IS8 is a dreadful one! No one is, he claims, too cool not to have a favourite – remember this is a FR class and no one is too cool for anything. He also said you should be creating halfpage summaries of each standard, to include the key summary and rules.

AAT under fire AAT’s business practices have come under attack after a tuition provider was told to ditch its current accountancy body’s qualifications for the AATs. PQ magazine has seen an email sent to a distance learning provider telling them they had a ‘weak’ offering for the full AAT qualification, in comparison to what is already available in the market. However, this college has a strong bookkeeping offering and hundreds of students, which the AAT account manager was interested in. The problem? These students are already registered with the ICB. The email ends by asking: “If you are open to discussing replacing your ICB offer with AAT then Technology, trust and talent are the key themes of the new ICAS qualification being introduced this September. The first big change will be the introduction of Business Acumen into the Test of Competence (TC). In a recent interview ICAS education chief Mark Allison explained that bringing business acumen, commercial awareness and initial entrepreneurial skills into level one

Deloitte goes legal Deloitte’s legal arm is set to become a ‘big player’ in the UK’s £26bn legal market. New head Michael Castle said the firm is ready to “transform the legal landscape”. No mean boast. Castle, who hails from Allan & Overy, explained that the legal profession is one of the last businesses to embrace wholesale digital transformation. He believes that combining law with the firm’s pre-eminence in consulting and technology will help the transformation. Deloitte is, however, late to the game, with EY, KPMG and PwC already having UK legal businesses. The scale and financial clout of the Big 4 accountancy firms is undoubtedly seen as a 10

Meanwhile, the PM examiner explained that while variance calculations are done well, students seem to struggle with discussing variances in relation to managers’ performance. There was concern

that PQs don’t really understand why they are calculated, or what they tell us about how the company is performing. Similarly, whenever there is a transfer pricing question, students seem to recoil in horror, no matter how easy the examiner tries to make them. Students just don’t like them and there are always problems. • We will have more on the Global Leaning Providers conference next month. For all the top tips for the June exam go to page 26. The ACCA’s Judith Bennett director of professional qualifications provides advice on how to pass the exams too – see page 17.

please let me know.” The distance learning college wondered whether this was an isolated case. AAT said: “We require a robust business case from all prospective training providers, especially those proposing distance learning as a delivery channel, before we are able to proceed with an application to offer AAT qualifications.” It told PQ magazine that the suggestion to move the provider’s existing students onto AAT qualifications was made as “then the number of students on AAT qualifications would be higher, and as a result it would be commercially more viable for the provider to deliver our foundation certificate and advanced diploma”. ICB President Garry Carter said: “I have a great deal of respect for AAT, so I was surprised to hear that a fellow professional body had been acting in what appears to be such an underhand way.”

A new look for ICAS will ensure students will be more relevant in the workplace. From 2020, Assurance and Business Systems at TPS will become Assurance and Data. A new subject of Risk and Technology is also being incorporated into the syllabus. Meanwhile, the tax paper

threat by many of the current ‘Magic Circle’ of law firms. Blockchain Analyzer EY recently launched the second generation of EY Blockchain Analyzer, its blockchain analytics tool. The first generation tool was designed to facilitate EY audit teams in gathering an organisations’ entire transaction data, from multiple blockchain ledgers, to reconcile that data to EY client books and records, and to perform enhanced analytics. The new upgrade is now available to EY teams and non-audit clients as a business application

will concentrate on business taxes. Those studying the CA qualification will also need to brush up their quantitative skills. We are talking forecasting, sensitivity analysis and estimation here. They will all become an important part of the new course and syllabus.

that is accessible anytime and helps enable financial reporting, forensic investigations, transaction monitoring and tax calculations. CEOs divided over AI Nearly three-quarters of UK CEOs (72%) believe AI will significantly change the way they do business in the next five years, but debate still remains on how involved government should be in the technology’s development. When it came to regulation, PwC’s 22nd annual CEO survey found just under half of those surveyed (47%) thought organisations should be allowed to self-regulate the use of AI, while a similar number (44%) disagree. PQ Magazine June 2019

PQ tech news

MIKE DAY The 5G step-change is almost with us

There are two tech topics that are just around the corner that will have a profound impact on business and accounting – mobility and big data. In this issue I’ll cover mobility (keep an eye out for thoughts on big data coming soon). So, how many seconds ago did you last look at a social media app? Well, you ain’t seen nothing yet! That’s because 5G mobile networks are nearly here. The country’s biggest mobile network, EE, is to launch 5G this summer in Cardiff, Edinburgh, Belfast, Birmingham, London and Manchester. Why the big fuss? Well, because 5G makes several major leaps forward. Current 4G networks transmit data at about 100 megabytes a second, so a full HD film takes over seven minutes to download. 5G networks are about five gigabytes a second – so downloading the same film will take just 10 seconds! But it's also very clever. At the moment the quality of your 4G connection is dependent on the number of other mobile device connections. There’s only so much capacity in any given area. This won’t be the case with 5G as it has far greater capacity and the ability to scale intelligently, according to what it is being used for. It’s also due to cover more geographical areas; great news for rural businesses. It will be like having a current fibre cable to every phone, tablet and laptop. In the meantime, the impact on remote working, transport and informed decision making in business on any device, is going to be big – and great for watching Netflix, too. Mike Day, Director, UK Education Sector, Xero

From hype to reality One in three accountants believe AI is still “all or mostly hype”, while the rest (60%) say in three years’ time it will become a reality, according to a new global research from the ACCA. The findings are published in a new report ‘Machine Learning: More Science than Fiction’. Those accountants surveyed say the adoption of machine learning needs to be based on legitimate business need, rather than just wanting to be seen as using AI.

The report also highlights the ethical challenges that lie ahead – accountants will increasingly need to align professional competence and due care with AI and machine learning. The reports author, Narayanan Vaidyanathan (pictured), said that as with any technology with power comes responsibility. He explained: “In the case of machine learning ethical considerations are never far away.” Vaidyanathan stressed that at the very least all finance professionals should know how AI is evolving and be alert to how the developing

Cybercrime soaring More than three out of five firms (61%) experienced a cyber incident in the past year, up from 45% in 2018, says the latest international report from Hiscox. Firms in Belgium were the most heavily targeted. While larger companies are still most likely to suffer a cyber attack, the proportion of small firms reporting an incident is up from 33% to 47%.

Among the firms across seven countries reporting attacks, average losses associated with all cyber incidents have risen from $229,000 last year to $369,000 – an increase of 61%. For larger firms cyberlosses now top $700,000. Of the countries surveyed German firms suffered the most, with one reporting a cost for all incidents of $48m. Supply chain incidents are also

capabilities could impact on their roles. He added that to prepare for the digital future ACCA has enhanced the digital content across many of its exams. getting more commonplace. Nearly two-thirds of firms (65%) have experienced cyber-related issues in their supply chain in the past year. The worse affected are technology, media and telecoms (TMT) and transport firms. The majority of firms (54%) now evaluate the security of their supply chains at least once a quarter or on an ad hoc basis. • The Hiscox Cyber Readiness Report 2019 looked at companies in the US, UK, Belgium, France, Germany, Spain and the Netherlands.

Nowhere to hide from the Revenue HMRC’s IT system, Connect, is increasingly being used to identify income and gains that have not been declared, according to accountants Blick Rothenberg. “Connect completely changes the dynamic of how HMRC commits investigation resource to risk and enables thematic and risk-based enquiries across the taxpaying population,” said the firm’s director of tax risk, Jessica McLellan. She added: “No taxpayer can

hide from the sophisticated electronic searches available to HMRC, it’s not just about identifying income and gains; the searches are being used to provide key information about wider lifestyle questions – for example the existence of offshore assets, expensive flights to exotic destinations, or purchase of high value assets in the UK such as property or classic cars.”

Tech briefs Call for mental health tax Doctors and MPs are calling on technology companies to pay a mental health tax, and for addiction to social media to be classed as a disease. A report, from an allparliamentary group on social media and young people’s mental wellbeing, has suggested a 0.5% tax on profits to fund research and education. The head of NHS England, Simon Stevens, has previously called for a tax on social media companies. He believes they should pay to fund the treatment 12

for the mental health problems they create. Ditch passwords It may be time to ditch online passwords because they do not properly protect people, says Microsoft’s Bret Arsenault. He revealed that some 90% of employees (they have 135,000) can now log on to the corporate network without a password. Instead, they use alternatives such as biometric services, which scan faces or fingerprints.

London talent sought Facebook has opted for London to become its global centre for a payments push for its messaging platform Whatsapp. The plan is to launch mobile payments in several countries this year, pushing up staff numbers in London to 400. Facebook said it chose the UK because of its multicultural workforce from countries where Whatsapp is popular. Whatsapp is far more popular in the UK and India than the US.

