PQ magazine, December 2023 by PQ magazine

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December 2023

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contents PQ

IN THIS ISSUE

December 2023

A note from the Editor Well, here we go again! It’s time to get nominating for the PQ magazine awards 2024. Time is flying by and these are our 21st awards. You can certainly say we are all grown up now. There are lots of shiny PQ trophies up for grabs, but please don’t wait until the last minute.com to enter. Winning a ‘PQ’ really does mean something – ask CASSL, our current Student Body of the Year. Check out all the details on page 16. This month we went in search of the ethical accountant, with the help of Queen Mary University of London and some great speakers. You can watch what happened on our YouTube channel: https:// youtu.be/vqrZF0OWOVA. While you are there you can check out our other videos in the series: The Future is Net Zero, the Future of Audit, and the Future of Tax. We have also joined forces with e-Careers to offer a free tuition scholarship to AATs who might be struggling with the cost-of-living crisis. It all came about from my visit to e-Careers HQ. There was a genuine worry that some AATs might be struggling to finish their qualification, and so the scholarships were born. We also have tons of exam tips for ACCA students sitting the December exams, and we look at the CIMA SCS pre-seen. Graham Hambly, Editor and Publisher, PQ magazine News 4

CIMA case results CIMA PQs struggle with latest Management and Strategic level case studies

A matter of trust

Survey shows people really do trust their accountant

Match made in heaven

ACCA and University of South Wales celebrate 50 years of working together 8

New ICAEW boss Institute names Alan Vallance as new Chief Executive to replace Michael Izza

AAT pass rates First full set of results released since introduction of Q2022

10 ACCA pass rates The good

and the not-so-good September exam results

12 Tech news

Rise and rise of AI not without risk, says PM Sunak

Features, etc 14 Have your say

Accountancy bodies need to get radical over climate change; why I’m off to New Zealand; and I am a calculator! Plus our social media round-up

16 PQ Awards 2024

We launch the latest edition of the best accountancy awards around; and meet our current PQ of the Year. We look forward to receiving your entry!

18 CBA pass rates

The latest AAT pass rates for both the A2022 and AQ2016 assessments

21 CIMA spotlight

Progress through your CIMA studies by taking one small step at a time

22 ACCA SBL exam

Sitting SBL in December 2023? Then make sure you read the September 2023 examiner’s report

24 ACCA PM exam

Five things you need to do to pass the Performance Management paper

25 ACCA spotlight

29 CIMA case study

Warehouse management is the topic this time around – so don’t get left on the shelf

31 ACCA exam tips

Six pages of the finest tips out there – but don’t forget to do a full programme of revision!

37 AAT level 3

All you need to know about accruals and prepayments

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38 CIPFA spotlight

Institute updates Better Business Cases course –we explain how and why

39 Careers

ACCA warns on the dangers of burnout; our Agony Aunt tackles your career issues; and our Book Club review

40 Fun

The lighter side of life – and accountancy

The columnists Lisa Nelson Does cramming for an exam actually work? 4 Robert Bruce Why the reluctance to embrace a greener future? 6 Prem Sikka It’s time to scrap the iniquitous student debt system 8 Anna Kate Phelan We must heed the warnings about artificial intelligence 10 David Rothera Win a sustainability audit for your organisation

p31

The importance of careful planning when it comes to timetabling your exams

27 AAT study advice

AAT level 3 and level 4 studiers are required to calculate depreciation – so here’s how it’s done

28 London Business Show 2023

p16

We preview an event that budding entrepreneurs just can’t afford to miss

To subscribe for FREE go to www.pqmagazine.com

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LISA NELSON

Does cramming actually work?

Everyone agrees that practising past examination questions is a good idea. However, it does depend on when you practise them. If it’s before the exam as part of your revision, question practice will only really strengthen the link to what you already know, effectively making it easier to find – it’s called retrieval strength. This is why if you get a similar question in the exam you will be able to retrieve the answer very quickly. Practising questions can sometimes help expand your existing knowledge, because reviewing the model answers will clarify some of what you previously didn’t understand. However, there’s a problem: without repetition, after 24 hours around 40% of what you learned will be lost and another 10% to 20% in the 24 hours that follow. This is not learning, it’s forgetting. Sitting alongside retrieval strength is storage strength; this is how well the knowledge was learned and understood at the time of learning. This is strengthened by spacing content out over time, the opposite of cramming, reflection and repetition. The point is you need both. Retrieving something that was not stored sufficiently well is of little use, and storing knowledge that you can’t find doesn’t work either. Cramming prior to the exam will only help you recall information for a short period of time, and as a result has not really been learned. When you need that knowledge again, maybe for the next exam, you will have to ‘learn it’ all again! Lisa Nelson is Director of Learning at Kaplan

