ACCA exam tips Five pages of red-hot exam tips

YOUR SEPTEMBER EXAM TIPS

The September sitting is nearly here. What you need is some BPP exam tips and guidance

Performance Management PM Section A will have 15 two-mark OTQs on a wide range of topics. Expect a mix of calculation and discussion-based questions, note that there are no marks for workings in this section. Good time management is key as it is easy to get caught up in a tough calculation which ultimately will only be worth 2 marks. Never be tempted to spend more than 5 minutes on any question in this section.

For section B there are three separate scenarios with five objective test questions on each scenario; each question is worth 2 marks. Questions are not dependant on each other and can be answered in any order. Each scenario could be a mix of topic areas or focused on one topic and will usually consist of two/three calculations and two/three narratives.

In section C there are two 20-mark questions, which could be from, but 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). Familiarity with the CBE software is vital as you may be expected to use both a word processing and spreadsheet format for your answer. Learn standardised layouts for calculations such as variances, learning curves and limiting factors. This will save you time in the exam and also mean that you are less likely to make mistakes. The split of marks tends to be approximately 40% calculations and 60% discussion, so don’t neglect the written elements of this paper. Make sure that you always fully explain your ideas. Interpretation and application are important skills that are tested in this paper so make sure you make full use of the scenarios that you are given in the exam.

Taxation TX (UK) In section A there will be a wide range of topics tested as there are 15 OTQs. Tutors expect at least a couple of these to be devoted to the administration of income tax and corporation tax. So, candidates should ensure they are comfortable with the following: • Due dates for the payment of income tax (including payments on account). • Due dates for the payment of corporation tax (including instalments for large companies). • Filing dates for the income tax and corporation tax returns. • Penalties and interest for late payments and returns. Other topic areas likely to be tested in section A of the exam are: • VAT rules on registration, impairment loss (bad debt) relief, and the SME schemes relating to cash accounting, annual accounting and flat‐rate 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 questions will be similar to those of section A, but there will be a longer scenario to deal with. This means a slightly different exam skill is necessary as you have more information to work through and each OTQ will require you to find the relevant information or data in that scenario. It is not a difficult skill, but you have to practise an extensive range of section B questions from the practice and revision kit before attempting the real exam.

In section C you will face the longer, constructive response questions with scenarios and much more open requirements. Your answers will need to show not just sound technical knowledge, but also the application of that knowledge to the question you have been asked.

At least 50% of your revision time should be spent answering the section C questions in the practice and revision kit to build confidence and speed in a way that will also maximise marks. 1. Remember to learn your income tax and corporation tax pro formas. 2. Calculations which require no more than two or three entries into your calculator can be included on the face of your pro formas (e.g. time apportioning a salary). Calculations which are more complex (e.g. company car benefits) need separate workings which are properly referenced (W1, W2 etc) and have a heading. Use the cell formulae to link the workings answer into your pro forma – then if you change the working the main body will be automatically update. 3. Actually attempt the narrative parts of the requirement – aim for as many sentences as there are marks with each sentence containing something technical. Keep your paragraphs to no more than 3 sentences long. 4. Your exam will be in the CBE software and the spreadsheets have some differences to the software you may be accustomed to, so it is crucial you practice using the

CBE software, especially for section C type questions. 5. Remember you cannot insert rows into the

CBE spreadsheets. So, leave plenty of space on the page (especially when setting up proformas). You may need to add something in and you can always go back and move workings up the page. Show workings down the page, rather than across the page as it makes them easier to mark. Well‐spaced answers are also easier to mark – and you always want to keep the marker happy.

We know that the two longest questions will focus on income tax and corporation tax. These are likely to include the following: • 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 whereby you have to correct errors in computations included in the scenario. • Capital allowance computations.

Finally, remember the pass mark is 50% so you don’t need to be perfect. If you don’t know something have a guess and move on. Sometimes you have to do that in order to get follow through marks in section C questions. If you make a mistake, but then use that incorrect figure later in a subsequent calculation, then that’s fine – you can only lose the mark once. In sections A and B never leave an OTQ unanswered – have a guess if you don’t know the answer. It might be right!

Financial Reporting FR Section A: • 15 two-mark OTQs on a wide range of topics including several on consolidation and interpretation of financial statements that will be covered in detail in section C. • Expect a few questions on non-core areas (e.g. inflation, specialised entities). • Read the scenario, requirement and answer options carefully and ensure you capture the correct information from the scenario to answer the requirement. • Don’t leave any questions unanswered – there is no harm in guessing if you are unsure of the correct answer (the same is true in section B).