Your voice HSBC UK’s innovative voice biometrics system, VoiceID, which allows customers to access their accounts using their voice, has prevented £330m of customer money falling into the hands of fraudsters, the bank says. Since the system was introduced in 2016, more than 15,000 fraudulent calls have been identified. The technology also provides a library of fraudsters’ voiceprints to check against new incoming calls. PQ Magazine June 2019

Accountex news PQ

Why cash is still king

Every UK small business is owed an average £24,841 as a result of late payments, according to the latest analysis from Xero’s Small Business Insights. Xero’s director of Partner and Product, Damon Anderson, told PQ magazine at Accountex that late payments cause a real cashflow squeeze that contributes heavily to some 50,000 small business failures a year. He explained that the average number of days for a small business invoice to be paid in February 2019 (30-day term) was 40.3 days. The data also shows that FTSE 350 companies pay in 46 days on average, or more than two

Damon Anderson

Open Banking has arrived Earlier this year, FreeAgent became the first UK accounting software to offer direct bank feeds via the Open Banking platform, FreeAgent’s Nick Longden (inset) told PQ magazine. Now part of the RBS and NatWest group, FreeAgent’s initial feeds were open to a selected group of test users, with a wider roll-out planned for later in the year. However, it’s what Open Banking enables business to do next is that is making Longden excited.

weeks late. Anderson said that in the 10 years since the Prompt Payment Code was introduced there has been no improvement in this area. More government legislation may be needed. In the meantime, he believes that using the tech provided by firms such as Fluidly and Iwoca will help small firms help themselves by building real time information, identifying the cash gaps and helping them get access to capital when they need it.

We are not there yet, but eventually businesses will be able to initiate payments in the software via the platform. We are not just talking about the supplier here but payroll, too. Businesses will also be able to share financial accounting data easier. So if you need a loan, mortgage, invoice factoring or insurance the decisions will become almost instant. That access to finance is critical for many businesses.

Top 10 guide to the best MTD bridging software Here’s MyFirmsApp’s Allison Plager’s Top 10 bridging software for Making Tax Digital (MTD) for VAT: 1 Absolute Accounting Software 2 Accu-Man 3 Andica 4 BTCSoftware 5 Clear Books 6 Forbes Computer Systems 7 IRIS Software Group 8 Norais Software Solutions 9 Vital Code 10 Wolters Kluwer UK

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PQ AAT exams

Back to basics: Net Realisable Value Struggling with how to value inventory? Rob Wyatt recaps the basic principles of valuing inventory using the Net Realisable Value technique

ne important aim of the Statement of Financial Position is to accurately report the value of the enterprise. The ‘true’ value of assets is achieved in various ways using a variety of techniques and one requirement when valuing inventory is the idea of ‘net realisable value’ (NRV). 0NRV represents the net value, real or estimated, to the enterprise after selling costs have been considered. For example, if there is are costs required to prepare the inventory for sale then those should be deducted from the expected selling price. In normal circumstances, NRV would be higher than historic cost, leading to potential profit, but in some

circumstances such as obsolescence, physical deterioration, etc, it can be lower. The requirement for financial reporting is to use the lower of historic cost or NRV. How is it calculated? Adjustments can arise in different ways. The simplest is where obsolescence, or similar, reduces the selling price. For example, inventory bought for £5 per unit with the initial intention of selling at £10 per unit would be held in inventory at the lower value, namely £5 per unit. However, if the market price dropped to £4 per unit then the NRV is now lower than historic cost

and the value of inventory would be reduced to £4 per unit. The adjustment recorded as an expense in the profit and loss account. Slightly more complicated are situations where the goods are damaged and require some form of repair to be placed in a saleable condition, albeit possibly with a different sales price. Consider the example above with a different situation whereby the items need to be repaired at a cost of 35p per unit to achieve a sales price of £5.25 The sales price is higher than cost, but the repair charge must be taken into account giving an NRV of (£5.25 – £0.35 =) £4.90. Once again the inventory would be reduced to the lower value with an appropriate charge to the P&L. Exam tips 1. Be careful not to simply adjust to NRV. Adjusting the example above again, consider a re-packaging charge of 50p per unit and a sales price of £6 per unit. While there is a vastly reduced sale price (£10 – £6) the comparison of NRV to historic cost is still paramount. In this situation the NRV is (£6 – £0.50 =) £5.50, which is higher than historic cost meaning that no adjustment is required. 2. Make sure inventories are not overstated. The valuation of inventories based on the lower of cost or NRV is an example of the prudence concept being applied. To present a ‘fairer’ picture of the enterprise it is essential that inventory values are correctly reviewed. PQ • Rob Wyatt is an AAT tutor for AVADO

A leading qualification for a changing world The role of the professional accountant is becoming more important than ever. That’s why we’re evolving the ACCA Qualification to keep it current and maximise your employability to give you the professional edge in a changing world. Key changes include:

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PQ Magazine June 2019

audit change PQ

CMA joins call to split audit and consultancy T

he UK Competition & Markets Authority (CMA) says legislation is now needed to address both the lack of choice and competition in the audit market. There is also genuine concern about the vulnerability of the industry to the loss of one of the Big 4. The CMA is recommending the separation of audit from consulting services, mandatory ‘joint audit’ to enable firms outside the Big 4 to develop the capacity needed to review the UK’s biggest companies, and the introduction of statutory regulatory powers to increase accountability of company audit committees. CMA chairman Andrew Tyrie said too many audits fall short, with more than a quarter of big company audits considered sub-standard by the regulator. “This cannot be allowed to continue,” he stressed. He went on: “The government now has three reports to hand. In large part, they come to similar conclusions. Conflicts of interest cannot be allowed to persist; nor can the UK afford to rely on only four firms to audit Britain’s biggest companies any longer. Early action will require legislation – hence the CMA’s proposals.” The CMA recommendations are: • Operational split: Auditors should focus exclusively on producing the most challenging and objective audits, rather than being influenced by their much larger consultancy businesses. Given the difficulties with an immediate global structural split, at this stage the CMA is only recommending an operational split of the Big 4’s UK audit work. This will require separate management, accounts and remuneration, a separate CEO and board for the audit arm, separate financial statements for the audit practice, an end to profit-sharing between audit and consultancy, and promotions and bonuses based on the quality of the audits. • Mandatory joint audits: More choice and competition for audits of big businesses can and should drive up their quality, but the barriers to entry for ‘challenger’ audit firms are currently large. The CMA is recommending mandatory joint audits to help increase capacity at the challenger firms, choice in the market and thereby drive up audit quality. It believes challenger firms should work alongside the Big 4 in these joint audits and jointly be liable for the results! There may be initial limited exceptions to the requirement, based on criteria set by the regulator, focused on the largest and most complex companies. However, any company choosing a sole ‘challenger’ auditor should be exempt, says the CMA. It is envisaged that the joint audit requirement should remain in place until the regulator deems that choice and competition have improved enough to address the vulnerability of the market to the loss of one of the Big 4.

PQ Magazine June 2019

The Competition and Markets Authority has released its proposals to ensure audit competition. It’s now over to the government to implement the changes • Audit committees: The CMA says it is essential that audit committees choose auditors by seeking those likely to provide the most robust and constructive challenge to the accountancy practices of their companies. That means the regulator should hold audit committees more vigorously to account. This may include ensuring that committees report their decisions as they hire and supervise auditors, and that the regulator issues public reprimands to companies whose committees fall short of adequate scrutiny of their auditors. • Five-year review: The regulator should review the effects of these changes periodically, in the first instance in five years from the full implementation date. It is then that they should look to see whether to go beyond the operational split already proposed, and how to fine-tune the joint audit remedy to adapt to market developments. However, there is one professional body that is not happy with the CMA’s recommendations and is prepared to say so – the CBI. The UK’s premier business organisation says some of the CMA’s audit recommendations risk damaging UK plc’s world leader reputation. It said that improving the quality of audit to

enhance public trust and investor confidence is paramount. But CBI President John Allan said: “The guiding star for any reforms must be a focus on what works.” He felt that mandating joint audits will add cost and complexity for business, with no guarantee of better outcomes. Operational splits could also restrict access to the skills required to carry out complex audits. Allan suggested that other ideas, such as greater scrutiny of audit committees by the regulator have merit and could safeguard against high-profile corporate failures, which have rightly prompted searching questions. He explained that with the Byron review yet to report a false move now could create yet more uncertainty and undermine confidence in corporate Britain. It is also being reported that several of the Big 4 are now considering the options of a judicial review of the recommendations. They seem to be particularly worried about the introduction of mandatory joint audits. This proposal ‘surprised’ many, given the level of opposition from companies in their submissions to the study, and the lack of evidence that such a move improves audit quality. PQ 15

PQ right of reply

Getting it right in the exam hall Andrew Williamson, Director of Marketing and Commercial at the AAT, responds to PQ readers’ criticism of the association’s exam hall software