CIMA SCS and MCS pass rates down CIMA PQs sitting the Management and Strategic level case study papers in August seemed to struggled with them a bit more than normal. The pass rate for the Strategic case exam dropped to 48% – it was 62% in May, and last November 2022 it was a healthy 71%. The Management case study pass rate dropped to 58% this time around. Some 62% of sitters passed the MCS May sitting, and 72% were successful in February. It was better news for those taking the Operational level case study – the August pass was up five

rate has remained consistent across the year, although Management and Strategic level case study pass marks dropped off for August. Candidates do need to make sure they show the depth required in their answers, evidence strategic thinking and remain focused on the question being asked. A good tip is to read to our examiners’ reports.” CIMA’s CGMA CASE STUDY PASS RATES

percentage points to 69%. Stephen Flatman, Vice President, Examinations – Management Accounting, told PQ magazine: “The Operational level case study pass

Time to nominate is here!

The PQ magazine awards have come of age – yes, they are 21 years old! And there is a whole new batch of PQ trophies being created

as we speak. One could have your name on it! If you think you know our next PQ of the Year, or even Tutor of the

PwC #1 for social mobility PwC has been ranked the top UK employer in the Social Mobility Index 2023. The index ranks Britain’s employers that have taken the most action to improved social mobility in the workplace. In the last academic year PwC

supported more than 17,000 secondary school students from lower social economic background with skills development. Last year PwC also removed the 2:1 degree classification requirement for all its

pages of tips for the December sitting. They cover all the papers from PM to APM and those in-between. See page31.

financial reporting and management accounting. Professor Kemi Yekini and Dr Galina Goncharenko joined in October 2023, with Professor Teerooven Soobaroyen set to arrive in January 2024.

AUG 23 Operational 69% Management 58% Strategic 48%

MAY 23 64% 67% 62%

FEB 23 68% 72% 56%

NOV 22 66% 71% 71%

Year, then get writing to us. Last year we introduced a new category of Podcast of the Year, which was won by Kieran Maguire and his Price of Football podcast. So, have you been listening to anything that’s worthy of a nomination? All those shortlisted will be invited to the coolest accountancy awards around – in late April next year. Deadline for entries is Friday 8 March 2024, but please don’t wait until the last minute to enter. Download the nomination form at www.pqmagazine. Just click on the ‘PQ Awards’ button at the top of the home page. Check out all the categories on page16. undergraduate and graduate roles, internships and placements, opening up opportunities to more people. And its recent investment in Cardiff provides PwC with a platform to recruit a wider range of people from differing backgrounds. This is the third time PwC has topped the rankings.

In brief Our ACCA exam tips are right here right now If you are sitting the ACCA APM exam this December then you must remember the paper is not about reciting technical knowledge – it’s vital you actually apply your knowledge. If you are attempting AFM then it is wise not to over-emphasise numerical analysis in your final revision – remember, this paper is not a maths exam! If you want more gems like this then you need to read our six 4

Three new senior staff join Aston’s accounting department Aston University is set to welcome three new experts to its business school’s accounting department. It said these appointments will significantly add to its current research base in several of its core areas including auditing,

Warehouse experts needed The CIMA SCS is just around the corner. So do you know the five advantages of ASRS? In fact, do you know what ASRS stands for? It’s automated storage and retrieval systems, of course!

And those five advantages include the fact that a robot is less likely to drop or damage inventory and have fewer picking errors. For those not in the know the final case study is all about working for Robobryce, a company that provides ‘solutions for handling objects’ in warehouses and factories. This pre-seen runs for the November and next February’s exam. Check out our take on the case study on page 29. PQ Magazine December 2023

news PQ

A profession you can trust? The latest Edelman Trust Barometer reveals a significant increase in levels of trust in chartered accountants (to 85%), despite ongoing economic uncertainty. The trust in chartered accountants has in fact increased seven percentage points since 2021 – which puts accountants alongside doctors (87%) and engineers (87%) as trusted advisors. To put this into context the trust in lawyers fell three percentage points between 2021 and 2023 to 64%. Auditors have a trust score of 75%

and politicians 27%. Interestingly, the trust in chartered accountancy bodies rose three percentage points to 80%. While good, it still means one in five people don’t trust them!