Section B (case questions): • Three separate scenarios with five OTQs on each scenario; each question is worth 2 marks. • Each scenario could be a mix of topic areas (for example revenue and receivables are often related, or PPE and leases) or focused on one topic and will usually consist of two/ three calculations and two/three narratives. • Questions are not dependant on each other and can be answered in any order.

Section C (constructed response questions): • Two 20-mark questions, one covering Continued on page 34

Continued from page 33 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 vice versa. • Accounts preparation questions may include extracts or standalone calculations or full statements. Students expect statement of profit or loss and other comprehensive income and statement of financial position to be asked, but don't forget about the statement of changes in equity and the statement of cash flows too. • Both questions will require knowledge from other areas of the syllabus, particularly the accounts preparation question which will have a range of adjustments covering various areas. • A single entity accounts preparation question from a trail balance or restatement of given financial statements with common adjustments being for depreciation, revaluation and current/deferred tax (including deferred tax on revaluations) plus a mixture of adjustments on other syllabus areas e.g. leases, substance over form issues, financial instruments (change in fair value or amortised cost), share issues, government grants, inventory valuat ion,and revenue recognition. • Group accounts preparation questions will provide the separate financial statements (or extracts thereof) of the parent and relevant subsidiary(ies) and associate. Candidates should be prepared to set out the standard workings for goodwill, non-controlling interests, movements in net assets, retained earnings as those are commonly examined.

Other common adjustments are intragroup sales of goods, intragroup sales of assets, dividends and fair value adjustments. • ACCA has clarified in the 2022-23 syllabus that a consolidation accounts preparation question could include up to two subsidiaries and one associate (previously it was one subsidiary and one associate) which allows additional scope for examining the disposal of a subsidiary (including as a discontinued operation). Candidates should be prepared for such a question from September 2022 onwards. • Candidates continue to find the interpretations question challenging. In both single entity and group interpretation questions, candidates must avoid making generic statements about the movement in ratios and instead focus on using the information in the question to, for example: identify key changes in the period (e.g. change in sales mix, closed down an operation, purchased a new subsidiary); identify transactions that would cause inconsistencies between periods or between balances (e.g. revaluation of assets for the first time, particularly if the revaluation was at the end of the period); identify any changes in accounting policies or estimates, or classification (e.g. one company presents expenses as part of cost of sales whereas

another presents as part of administrative expenses). • ACCA has clarified wording in the 2022-23 syllabus to emphasise the importance of the statement of cash flows in interpreting financial statements. Candidates should be prepared for such a question from September 2022 onwards.

Audit & Assurance AA In section A there will be three mini-case style scenarios, each with five 2-mark questions based on the scenario (30 in total). Each minicase question will test single topic areas of the syllabus and so will test syllabus areas A, B, C, D or E. Expect questions in section A to focus on areas A and E.

All three questions (one 30-mark and two 20-mark questions) in section B will be broken down into sub requirements and be scenario based. The majority of marks in each question will test syllabus areas B, C and/or D.

Areas expected to be tested in questions 16 to 18 include: • Audit planning. • Audit risk (identification and explanation of audit risks 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). • Audit procedures (Substantive procedures & tests of controls). General advice: Where questions are based on a scenario it is essential that you use the information in the scenario to score the identification marks and then develop this to score the explanation marks.

The exam provides a table for you to complete your answer. For example, audit risk questions will have a table with two columns, one for ‘audit risk’ and one for ‘auditor’s response’ with each properly explained point being worth one mark. Using this tabular approach encourages you to answer both parts of the question, therefore maximising your marks.

Pay attention to the verbs used in question requirements as these indicate the number of marks available. For example, the verb “explain” requires a sentence and will score one mark if properly explained whereas the verb “list” simply requires you to list out information with no further explanation and this will score 0.5 mark per point.

Finally, it is essential you read the Examiner’s Reports which are issued twice a year after the June and December exam sittings. These are an invaluable source of advice and provide a sample section A OTQ case style question as well as three constructed response questions from the March/June and September/December sittings. Not only do they provide the example questions but these are accompanied by a commentary from the examining team which gives guidance on interpreting the question requirements and common mistakes/areas of weakness noted during the marking process. These reports can be found on the ACCA website: https://www.accaglobal.com/uk/en/ student/exam-support-resources/fundamentalsexams-study-resources/f8/examiners-reports1. htm.

Financial Management FM Questions in section A will often be knowledge based (testing your knowledge of key technical terms), and will balance out the questions in section B and C of the exam to make sure that all aspects of the syllabus are examined.

It is also likely that a good number of these questions will test your understanding of financial management and objectives (ratio analysis, the concept of shareholder wealth) as well as the economic environment and financial