’m writing in response to an article in the April issue of PQ magazine and wanted to feed back directly on our approach to working with training providers to ensure thirdparty software is in line with our requirements. As the original article correctly outlined, some AAT assessments use third-party software such as SAGE. This is important because it enables us to provide real-life scenarios and assess students using software they would be expected to be familiar with in an accountancy role. AAT takes its responsibility for communicating with training providers about the importance of third-party software seriously. We regularly communicate via email, in meetings and at our annual conference so training providers are continually reminded of the importance of keeping their systems and software up-to-date. The training provider approval application forms include questions specifically around what

Andrew Williamson

third party software they will have in place to manage AAT assessments. Training providers applying for approval must declare they have all the relevant software required. They must also confirm that the information held on Find an Assessment Venue/Find a Training Provider on AAT’s website is accurate and unambiguous. External Quality Assurers carry out occasional spot checks during visits to training providers, to ensure they continue to have appropriate thirdparty software. And our Regional Account Management team works with our existing training providers to ensure that the information on Find a Training Provider and Find an Assessment Venue is an accurate representation of what they can actually offer students. As an awarding body it is important that our assessments run smoothly. We expect our training partners to provide a high-quality system and up-to-date software in order to allow this to happen in their college. We have only occasionally received a complaint from a student about their training provider regarding issues with their third-party software. Any complaints are noted but we always require students to exhaust the complaint process with their training provider before it is investigated further by AAT. If we receive a number of complaints about a training provider we may instigate an early external quality assurance visit or place the provider on sanction while we investigate the matter further. However, on this occasion, we have not had any significant complaints and so we’ve not needed to do this. PQ

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PQ Magazine June 2019

ACCA update PQ

Qualification for today Judith Bennett outlines how the new ACCA qualification, introduced last year, is progressing

hange is the new normal, and since we relaunched ACCA’s qualification in 2018 there’s certainly been a lot of change to ensure the skills we are testing in the qualification are aligned to the needs of employers, and we are now seeing a lot of progress and positivity. To ensure PQ readers are performing as well as they should in their ACCA exams, I wanted to offer a few timely reminders for future success and share some of our latest updates that will ensure the skills you are developing keep you in demand. ACCA’s new Strategic Professional exams had their third sitting in March, producing a set of good results, including those for Strategic Business Leader and Strategic Business Reporting. Many congratulations to all the students who have passed these exams, especially those students in many different parts of the world who have achieved excellent prize-winning marks. Results for Strategic Business Reporting were the highest since launch. What’s really gratifying about this is the way students have approached this exam with advice and guidance now being taken on board. ACCA’s Catherine Edwards wrote an article for PQ recently, explaining how markers reported that they felt students were approaching Strategic Business Reporting just like the former P2. In Strategic Business Reporting, students have to analyse the data and present their findings to stakeholders and we’re now seeing more students doing just this. And even more pleasingly, we’re seeing strong evidence that students are starting to understand how to refer to the conceptual framework in their answers. There was another great article in PQ by Tom Clendon, a tutor with Avado, who explained the use of this very clearly and students will be expected to apply this framework in every exam (PQ, April ’19).

The power of practice Our main advice for Strategic Professional exams is twofold: time management and practise, practise, practise! With time management, we see evidence in all exams at Strategic Professional that students are spending too long on the first question and although they are often answering it really well, responses to subsequent PQ Magazine June 2019

questions are written in bullet points. At this level, trying to convey their answers in bullet points is unlikely to score marks, and so time management is essential to show the marker what you are capable of throughout the exam. Successful students tell us they prepare by practising full exams to time, also focusing on answering the question as set and responding to the stakeholder’s needs as appropriate. It really does help and we think this is super practical advice. Evidence of helpful practice can also be seen in the results for the Applied Skills exams and how students are using the spreadsheets, for example. Here, practice can help you develop shortcuts that you can use in the exams to save time and let you focus on your response. And remember, in our spreadsheet questions the marker sees what’s in and behind every cell, not just the answer, so you will get marks for workings. Rehearse all your questions on a computer. If you are with an approved learning provider, they should set your homework questions on computer. Or if you are using our approved content material, use the Constructed Response Workspace. The more practice you do, the more familiar you will become with the exam tools to help you in the exam. Digital, ethical and successful Launched in October 2017, our groundbreaking Ethics and Professional Skills Module (EPSM) is designed to support your exam success. It provides you with the full spectrum of advanced ethical and professional skills employers need from accountants. We’ve recently introduced two new units into the module. The first specifically outlines to students how to use the learnings from EPSM to succeed in Strategic Professional exams. And the second unique innovation is a new

interactive unit on data analytics covering big data, different methodologies for data analytics such as robotics, AI, and machine learning, and the associated ethical and security issues. It also covers the legal implications of using and storing data, and explains how data analysis can be presented and communicated, allowing people to make good business decisions. Importantly the unit also includes scepticism in data analytics, one of the key professional skills required of any finance professional. This means that data results should never be taken at face value and that ‘too-good-to-be-true’ results need to be explored in detail before any decisions are made. Uniquely, as part of this module, students have to undertake a practical exercise to carry out data analysis, using statistical techniques, and make recommendations based on that analysis. Connected to emerging technology Of course, as well as getting students to practise data analysis in the EPSM, the ACCA qualification has digital content embedded throughout the exams; starting with Accountant in Business all the way through to the Strategic Professional exams. Subjects such as big data, Fintech, cybersecurity, audit data analytics and more are covered to ensure the relevance of the qualification. With the profession going through rapid change, we’ll ensure we’re giving you – our students – the knowledge and skills needed for the workplace today and the future. Our syllabus is updated each and every year to ensure that you have the awareness and skills needed for your careers, understanding what it means to be a professional accountant in the digital world. PQ • Judith Bennett is the ACCA’s director of professional qualifications 17

PQ Conceptual Framework

To know or not to know:

that is the question A

s a tutor of financial reporting papers of many years’ experience, I always find that students are overwhelmed by the number of Accounting Standards that they need to remember in financial reporting papers. Well, they think that they need to know them all! What is in fact more important is to remember the Conceptual Framework. This contains the concepts and principles that created all of the Accounting Standards. The Conceptual Framework The Framework identifies the five elements of financial statements: • Assets: These are resources controlled by an entity as a result of a past event that will lead to a probable inflow of economic benefits into the business. • Liabilities: These are obligations of an entity arising as a result of a past event that will lead to a probable outflow of economic resources from the business. • Equity: This is the residual net assets of an entity after deducting its liabilities. • Income: This increases the economic benefits for the business during the period. • Expenses: These decrease the economic benefits for the business during the period. The Conceptual Framework also identifies when the elements can be recognised in the financial statements. It says that an element should be recognised in the financial statements if: • It meets the definition of an element. • It is probable that future economic benefits will flow to or from the entity. • The item can be measured reliably. I always reassure my students that they can give a very good answer for most exam questions that are testing accounting standards just by knowing the Conceptual Framework. Let me explain this further, with examples of how easy it is to talk about an accounting standard, even if you don’t know the accounting standard, as long as you know which element is being addressed in the accounting standard. There are many examples, but I will focus on just three accounting standards. Revenue IFRS 15 asks a lot more questions now about whether we should recognise revenue than the previous revenue standard did. In terms of the element that we are talking about from the conceptual framework, this standard is addressing ‘income’. Even if I don’t know what IFRS 15 says and I am asking whether income should be recognised, most scenarios can be answered by looking at the recognition criteria of the 18

Richard Poole explains why knowing the Conceptual Framework will take the slog out of learning accounting standards Conceptual Framework: • It meets the definition of an element. • It is probable that future economic benefits will flow to or from the entity. • The item can be measured reliably. IFRS 15 asks us to address a number of steps. Within these steps, the key things that the standard tells us to do is: • ‘Identify the contract’ – Is it probable that the selling entity will receive consideration? • ‘Determine the transaction price’ – The entity must estimate the amount it expects to receive. – It is highly probable that a significant reversal in the amount of revenue recognised will not occur. It can be seen that with a reasonable knowledge of the Conceptual Framework that it is possible to conclude on whether we should or shouldn’t recognise revenue in most scenarios. Intangible assets When we consider intangible assets (including Research and Development expenditure) we are considering the recognition an ‘asset’ as the element here. In some cases, development expenditure may meet the recognition criteria. IAS 38 Intangible Assets stipulates that this is only the case if ALL of the following conditions are met: • Completion of the asset is technically feasible. • The intention is to complete and use or sell the asset. • The asset can be used or sold. • The asset will generate future economic benefits. • Adequate resource is available to complete the

asset. • The expenditure on the asset can be measured reliably. It can be seen again that by knowing the Conceptual Framework we can generally identify if development expenditure should be recognised. Leasing In relation to Leasing, IFRS 16 says that a lease is probably a finance lease if one of the following applies: • Ownership of the asset transfers at the end of the lease term. • The leasee has the option to purchase the asset for less than its expected fair value and this is reasonably certain (probable) to occur. • The lease term (including secondary periods) is for the major part of the asset’s economic life. • At the inception of the lease, the present value of the lease payments amounts to substantially all of the fair value of the leased asset. • The leased assets are specialised. • The leasee will benefit from changes in the asset’s residual value. • The leasee can continue the lease for a secondary period in exchange for rent payments that are much lower than market rates (probability needs to be considered). To conclude I am not in any way suggesting that students shouldn’t try and learn their accounting standards. However, it is a very useful tool to have in your exam technique repertoire to know the code (Conceptual Framework) that created the accounting standards. PQ • Richard Poole FCCA is a freelance classroom lecturer and online tutor with FME Online PQ Magazine June 2019