Finding the ethical accountant The world has gone wrong when it comes to ethics, especially accountancy, according to Professsor Atul K Shah. He told a packed Queen Mary University of London seminar that good leadership in accountancy should start and end with ethics. However, he said ethics is in direct conflict with greed and profit maximisation.

PQ Magazine December 2023

He felt we paper over this conflict, but the scandals don’t go away. Shah explained leaders set the tone of organisations and they need to be held account, as all they only seem to care about is themselves. Meanwhile, Gareth Moss, FD of CIPFA, felt the vast majority of accountants are honest and trustworthy, and society is better for that.

The Edelman report, commission by Chartered Accountants Worldwide, said as concerns about misinformation grow, particularly during a move towards increase automation, chartered accountants can capitalise on their existing strength and become the ‘guardians of the data’. Some 77% of financial decision makers say they have or will be using their accountants to lead the digital transformation in their organisation. For more go to https://tinyurl.com/ mt9b4euv Atul K Shah

However, he suggested that when things do go wrong and individuals go rogue we haven’t quite got it right in terms of dealing with that. Check out our film of the night here.

Win an AAT scholarship

PQ magazine has joined forces with e-Careers to offer one lucky AAT student a free scholarship every month for the next six months. That’s six scholarships up for grabs, meaning you could be studying your next AAT level for free! The scholarships came about after PQ’s Graham Hambly visited the e-Careers team at their Langley HQ. The team were genuinely concerned how the costof-living crisis might be affecting people’s ability to choose accountancy as a career. To enter all you have to do is say why you think you deserve the scholarship. You will be put forward for all six scholarships, so if you don’t win it the first time there are still another five chances to win. Hambly will be on the judging panel to help award the scholarships. Check out more on page 9.

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ROBERT BRUCE Why the reluctance to embrace the future? The world of sustainability and the power of financial reporting to speed its progress appears to be grinding to halt. This is puzzling. It is after all what people used to call a no-brainer. Its logic and purpose was, and still is, clear. Basing a nation’s energy needs on renewables has increasingly become a reality. The technology has accelerated to provide more reliable and better vehicles, for example. All the benefits of sustainability are coming to pass. Yet politicians and the rhetoric of the general public increasingly portray it as the opposite. This is puzzling. There is nothing that is suddenly new in the efforts to make business long-term and sustainable. It is almost 20 years since, in the days when he was Prince of Wales, King Charles set up the Accounting for Sustainability organisation. It was all about the role of accountants in making businesses resilient, integrating financial systems and reporting results in such a way that the consequences of the reporting are plain. Meaning change that is required is obvious for all to see and is acted upon. Sustainability standards are being adopted globally. As I said, none of this is new. So it is disconcerting for example to find that in the US oil industry and, following on its coat tails, the UK’s is going gangbusters back to the past. The short term has temporarily overtaken the long term. But the figures will bring it back. As my Scottish forbears used to say: it cannae last. Robert Bruce is an award-winning writer on accountancy for The Times

ACCA and USW ‘together’ for 50 years ACCA and the University of South Wales (USW) came together for a special event at the Newport City Campus recently to mark 50 years of training finance professionals in south Wales. Since introducing the ACCA course in 1973, the University of South Wales has become an ACCA Platinum Approved Learning Partner, the highest level of accreditation that a tuition provider can obtain. Dr Ben Calvert, vice chancellor of the University of South Wales, said: “This course epitomises what USW stands for – working with the profession and industry locally and globally to bring industry needs into the classroom and train

professionals who will be at the heart of organisations throughout their careers.” Helen Brand OBE, chief executive of ACCA (pictured with USW students), said: “It’s such a pleasure to be here as we celebrate 50 years of USW offering the ACCA qualification. In that half-century we have seen so many

cohorts of gifted accountants emerge from USW, and they have gone on to contribute so much, in so many ways, to the worlds of finance and business in Wales, across the UK, and across the world.” • USW has won the PQ magazine Public Sector College of the Year award four times.

FRC hands out record fines to KPMG KPMG must pay out record fines over its ‘exceptional’ audit failings of Carillion, the construction company that collapsed in 2018. The Financial Reporting Council issued two fines, one of £18,550,000 and another of £2,450,000. Along with two severe reprimands, the Big 4 firm was also ordered to pay Executive Counsel’s costs of both investigations, which amount to £5,324,365.68.