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PQ mental wellbeing

Alice, now an experienced accountant and lecturer, explains how getting an education helped her cope with depression

Can education

he struggle with mental health is felt by many people in all different forms. The problem with this illness is that it has no physical existence. Many people are suffering without others knowing; they suffer in silence. Many people donâ&#x20AC;&#x2122;t understand the impact they can have on what others say and do. It can have such a negative effect on those who are suffering from a mental illness. Having personal experience of mental health issues, I totally understand how this can affect your life and that of the people who surround you. However, I used my illness as a motivator. Donâ&#x20AC;&#x2122;t get me wrong. There were many times I would struggle to even get out of bed, but every day I made sure I had a reason to. One area of my life I focused my attentions on was my education and building a career. Studying became a focus for me. It stopped me thinking negatively. It gave me something to aim for. Having been told all my life that I wasnâ&#x20AC;&#x2122;t academic or clever enough, I knew studying would be

a struggle because I began to believe I wasnâ&#x20AC;&#x2122;t clever enough. In time this made me more determined than ever to show those around me what I could do. So I enrolled at college and completed a GCSE Accounting and Computerised Accounting course successfully. I then had to make the decision about whether to carry on and complete my AAT or not.

Voices in my head The voices in my head said no â&#x20AC;&#x201C; you are not clever enough. But my stubbornness, determination and the fact I wanted to prove everyone wrong motivated me to enrol. Having gained exemption from Level 2 I completed the course successfully in less than two years. Within this time I also set up my own accounting practice which, 20 years on, is still trading. I didnâ&#x20AC;&#x2122;t stop there! After AAT I decided to do something I never would have dreamed of; I trained to become a teacher. After 15 years I am still teaching the AAT and still loving it. This career path became my saviour. While studying for my teaching degree my illness hit an

all-time low. Wondering how I was going to complete my teaching qualification caused me anxiety and deep depression. However, teaching is like acting, and being in front of a class was an act â&#x20AC;&#x201C; no one had a clue what was happening inside my head. My students and their success was my focus and all that mattered in that time in the classroom. Outside the classroom things were different, but my motivation grew stronger and stronger the more I was told that I would struggle, that it would all be too much for me, and that I should pack the course in. However, I proved them wrong. I did complete my Certificate in Education and graduated from Huddersfield University. Then came the biggest challenge of my life. Do I enrol onto a BA in Education and Professional Development? I asked for advice from certain members of my family and what was said to me has stuck with me. Instead of hearing yes, you can do it, or yes, we are so proud of what you have achieved, I got told â&#x20AC;&#x153;go ahead if you want to be the one in the graveyard with

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â&#x20AC;&#x2DC; Practise, practise, practise. The practice software provided on the ICAEW website is crucial for computer-based exams. You have to get used to the software and make full use out of it. If you can master the software, it can really help you in answering the exam.â&#x20AC;&#x2122; Ilyana Ibrahim ACA student

PQ Magazine June 2019

mental wellbeing PQ

n aid mental health? letters after their name but who has not achieved anything”. That moment was a turning point for me. I did enrol but I ended up deferring due to my state of mind. I then started my studies again because I realised that if I completed during a specific academic year I would graduate at the same ceremony as my daughter. So although my motivation for completing changed, it enabled me to successfully achieve a BA (Hons) 2:1. Looking for approval On reflection, I realised I was constantly looking for approval from one particular person in my life. Because this never came I kept striding for the next qualification, the next promotion, etc, and I wouldn’t change it one bit. Whatever happened has made me who I am today and I am extremely proud of my achievements and the work ethic I have passed on to my children. Although I will never be free from my

illness I do believe it has helped me become stronger and it has also enabled me to understand what triggers my state of mind and how to avoid those triggers. Many of the issues I have dealt with over the years have been caused through verbal abuse. I really don’t think people realise what damage they can cause to others just through what they say and how they say it. I believe if we all think before we speak it may just stop someone who is suffering feeling worthless and invaluable. My advice to anyone who is going through similar issues is to pull on your strengths and use them to motivate you into becoming a success. If people around you are negative towards you show them you can do it and don’t let them control your future. Remember, you may have a bad day and that’s ok because tomorrow is a new day. Start the day off positive and show the world you are worthy of whatever you want. PQ • The author’s name has been changed

Managing exam stress Alison Sweeting offers some pointers on how you can cope with the anxiety that exams inevitably bring with them

eeling tired? Can’t sleep? Wake up in the middle of the night worrying about whether you’ve done enough revision? You’re not alone – in the lead-up to your exams, it’s very common to feel stressed. While it’s great that you’re taking your exams seriously, if you don’t manage your stress properly it can end up harming your chances of success – to say nothing of harming your physical and emotional wellbeing. So what can you do to manage stress or anxiety? In the revision period: • Plan your revision so that you have a clear idea of what you are going to revise and when. Allocate time based on your understanding of the subject and how you’ve performed in practice tests or mock exams. • Print out your revision plan and stick it somewhere to keep track of your progress. Try to stick to the timings you’ve given yourself. • Try to revise in a quiet and tidy space. If it helps, listen to music. • Take regular breaks and stay hydrated. Try to avoid caffeine and alcohol – water all the way. • Tempting as it might be to keep studying for PQ Magazine June 2019

longer than planned, try to keep to the schedule and make sure you get plenty of rest. • Speak to your employer about study leave and workload if you find you are struggling to keep on top of everything – they may have support and resources available to you. • Remember your tutors are there to help, even once your classes are over. Make use of the forum on CIPFA Learning to discuss problems. • If you feel it’s all getting a bit much, try some breathing exercises. This is a simple way to calm

yourself when you’re feeling stressed. You can find good examples of breathing exercises at https://tinyurl.com/ycaj6aoz • Eat properly. It may be tempting to eat lots of sugary snacks to get that instant burst of energy, but a sugar high is followed by a sugar low. Focus on a balanced diet with lots of protein for

energy – snack on nuts for an instant boost. • Try to build exercise into your day. Even something as simple as a 20-minute walk will recharge your batteries, activate endorphins and give you some fresh air. You might think this is taking you away from your revision, but you’ll come back to your studies feeling energised and refreshed. During your exams, the above tips still apply – eat properly, get plenty of sleep, stay hydrated and remember the breathing exercises when you feel stressed. Try to avoid last-minute cramming on the day of your exam, if you can. At CIPFA, we recognise that students can feel stressed, especially in the lead up to exams. Our trainers are always available in the classroom or online via CIPFA Learning, so students can talk to their tutor or to the Training Delivery Manager about any issues. We are currently working with the CIPFA South East Student Network to develop a programme of support that can be rolled out to other areas. Examples of initiatives we are trialling include a mindfulness/breathing class during the revision period and the creation of a CIPFA Learning page for all students, which will contain wellbeing information and links to useful resources. In the meantime, get in touch if you need advice or support, or with any suggestions for how CIPFA could better support student health and wellbeing: Alison Sweeting, Training Delivery Manager – alison.sweeting@cipfa.org PQ 21

PQ AAT exams

AAT RESULTS AAT has now published its annual pass rates for the year ending 31 December 2018 Assessments only CBA pass rate

Level 1/Access 91.6%

Foundation 84.9%

Advanced 71.8%

Professional 62.0%

AAT has four graded qualifications. The table below shows a summary of the grades awarded for each qualification between 1 March 2018 and 28 February 2019. Qualifications and grades awarded

Pass

Merit

Distinction

Foundation Certificate in Accounting

43%

52%

Foundation Diploma in Accounting and Business

10%

71%

19%

Advanced Diploma in Accounting

26%

54%

20%

Professional Diploma in Accounting

51%

45%

The latest AAT results are now out there, and it’s good to see the Professional Diploma Synoptic assessment pass rate is moving in the right direction – it’s up to 56.7% from 50.9%. There has also been a healthy rise in the CTRM and AVSY pass rates. CTRM pass rates rose to 59.2%, compared with a 50% pass rate last time around. And the Advanced Diploma Synoptic assessment pass rate jumped from 54.6% to 61.1%. The overall CBA pass rates are also holding steady. At Professional level they rose ever so slightly to 62%. However, these rates are based on the CBAs only and not achievements rates for the qualification. The pass rates are for the year ending 30 June 2019 will be published at the end of September 2019. PQ

Level Level 1 Level 1 Level 1 Level 1 Level 1 Access Access Access Foundation Foundation Foundation Foundation Foundation Foundation Foundation Foundation Advanced Advanced Advanced Advanced Advanced Professional Professional Professional Professional Professional

Assessment name Short Code Access AA Bookkeeping and Accounts BKAC Computerised accounts COPA Computerised Payroll Administration CPYA Spreadsheets software SPRS Access to Accounting Software AASW Access to Business Skills ABSK Access to Bookkeeping ATBK Bookkeeping Controls BKCL Business Communications, Personal and Learning Skills BPLS Bookkeeping Transactions Elements of Costing Foundation Synoptic Assessment Introduction to Business and Company Law Introduction to Payroll Using Accounting Software Advanced Bookkeeping Advanced Diploma Synoptic Assessment Final Accounts Preparation Indirect Tax Management Accounting: Costing Business Tax Credit Management Cash and Treasury Management External Auditing Financial Statements of Limited Companies

Worldwide 88.4% 84.7% 93.2% 89.3% 95.0% 81.3% 95.1% 95.4% 74.6% 95.1%

BTRN ELCO FSYA

88.8% 93.2% 84.8%

IBLW

53.3%

INPY UACS AVBK AVSY FAPR IDRX MMAC BSTX CDMT CTRM ETAU

89.1% 87.3% 61.2% 61.1% 77.2% 79.1% 83.7% 70.3% 56.4% 59.2% 64.0%

FSLC

59.7%

Professional Management Accounting: Budgeting Professional Management Accounting: Decision and Control

MABU

76.2%

MDCL

52.5%

Professional Professional Diploma Synoptic Assessment

PDSY

56.7%

Professional Personal Tax

PLTX

65.6%

PQ useful apps

Apps that help you work, rest and play Audio Memos Love the sound of your own voice? Audio Memos is a great app with a simple to use voice recorder for those of you who prefer auditory learning. The app lets you record audio, whether that be your lecturer or yourself reading notes. You can name and date-stamp your recording for easy organising as well as customising the recording settings best suited for your needs. The app is optimised for phones and tablets, meaning you get the most out of it when on the move. One issue is the inability to choose where to save the recordings. The app only lets you store the recordings on a device’s native memory, and won’t let you transfer over to a memory card. Although this doesn’t seem like a major problem at first, when you start piling up the memos, the smaller native memory of a phone soon fills up. This is made all the more frustrating by the fact you can have an additional memory card sitting 22

empty, but with no way to transfer the memos over to it. It’s a tarnish on an otherwise great app.

Catch It Catch It is an app made by the universities of Liverpool and Manchester and endorsed by the NHS. It’s essentially a diary, with the focus being on the user’s mood. You are asked to state how you are feeling, giving yourself a mood rating, and then to reflect upon it. The app then asks you how you feel you could improve your mood, allowing you to provide targets and goals for your selfesteem, happiness, and general mental wellbeing. The focus of the app is Cognitive Behavioural Therapy, which it intends to use to change your own personal thoughts and feelings on subjects and events. The App is a good idea, and is very simple to use, with an aesthetically appealing interface. However, it is not for everyone, as this is not an advice app or a peer-to-peer forum. It’s

purely there for you to reflect on your own thoughts and feelings, and although introspective thought can be therapeutic, it isn’t ideal for everyone suffering from mental health worries and is definitely not an alternative to professional medical treatment.

Zombies, Run! They say the key to a healthy mind is a healthy body. Sometimes, though, it’s hard to find the motivation to exercise after a long day at work (especially if you have exam studying to do as well). So what if you had to run, for your life? Zombies, Run! does just that. A little different to your normal running app, this one drops you into the centre of an awardwinning radio play, with you as the hero. The app is a great way to motivate you into regular exercise. Not only do you get training with distances and speed, but it’s all hidden behind some pulpy entertainment. This app is available on Android and iOS devices. PQ Magazine June 2019

ICAEW CBAs PQ

Computer power O

ver the past two years, the ACA Professional and Advanced Level exams have been moving to computer. ICAEW has delivered over 65,000 exams on the new platform and the transition will complete in July 2019 when the Case Study exam moves to computer. The move from paper to computer-based exams marks a new era in exam delivery. Like anything new, familiarising yourself with the functionality is important and will help you to overcome any fears or concerns you may have. Ilyana Ibrahim, an ACA student from Malaysia, says her biggest fear going in to an exam was “the stability of the software”. She was worried that “the system would crash in the middle of the exam”, or that questions would take some time to load “while the timer is still running”. After sitting her Financial Accounting and Reporting exam without problems she no longer has these concerns. The exams are delivered via a secure, lockeddown application that is resilient to internet connectivity problems and your answers are automatically saved as you navigate through each question. In the unlikely event that your computer does crash, your exam will automatically save and you will be able to pick up where you left off by re-entering your keycode. If you feel something has negatively affected your exam, make the invigilator aware as soon as possible. They have the ability to pause your exam while they investigate and, hopefully, fix the issue. After your exam has finished, make sure you complete an invigilator report before you leave the exam room. If the issue wasn’t resolved, you should also apply for Special Consideration, but you must do so no more than 10 days after your exam. The Instructions to Candidates details further information about the Special Consideration process.

Resize fits all All computer screens within the exam centres meet our minimum specifications and guidelines. While screen sizes may vary, this will not affect the amount of content visible on screen. Larger screens will just have more blank space around the exam software. You will be able to move and resize the question window to

CBAs are here to stay – but they are certainly nothing to fear

fit side-by-side with the response area. The software is the same for all Professional and Advanced Level exams, with the exception of a couple of buttons; a ‘Formula and Discount tables’ button for Financial Management and an ‘Exhibits’ button for Corporate Reporting, Strategic Business Management and Case Study. The Case Study exam also includes a ‘List of exhibits and requirement’ button. Many students prefer to type their responses, as it can be faster and neater than handwriting. Ibrahim felt she could finish the exam faster because she “tends to write really slowly”. In addition, she said “since I am an environmentally-conscious person, I love how we could save so much paper just by moving to the digital platform.” Although you will be provided with a pen and loose-leaf paper to make notes, you are still expected to show all workings as part of your response on screen. Ensure that all your answers are visible and not hidden within cells, as they will be presented to the examiner exactly as they appear on screen. Ensure you’re prepared and confident going in to your next exam, familiarise yourself with the practice software and make this part of your revision process. Ibrahim says her biggest tip when preparing for a computer-based exam is “practise, practise, practise. The practice

software provided on the ICAEW website is crucial for computer-based exams. You have to get used to the software and make full use out of it. If you can master the software, it will really help you in answering the exam.” Access exam resources at icaew.com/examresources. For FAQs, exam tips, support and more on the exam software visit icaew.com/cbe. Preparing for the case study From July 2019, the Case Study exam will be computer-based. You must practise with the exam software in advance of your exam, to ensure you are familiar with the functionality and formatting on the day of your exam. View the exam guide which provides an overview of the Case Study exam software, listen to on-demand webinars, practise using the blank practice software or software with sample exams and explore more at icaew.com/casestudy. You can also join ICAEW on 19 June, 10:00 (UK-time) at a live webinar, as they talk through the Case Study exam software, the exam experience, give top tips and answer your questions. Email questions to acamarketing@icaew.com and register your place at http://bit.ly/CaseStudyOverview. PQ • Thanks to the ICAEW for this article Reproduced with the permission of ICAEW, this article was first published in Vital (December 2018).