Two former audit partners, Peter Meehan and Darren Turner, were also fined, with Meehan given a 10-year exclusion from membership of the ICAEW. Elizabeth Barrett, Executive Counsel, stressed: “The number, range and seriousness of the deficiencies in the audits of Carillion during the period leading up to its failure was exceptional and undermined that credibility and the public trust in audit.

This is reflected in the financial sanction imposed on KPMG LLP, the highest-ever imposed by the FRC.”

ICAEW Professional exam results are in In all, 4,743 ICAEW students sat the September 2023 Professional exam session. Some 8,010 exams were attempted, and 3,387 PQs passed all the exams they took. A total of 722 students now move on to the final level, with 254 of these still not having failed any

exams. The exam stats show one student sat all six Professional papers – and failed all six! More than half (2,471) of sitters sat just one exam. Of these 72.8% passed and 27.2%, or 673, failed. The pass rate for sitting three papers was slightly higher. Some

73.6% of the 1,000 or so who sat three papers passed them all. ICAEW SEPTEMBER 2023 PROFESSIONAL EXAM RESULTS: Audit & Assurance 80.1%; FAR (IFRS) 64.7%; FAR (UK GAAP) 0%; Tax Compliance 88.7%; BP: Tax 80.4%; BP: Banking 62.7%; BP: Insurance 100%; Business Strategy & Technology 86.2%; Financial Management 82.9%.

marks. There more great tips from Noel-Cephise on page 24.

demand pressures will have added £15 billion (almost 29%) to the cost of delivering council services since 2021/22. Some councils have warned rising costs are threatening their financial sustainability.

Review. In 2022, small and medium-sized enterprises (SMEs) were owed on average an estimated £22,000 in late payments. Improving payment culture in the UK will support smaller businesses and could boost the economy by £2.5 billion annually. The measures being proposed include extending payment reporting obligations, improving advice available to SMEs on negotiating payment terms, and expanding the powers of the Small Business Commissioner.

In brief How to pass the hardest advanced skills paper PM, with a pass rate of 40% last time out, now has a worse pass rate than AA. How do you pass this ACCA advanced skills paper first time around? Top tutor Jean-Paul NoelCephise says you have to keep your answers to the point and brief. One sentence per point is just fine. Noel-Cephise points out that by making your answers longer you are simply taking up valuable exam time and still not earning any 6

In the eye of an inflationary storm Councils in England face a funding gap of £4 billion over the next two years, according to the Local Government Association. This is a £1bn increase since the LGA’s initial analysis in July as cost and demand pressures continue to rise. New LGA analysis – published ahead of the Autumn Statement – also shows that by 2024/25 cost and

Getting tough on late payment The UK government has unveiled tougher measures in an attempt to address late payment to small businesses ahead of the publication of its Prompt Payment & Cash Flow

PQ Magazine December 2023

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PREM SIKKA

New CEO for ICAEW Why it’s time to scrap student loans

Successive governments have funded tax cuts and perks for corporations and the rich by shifting state expenditure and debt to households. Graduate debt of £206bn is one such example. Before 1998, there were no university tuition fees for students domiciled in England. Now the average annual fee is around £9,250, mostly funded by loans. Around £20bn a year is loaned to students to cover fees and living expenses by the government-backed Student Loan Company. The average debt of a graduating student is around £45,000. Medical students on longer courses typically rack up between £50,000 and £90,000 of debt. Interest of around 7.3% a year is charged and increases the debt, which is expected to be repaid over 30-40 years. It is written-off after that. In 2022-23, £8.3bn of interest was added to student debt, compared with £4.2bn in repayments. Due to low wages and loss of skilled and semi-skilled jobs, around 27% of full-time undergraduates starting in 2022/23 are expected to repay the loans in full. Loan repayments deplete income of graduates, just when they are thinking about starting a family, business or buying a home. Thus, the whole nation becomes poorer. To stimulate the economy, the government needs to increase household purchasing power. One effective policy would be to emulate major European countries and abolish university tuition fees. It also needs to write off the graduate debt, not in one instalment but by writing it off as and when it becomes due for repayment; that is spread over 30-40 years. Prem Sikka is Emeritus Professor of Accounting at the University of Essex

ICAEW has announced that Alan Vallance (pictured) has been appointed as its new Chief Executive. Vallance is expected to take up the role in Spring 2024. He will succeed Michael Izza, who has been CEO since 2006. Izza announced in March his intention to retire from ICAEW by the end of this year, but he has agreed to stay in post until Vallance joins the institute to ensure a smooth transition. Vallance, an ICAEW chartered

accountant, is currently Chief Executive of the Chartered Insurance Institute. His previous roles have included Chief Executive of the Royal Institute of British Architects and the Group Chief Operating Officer at the Law Society. Vallance said: “The accountancy profession today plays a vitally important leadership role on the key issues facing society. I am determined to make sure that ICAEW leads from the front and that this role continues, indeed evolves

in the future, with an unwavering focus on the public interest so that our members play their rightful part in building a world of sustainable economies.”