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PQ CIMA exam tips

Five tips for success 1) Plan ahead Structure planning and preparation can increase your confidence and help you deal with preexam stress. So how can you make sure that you stay on track? • Find a study method that works for you. • Create a study plan to make sure you cover all areas and have a good understanding of all syllabus topics. • Book your exam in advance to keep your focus and motivation. • Practice exam style questions. • Refine your exam techniques and time management skills. • Whether you pass or fail, make sure you understand your results. The content of the exam is always going to be unknown, but knowing that you’re well prepared for it will make you feel more confident when entering the exam room. 2) Don’t be afraid of failure It may be hard to believe, but if you happen to fail an exam it won’t be the end of the world. And if you do it is important that you don’t panic, but sit back, reflect on what went wrong, and identify the steps you need to ensure that you pass the next time around. Another way of dealing with failure is to seek advice from family, friends, a tutor or perhaps a trusted colleague. Failing an exam can throw you off balance, but it’s just one if the many life challenges you’ll face, and there’s always a way to learn from it. Keep motivated, don’t be too hard on yourself and keep in mind that it will all be worth it in the end. 3) Keep a work-life balance Juggling your professional studies, your work and personal life at the same time requires a big commitment and some serious time management skills. You’ll need to plan, organise and prioritise personal, study and work activities to make everything more manageable both at a practical and emotional level. Create a study plan, which includes exam dates and items such as essential appointments, family events, time to exercise, planned down time and holidays. Based on this, you can identify how much time you have available to

We know that working towards CIMA exams can generate stress and anxiety for our students. So here are a few tips to help you take control and reduce your stress levels, writes Stephen Flatman You also have great flexibility around study options, putting you in the driving seat and giving you complete control over how, when and where you study. For example, if you like studying with others and appreciate having a tutor on hand to answer your questions, attending a course with an accredited tuition provider may be the best option. On the other hand, if you’ve a lot of conflicting priorities to juggle, self-study via online and distance learning may better suits your needs.

study and when you can schedule it in. Remember that having a plan is great but it shouldn’t be overly rigid and allow for some flexibility to accommodate unexpected events. Make sure you review it regularly to reassess priorities and reschedule activities. 4) Make the most of CIMA’s flexibility One of the biggest advantages of studying for a career in business and finance with CIMA is the flexibility offered by the exams. You can sit your Objective Tests on-demand throughout the year and get your results straight away. In addition you’ve got some planning room around the four Case Studies exam windows available a year.

5) Practice makes perfect Studying and practising are the best ways of ensuring that you are well prepared for, and know what to expect, when you sit your exams. If you’re taking your first Objective Test or Case Study exam, take a look at our exam tutorials – these will help you familiarise yourself with the exam including the types of question you can expect. Don’t forget to try the question tutorials. To help you prepare for your exams, you should also go through past exam papers. This will give you a general idea of how the questions are phrased and marks distributed. If you’re going to sit exams under the 2019 CIMA Professional Qualification (starting in November 2019) make sure you take full advantage of our exam blueprints. They set out in detail what is examinable as well as the format, structure and weightings of the assessments for each Objective Tests and Case Study exams. PQ • Steve Flatman, VP Examinations at the Chartered Institute of Management Accountants

Are you ready to go? Are you exam-ready?

PQ-Go

You need PQ-go.com 24

PQ Magazine June 2019

*DLQ 4XDOL FDWLRQV LQ YLD 2QOLQH 6WXG\ Combine the CIMA Advanced Diploma with a BSc Accounting Degree, and develop a solid grounding in both technical accounting and non-technical skills required for a successful professional career. Start Sep 2019 www.rgu.ac.uk/bscaccountingcima

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PQ ACCA June tips

HOT TIPS FOR YOU What should you expect to see in the exam paper this June? Here’s some sound advice from BPP PM As all of the syllabus areas can be tested in sections A and B, the best advice is to study all areas of the syllabus. Sorry about that – but you knew that already! Areas expected to be tested by the examiner in section C include (but are not limited to): budgetary systems, planning and operational variances, mix and yield variances and evaluation of the company performance (either as a whole or on a divisional basis). Given that this is a performance management paper you would be advised to be prepared to evaluate some performance. Candidates are told to expect the unexpected, and since the introduction of MCQs this advice is even more critical because more topics can be tested. The exam will be approximately 40% calculation and 60% discussion, meaning it is not sufficient to be able to perform all the calculations to get a pass here. TX Expect a couple of the OTs in section A to be devoted to the administration of income tax and corporation tax. That means you have to be comfortable with the following: • Due dates for payment of income tax (payments on account). • Due dates for the payment of corporation tax (instalments for large companies). • Filing dates for the income tax and corporation tax returns. • Penalties and interest for late payments and returns. Also likely to be tested in section A are the following: • VAT rules on registration, impairment loss (bad debt) relief, and the SME schemes relating to cash accounting, annual accounting and flatrate schemes. • Inheritance tax due on lifetime transfers both in the donor’s life and on death. • Statutory residence tests for individuals. • Identification of groups of companies for

corporation tax loss reliefs and gains. • Trading loss reliefs for both companies and sole traders. In section B, the exam questions will be similar to those of section A – only longer! This means you need a slightly different exam skillset here. Section C will have much more open requirements. Your answers will need to show not just sound technical knowledge but also the application of that knowledge. The examiner has also asked for more logical presentation so markers can follow your thought progress. Spend at least 50% of your revision time on answering section C questions in the practice and revision kits. Learn your income tax and corporation tax proformas. Any calculations that require no more than two or three entries into your calculator can be included on the face of your proforma (eg time apportioning a salary). Calculations that are more complex (eg company car benefits) need separate workings, which are properly referred (W1, W2, etc) and have a heading. We know the two longest questions will focus on income tax and corporation tax. These are likely to include: • Employment benefits. • Property income. • Relief for pension contributions. • Adjustments to profit to arrive at trading income for both companies and sole traders – in past sittings we have seen a number of questions where you have to correct errors in computations included in the scenario. • Capital allowance computations. FR Section A’s OTs will test a wide range of topics, including several on consolidation and interpretation of financial statements. Expect a few questions on non-core areas (inflation, specialised entities). In section B, each scenario could be a mix of topic areas or focused on one topic and will usually consist of two or three calculations and two or three narratives. Questions are not dependent on each other and can be answered in any order. Section C consists of two 20-mark questions, one covering interpretations and the other

preparation of financial statements. One question is likely to be in the context of a single company and one in the context of a group – so you could have a single company interpretation and a groups preparation, or visa versa. Accounts preparation questions may include extracts or stand alone calculations or full statements of profit or loss and other comprehensive income and/or statement of financial position. Both questions will cover the accounting for items from other areas of the syllabus. They may also include a short separate part, for example with a statement of changes in equity, statement of cash flows extract, earnings per share calculation or linked written topic. A consolidated question would include one subsidiary and often an associate, with adjustments (eg fair values, deferred/contingent consideration, PUP on inventories/PPE, intragroup trading and balances, goods/cash in transit). A single entity question could be preparation from a trial balance or restatement of given financial statements, with the usual adjustments for depreciation, revaluation and current/ deferred tax (including deferred tax on revaluation), plus a mixture of adjustments on other syllabus areas, eg leases, substance over form issues, financial instruments (charge in fair value or amortised cost), share issues, government grants, inventory valuation, revenue recognition or construction contracts. AA In section A, each mini-case question will test single topic areas of the syllabus and so will test syllabus area A, B, C, D or E. You should particularly expect questions in section A to focus on syllabus areas A and E. For Section B, Q16 to Q18 expected areas to include: • Audit planning. • Audit risk (identification and explanation of audit risk from a scenario and explanation of the auditor’s response to each risk). • Internal audit. • Internal controls (identification and explanation of deficiencies in internal control and the recommendation of suitable internal controls or description of tests of controls).

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PQ Magazine June 2019

ACCA June tips PQ include cost of capital calculations. Risk management may also feature in a number of different ways, eg value at risk, real options, hedging or risk mapping. For section B the tips are: • Risk management (currency or interest rate). • Dividend policy and general financing issues. • Real options.

• Audit procedures (both substantive procedures and tests of control). Try to use a tabular format in your solutions where relevant as the examining team has said students who do this score better. FM In section A, the OTs will often be knowledge based (testing your knowledge of key technical terms) and will balance out the questions in section B and C. So expect a good number of these questions to test your understanding of financial management and objectives (ratio analysis, the concept of shareholder wealth), as well as the economic environment and financial institutions topics (financial intermediation, fiscal and monetary policies). The efficient market hypothesis is also likely to be tested. Areas to expect in section B are working capital management (operating cycle, the impact of a change in credit period, or accepting a factor’s offer), business or security valuations (methods of valuation), and financial risk management (currency risk or interest rate risk). The two questions in section C will focus mainly on syllabus sections C, D and E. That’s working capital management, investment appraisal (think NPV with inflation and tax here), and business finance – an evaluation of financing options (interest coverage and gearing ratios are likely), or cost of capital and analysis are most likely. Whichever of these topics does not feature in section C is likely to appear in section B. SBL Welcome to your first four-hour closed exam. SBL aims to build on the knowledge that you gained at the Applied Knowledge and Applied Skills level, but also has its own distinct syllabus content. The exam will focus on one main organisation, and all the question requirements will relate to this organisation. You may, however, have to take on a variety of roles, which may require you to adopt an internal or external perspective when answering the question. All of the questions are compulsory and will consist of 80 technical marks and 20 professional skills marks. ACCA acknowledges that the SBL exam is demanding, and time management is a key part of any exam success strategy. You are advised to PQ Magazine June 2019

spend 40 minutes reading, planning and interpreting the requirement and the information/exhibits provided. That leaves 200 minutes to build up your 50% pass mark. One area students often fall down on is producing lots and lots of unnecessary calculations. By planning the numerical analysis that you intend to perform will ensure you aren’t producing numbers just for the sake of it. SBR You should start by reading the examiner’s approach article on the ACCA website, and while you are there read any other exam technique and technical articles. In section A, the first question will be based on group accounting and may include complications such as a foreign subsidiary, discontinued activities, disposals and/or acquisitions. Be aware that this question may test consolidation statements of cash flows, as was the case in December 2018. The second question will cover the reporting and ethical implications in a given scenario. Make sure you consider any threats to the fundamental principles of ACCA’s Code of Ethics and Conduct in your answer. Section B will always include a question or part-question involving the analysis or appraisal of information from the perspective of a stakeholder. In the December 2018 exam this involved explaining the nature of tax accounting in the financial statements to an investor. Even if this sounds daunting, make sure you have a go at answering it. Current issues could be examined in either section A or section B. The Conceptual Framework and associated exposure draft have featured a lot in both the September 2018 and December 2018 exams – be prepared for this to be the case in June 2019 as well. AFM From last September every exam has had questions, which focused on section B of the syllabus (advanced investment appraisal) and E (treasury and advanced risk management techniques). These areas are therefore a high priory for your revision phase. Section A questions are often based on core areas such as project appraisal (domestic or overseas), business valuations and business/ financial reorganisations. These areas often