Where do you get your financial guidance? More young people are turning to social media rather than their bank for financial guidance, according to new research from Deloitte. A survey of over 2,500 UK consumers, conducted in August 2023, found that 25% of 18-24 year olds use social media when searching for financial guidance and advice. It also found that 20% of this age group have invested money based on social media recommendations, with almost half of these (48%) having invested between £100 – £500 and 16% invested over £1,000, in their lifetime. Some 21% invested specifically in cryptocurrency based on social media guidance. Yet 33% of the

same age group are not confident enough in their financial knowledge to take out investment products at all. Margaret Doyle, chief insights officer, financial services at Deloitte,

said: “It is troubling that instead of reaching out to trusted providers many people are turning instead to what is often unregulated financial and investment advice from ‘finfluencers’ on social media.”

Remuneration reporting ‘lacks clarity’ There appears to be real problems with the way directors’ remuneration is reported. As part of the ongoing audit and corporate governance reform programme the FRC recently extended its monitoring work to include a review

of directors’ remuneration reporting for a selection of 10 companies. As a result, the FRC had to write to nine of these companies on matters mostly relating to the clarity of these targets and performance against them. In its recently published Annual Review of Corporate Reporting,

the FRC reported the findings from its monitoring activities, together with its expectations for the coming reporting season. It reviewed 263 company reports and wrote to 112 companies with questions about their accounts. Following FRC enquiries, 25 companies were required to restate aspects of their accounts.

playing an increasingly pivotal role in providing stability and flexibility to all industries. As a result, there’s a growing demand for trusted tax advice and support that’s easy to access.”

have worked out could raise just over £200 billion a year. Research by the EU Tax Observatory found these billionaires had very low effective personal tax rates, of between 0% and 0.5% of their wealth. A key reason for the low tax rate is because these very wealthy people can use personal holding companies to avoid the income tax. EU Tax Observatory suggests that these holding companies are in a “grey zone between avoidance and evasion”.

Mileage rate ‘outdated’ People who use their own cars for business trips are being left out of pocket by ‘severely outdated’ mileage rates, the Association of Taxation Technicians (ATT) has warned. Employees can be reimbursed for business travel tax-free – provided that their employer uses HMRC approved rates. For employees using their own car or van for business travel, these rates are 45p per mile for the first 10,000 miles, and 25p per mile thereafter.

Tax briefs TaxScouts go big TaxScouts have appointed Mal Cowley as its new CEO, with the aim of building its tax and accounting platform into the largest network of certified accountants in Europe. Cowley’s appointment comes as TaxScouts reports a 350% increase in growth. It has also tripled its customer base in two years and the platform now has a network of 150 accredited accountants. Cowley said: “In the new realities of work, the self-employed are 8

A minimum tax rate for billionaires? The world’s billionaires must start paying a minimum tax rate, according to the EU Tax Observatory. It has suggested that the super-rich should pay a minimum of 2% tax, which they

PQ Magazine December 2023

news PQ

AAT pass rates are in AAT has released the latest set of pass rates with a warning. It explains: “Please remember that the new qualifications are very different to their AQ2016 counterparts, both by way of content and assessment approach. For this reason, you should avoid making direct comparisons between Q2022 and AQ2016 pass rates.” So, what are these Q2022 pass rates like? One worry will be the

Credit and Debt Management assessment, which is the only one with a pass rate of under 50% – it is 49.8%. The Personal Tax pass rate for Q2022 is 53.5%, which is also

much lower than the AQ2016 pass rate of 62.7% (sorry, it is hard not to compare!). Two other papers at Level 3 have pass rates under 60%: FAPS (53%) and BUAW (59.35%). The difference between the two qualifications is also pronounced when you look at the pass rates per level. For Q2022 the Level 3 pass rate is 58.9%; for Level 4 it’s 63.7%. For AQ2016 the pass rate for the Advanced Level is 71.2% and for Professional it is 63.9%. Check out all the pass rate on page18.