APM Question 1 focuses on a range of issues from syllabus area A (strategic planning and control), C (performance measurement systems and design) and D (strategic performance management). In recent exams Q1 has often required linking a business’s mission to its performance objectives using the concept of CSFs and KPIs. You may well also have to critique and recommend improvements to performance reports and the balanced scorecard could well be tested in this context. The assessment of performance is also likely to be tested and this could easily include benchmarking as a theme. Financial performance measures (ROCE/RI/EVA, etc) are also likely to be commonly examined in question 1, but don’t neglect non-financial issues from syllabus section D, such as quality management and reward systems. One of section B questions will come from syllabus section E (performance evaluation and corporate failure). In section B, commonly tested areas include quality management, information reporting (big data and lean information), the application of strategic models (PEST, Porter’s 5 forces, the value chain), HR frameworks (reward and appraisal systems), risk management and environmental management accounting. ATX One of the section A questions will focus on personal tax issues and the other will focus on corporate tax issues. In question 1 there will be four professional skills marks and in section A there will be five marks available on ethics. Topics/scenarios you would expect to see are: • Personal income tax scenarios, which could involve investing in a pension, investing in EIS, SEIS or VCTs, share schemes, employment income possibly with termination payments, a personal service company, property income or takeover. • Unincorporated business, particularly including loss reliefs, partnerships or basis period rules. • A question focusing on overseas issues. This could be income tax, CGT, IHT or a corporate scenario. • CGT v IHT, including availability of reliefs. • Corporate scenarios – likely to focus in more depth on intangibles, research and development issues, corporate groups or consortia. • Special corporate scenarios such as liquidation purchase of own shares, close or investment companies. • A business transformation scenario question, such as selling a sole trader business, incorporation or, in a corporate context, the sale of shares versus the sale of trade and assets. • Other common types of question/calculations: Continued on page 28 27

PQ ACCA June tips

What words mean If the question says ‘analyse’ you will need to break the question down into separate parts and discuss, examine or interpret each part. A key ACCA tip: Give reasons for the current situation or what has happened.

If you need to ‘illustrate’ then give concrete examples. Explain clearly by using comparisons or examples. A key ACCA tip: Add in some description.

If the examiner wants you to ‘assess’ you will need to judge the worth, importance, evaluate or estimate the nature, quality, ability, extent or significance of what is being asked. A key ACCA tip: Determine the strengths, weaknesses, importance, significance, and ability to contribute.

If the question says ‘comment’ you will need to remark or express an opinion. A key ACCA tip: Your answer should include an explanation, illustration or criticism. If the question wants you to ‘compare’ then you need to examine two or more things to identify similarities and differences. A key ACCA tip: Clearly explain the resemblances or differences. If the question says ‘conclusion’ you will need to provide the result or outcome of an act or process or event, final arrangement or settlement. A key ACCA tip: End your answer well, with a clear decision! If the question says ‘criticise’ then you need to present the weaknesses/problems, and evaluate the comparative worth. Don’t explain the situation, instead analyse it.

If you are asked to ‘interpret’ you must comment on, give examples and describe relationships. A key ACCA tip: Include explanation and evaluation in your answer.

The ACCA recently provided PQs with definitions of the common verbs used by examiners in their papers. Here they are again… A key ACCA tip: Criticism often involves analysis. If the question says ‘define’ you need to give the meaning, and that’s usually a meaning specific to the course or subject! A key ACCA tip: Explain the exact meaning because usually definitions are short. If the question asks you to ‘describe’ you have to give a detailed account or key features. That means listing characteristics, qualities and parts. A key ACCA tip: Make a picture with words, identification is not sufficient for the examiner here. If the examiner asks you to ‘discuss’ you must consider and debate/argue about the pros and cons of an issue. This means you have to examine in detail by using arguments in favour or against.

HOT TIPS FOR YOU Continued from page 27 – reviewing a pre-prepared computation to spot, explain and correct errors. – calculations such as “tax saved through an action”, “after tax proceeds”, “the value of a post-tax inheritance”, “net spendable income” or the “net of tax cost of something”. When it comes to VAT, expect to see marks available for partial exemption, land and buildings, transfer of going concern, capital goods scheme, overseas VAT, and registration/group registration. There will also likely be a couple of marks for stamp duty points, and finally don’t forget the basic administration points – when do we need to pay tax, when do we file a return and that if either of those are late. 28

If the examiner wants you to ‘evaluate’ you must determine the scenario in the light of the arguments for and against. A key ACCA tip: Mention evidence, case, point, and issues to support your evaluation. When it comes to ‘explain’ make an idea clear. Show logically how a concept is developed. Give the reason for an event. A key ACCA tip: Don’t just provide a list of points, add in some explanation of the points you are discussing.

If the question says ‘apply’ you will need to put into action pertinently and/or relevantly. A key ACCA tip: Properly apply the scenario/case.

If the question asks you to ‘calculate’ you will need to ascertain by computation, to make an estimate of, evaluate, and perform a mathematical process. A key ACCA tip: Provide description along with numerical calculations.

A key ACCA tip: Write about any conflict, compare and contrast.

AAA The most recent AAA exams have not contained any real surprises, although you should note the presentation of the embedded email and the supporting exhibits in the case study. Section A’s case study is set at the planning stage of the audit for a single company, a group of companies, or potentially several audit clients. Expect the detailed information to include extracts of financial information, strategic, operational and other relevant information for a client business, as well as extracts from audit working papers, which could include the results of analytical procedures. Candidates will have to address a range of requirements from syllabus sections A, B, C and D. This will, be a real-world situation where you

If the examiner wants to see a ‘list’ then list several ideas, aspects, events, things, qualities, reasons, etc. A key ACCA tip: This isn’t a time to discuss – just make a list! If an ‘outline’ is called for then describe your main ideas, characteristics or events. A key ACCA tip: Briefly explain the highlighted points. If you need to ‘recommend’ you are being asked to advise the appropriate actions to pursue in terms the recipient will understand. A key ACCA tip: Give advice or counsel. If the examiner says ‘relate’ you must show the connections between ideas and events. A key ACCA tip: Relate to real time examples. If the question says ‘state’ then explain precisely. A key ACCA tip: Focus on the exact point. Finally, if you are asked to ‘summarise’ try to give a brief, condensed account. Include a conclusion and avoid unnecessary details. A key ACCA tip: Remember to conclude your explanation. There are marks in it! PQ will need to address a range of issues simultaneously in relation to planning, risk assessment evidence gathering and ethical and professional considerations. In section B, one question will always predominately come from syllabus section E, so you must always be ready to answer a question relating to completion, review and reporting. Think here about the assessment of going concern, the impact of subsequent events, evaluating identified misstatements and any corresponding effects on the auditor’s report. Candidates may also be asked to critique an auditor’s report or a report that is to be provided to management or those charged with governance. The other section B question can be drawn from any other syllabus area – A, B, C, D and F. Syllabus section G on current issues is unlikely to form the basis of any question on its own, but instead will be incorporated into the case study or either of the section B questions. PQ PQ Magazine June 2019

careers PQ

Time for a quiz? CIMA has launched a learning resource centre and fundamental series to help all finance professionals take advantage of the growing opportunities emerging technology presents. It is providing free learning resources on the ‘fundamentals’ of digital disruption – automation, blockchain, cyber security, data analytics and ethics.

Designed to help develop a digital mindset, the topic blocks come on stream from April through to October 2019. A quiz for finance professionals is also available to test your current level of knowledge and see how you compare with their peers. Go to https://quiz.cgmastore.com/ The first set of resources cover Automation and provide a great understanding of Robotic Process Automation (RPA). Building on the first theme of digital disruption, new resources will become available on: blockchain (May); cyber security (June); data analytics (July); and ethics and the challenges posed by new technologies (October). The full resources (free to students and professionals) on the A, B, C, D of digital finance can be found at: https://www.cimaglobal.com/Future/res ources/#article1

Call me Mark Women make up just a quarter of the executive boards at the top 25 accountancy firms, although they make up 44% of full-time accountants. Research by recruitment platform, Real Links discovered that only two of the top 25 firms’ boards are (nearly) equal in their gender split, and a further six boards were only one-third women. Four executive boards had no women at all. The study also found that of the 10 most common names on executive boards Mark, David and Andrew are the three most common. The ‘top’ female name, Sarah, comes in at tenth spot. And out of the top 20 most common names, only two female names appeared. PQ Magazine June 2019

Life at Small Business Accountancy James McDowell, 42, is an accountant based in Brighouse, West Yorkshire. He has worked for the firm for six years and has just completed the AAT qualification. James was recently crowned PQ magazine’s Distance Learning Student of the Year! What time does your alarm clock go off on a working day? 6.30. My wife insists on setting it to go off early. I then go back to sleep for an hour. What’s the first thing you do when you get to your desk? I check my emails, deal with any queries and adjust my plan for the day based on the emails received. What’s on your desk? A lot. What’s the best thing about where you work? I work from home and so the best thing has to be the convenience and flexibility. Where’s your favourite place to go for lunch? I usually eat a sandwich or something light at home. Then I might go for a walk to get some exercise. Sometimes I grab a sub at Subway. What (or who) can you see when you sit at your desk? A nice view over Brighouse, and the surrounding hills.

Which websites are your favourites and why? Any website that’s relevant at the time. Which websites do you use for work? I use HMRC (gov.uk) almost every day, plus aat.org.uk and icpa.org.uk. How many hours a week do you spend in meetings? It depends on the time of year. During busier periods I can have several meetings a day while at quiet times I might have one or two a week. What time do you leave the office? I tend to break for tea and then go back into the office to do a bit more. Otherwise I find myself watching early evening TV and feel like I’m wasting my life. How do you relax? Weight training helps me to blow off steam. When I do finally finish work for the day, I like nothing better than to watch TV and

snack. Being outside in the countryside on a summer’s day is great, too. What’s your favourite tipple? A nice pint of bitter or a glass of red wine – only occasionally. What is your favourite TV show? I’m a big fan of box sets. I don’t really have a favourite. Summer or winter? Summer. It’s good to be able to get the kids out to play on an evening. Pub or club? Pub. I would pay good money not to have to go to a club. Who is your hero? My grandfather. Looking up to a role model at a young age can be a powerful thing. If you had a time machine, where would you go? Should I go and get next week’s lottery numbers? But that wouldn’t be ethical, would it, so obviously I wouldn’t do that!

you are, the more likely you are to face financial difficulties. According to research conducted by Sandra Matz, from the Columbia Business School, and Joe Gladstone, from University College London, people who show more ‘agreeable’ traits are roughly 50% more likely to suffer bankruptcy. The researchers believe this could be down to the fact that people who tend to be more trusting, modest, sympathetic and altruistic put less of a value on money than their less agreeable counterparts.

Time for a pay rise Men are less afraid to ask for what they want from an employer, says a new survey from CV-Library. Some 55% of men said they would negotiate on a job offer, compared with just 42% of women. Male workers are also more likely to ask for a pay rise (64%), with just 43% of women feeling comfortable about doing so. And women are less concerned about their job title; nearly a third of men (30%) say the job title is the most important part of a job offer.

In brief Flexible workers don’t shirk Professionals with the freedom to work flexibly tend to work longer hours than those with more rigid hours, according to new research. It appears those who are able to determine their own schedules work harder to compensate for the stigma attached to flexible hours. It’s all those raised eyebrows from colleagues when you tell them you are working from home! Time to toughen up It turns out that the nicer

The PQ Book Club: books you should read Live Like a Stoic by Massimo Pigliucci and Gregory Lopez (Rider Books, £12.99) First up, what is stocism? According to a well-known online encyclopedia, “Stoicism teaches the development of selfcontrol and fortitude as a means of overcoming destructive emotions; Stoicism involves improving the individual's ethical and moral well-being: ‘to be free from anger, envy and jealousy’.” The authors have set out an action plan in 52 chapters designed to ‘cultivate a good

life’ – one for every week of the year. But this is no philosophical treatise; each chapter demands the reader tests themselves and records their repsonses to that week’s exercise. The book is organised around the three founding tenets of Stoicism: desire, action and assent. As the authors explain, Stoicism is one part theory to nine parts practice. That means the onus is on the reader to absorb the authors’ lessons and then self-examine, develop and grow. To help and inspire, there

are extensive quotes from some of the practitioners of the philosophy, including Seneca, Epictetus, and Marcus Aurelius. PQ rating 4/5 Control is the central concept of Stoicism – learning to use your emotional and intellectual energy to dealing with the things you can control, and not fixating on things you can’t. This book will help you achieve that. 29

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

OUR CARBON DEBT

SPINNING RECORDS Jax Jones, the international multiplatinum musician who has been both Grammy and Brit nominated, was once an aspiring accountant! That’s right, the London DJ, producer and songwriter behind such songs as Breathe, You Don’t Know Me, and Ring Ring once studied to be an accountant. Jones, real name Timucin Lan, trained in accountancy while honing his DJ skills. He even turned down an interview at Oxford University to attend Brunel, which meant he could closer be to the Brixton music studio where he was learning the ropes. Despite studying accountancy at university, Jones states that he “has never had another job” (except from a two-week stint as a Christmas temp for M&S), and has been making a living from music the entire 10 years since he left university at 21. Let’s hope he’s got himself a good qualified accountant!

TWITTER USAGE ON INCREASE Twitter recently unveiled a three-fold first-quarter profit increase. Revenue jumped to £606m to the three months to March and net profit soared to £147m. Daily users also rose to 126 million – that’s up 6%. Twitter, which was founded in 2006, is now valued at £23bn. There is someone who isn’t happy though! President Trump, who has nigh on 60 million followers said Twitter does not “treat me well as a Republican” and was “very discriminatory”.

The UK government was recently accused of some “very creative carbon accounting” by Greta Thunberg. The 16-year-old activist from Sweden founded the school climate strikes and was recently in Westminster to give a speech to MPs. Thunberg claimed that the Britain had a “mind-blowing historical carbon debt” because of the emissions it has poured out since the start of the industrial revolution 200 years ago. She explained that the 37% reduction in emissions in the past 30 years was in fact just 10% when aviation, shipping, imports and exports were counted properly.

WRONG ACCOUNT FOR CASH The Sunday Times’ Prufrock cartoon recently took the theme of the CMA’s audit recommendations to show just how angry the Big 4 are getting!

HE’S BACK! Tick, the accountancy super-hero, is back. Season 2 of the show is now being broadcast on Amazon Prime. Tick and Arthur have apparently freed the City from The Terror, but now has new villains and old enemies to contend with. Watch out too for Tinfoil Kevin and Overkill. All we can say to that is “Spooooooon!”

’ WEV E

The Oxford University Computer Society’s accounts department was stumped recently when it discovered an unexpected windfall of £105,520 in its bank account. The society tracked down the source of the money – Deepmind, the London-based AI research subsidiary of Google! Compsoc treasurer Ben Slater thinks the money should have gone to the Department of Computer Science to fund a scholarship. Deepmind has not commented.

EVERYONE LOVES AN ACCOUNTANT! It appears accountants are on the up, according to Grazia’s ‘Chart of Lust’. It revealed following some questionable choices in past husbands/boyfriends/ fathers to her children that Khloe Kardashian has resolved: “I should start to date accountants.” As PQ magazine said: “Isn’t it always!”

GOT THE L OT

Stick yourself happy

Essential detox

We are giving you the chance to win one of Esmeee Rotmans’ sticker-by-number picture books. It will help you boost your happiness levels by taking some time out to play and be creative. Accompanying each of the 14 projects are insights on happiness and a chance for reflection. To be in with a chance of winning one of the three books we have to give away send your details to graham@pqaccountant.com. Head up your email ‘sticker happy’.

We are giving you the chance to change your ways with The Essential Digital Detox Plan. This self-help book encourages you to step back from your screens and devices and breathe in the air around you. It’s full of step-by-step programmes to help you improve and refocus your mind. Send us your name and address to be entered for this lucky dip. There will be three lucky winners of this giveaway. Head up your email ‘digital detox’.

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 7 June. The main draw will take place on Monday 10 June 2019.

TO ENTER THESE GIVEAWAYS EMAIL GRAHAM@PQACCOUNTANT.COM 30

PQ Magazine June 2019

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