Are local authorities ready for IFRS 16? ACCA has raised doubts over the readiness of UK local authorities to adopt international accounting standard IFRS 16. Responding to a consultation on the update to the Code of Practice on Local Authority Accounting for 2024/25, ACCA has said that greater understanding is required in the readiness of local authorities in adopting IFRS 16 on accounting for leases. This is particularly important given the challenges

faced by the bodies, from both a fiscal and preparatory perspective. ACCA highlights the need for a

collaborative approach given local challenges, complex regulatory landscapes, constraints of resources and the financial stability of certain councils. Glenn Collins, ACCA’s head of Technical and Strategic Engagement, said: “In the face of limited resource constraints – including staff shortages and spending cuts – the potential repercussions of local authorities adopting IFRS 16 may be that timely reporting is unfeasible.”

Increasing OPBAS powers ‘only viable option’ The Institute of Financial Accountants (IFA) has warned of “significant risks” to the UK financial system if government proposals to create a single AML regulator go ahead. In its response to HM Treasury’s AML supervisory consultation, submitted in late September, the IFA argues in favour of the proposed OPBAS+ model, which would enhance the powers of the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) and increase the effectiveness of professional body supervision (PBS), viewing it as the only viable option for change. IFA’s Tim Pinkney said: “We believe that the OPBAS+ model is by far the easiest, quickest, most streamlined and least disruptive to implement. This option best meets the objective that ‘structural reform be implemented swiftly’, with less disruption to the regime than would occur with the other proposed models.”

WIN AN AAP PQ magazine and e-Careers have joined forces to offer a free scholarship to an AAT student each month for the next six months! That’s six scholarships up for grabs! e-Careers is aware of the impact that the cost-of -living crisis is having on those trying to start or complete their accountancy qualifications, and so the scholarships were born. To be in with a chance of winning a scholarship simply tell us why you thinserve one. Send your entry to scholarships@e-careers.com. If you are chosen then you will receive free tuition for the whole of the level you require. And if you don’t win the first scholarship don’t worry – your entry will be kept in the draw for the duration that the scholarship applies. To be eligible for the scholarship we need your application to include your full name, address and telephone number. You have up to 500 words to explain why you deserve the scholarship. PQ magazine editor Graham Hambly will be on the judging panel. The winners will be notified around the 20th of each month. PQ Magazine December 2023

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ANNA KATE PHELAN Why we must heed the AI warnings

An AI Safety Summit took place at Bletchley Park at the beginning of November. The two-day meeting, held at the base of historic World War II codebreakers such as Alan Turing, was an absolute coup for the UK government, who attracted the best and brightest AI minds to the Milton Keynes stately home. Businesses, leading AI nations (including the US, France, Germany, Italy, China and Japan), AI experts and civil society representatives (including King Charles) all joined the party. The event has been dubbed a “remarkable achievement” for diplomacy, with an international declaration on the necessity to combat AI risk being signed by 25 big-hitter countries and the EU. UK Prime Minister Rishi Sunak and Tesla chief Elon Musk had what some felt was a softball conversation on AI; however, positioning ourselves as an AI thought leader on the global stage has definite value. Musk made some alarming statements at the conference – he sees AI as “one of the biggest threats to humanity… we’re not stronger or faster than other creatures, but we are more intelligent. And here we are, for the first time really in human history, with something that’s going to be far more intelligent than us.” It’s clear that AI is set to change the world. Some changes we will be able to anticipate and some will be unexpected and potentially very impactful – a scary thought! Regulation and risk management can’t come fast enough. Anna Kate Phelan is Head of Product at Eintech

ACCA’s September 2023 pass rates With a consistent 10% difference in pass rates some people may wonder why any ACCA student sits the APM and AAA optional papers, rather than ATX and AFM. The September 2023 pass rates for AAA and APM both came in at 34%. However, the AAA pass rate wasn’t bad relatively speaking; you have to go back to December 2020 to find a higher one, at 35%. The 48% pass rate for ATX is the highest on record, and the AFM pass rate held up well at 45%. PM had the lowest pass rate at the Applied Skills level, at 40%.

UK dumps ‘burdensome legislation’ The government has withdrawn draft regulations after consultation with companies raised concerns about imposing additional reporting requirements. Draft regulations published in July would have added some additional corporate and company reporting requirements to large UK listed and private companies, including an annual resilience statement, distributable profits figure, material fraud statement and triennial audit and assurance policy statement. However, it said that it remains committed to wider audit and corporate governance reform,

Kemi Badenoch

including establishing a new Audit, Reporting and Governance Authority to replace the existing Financial Reporting Council. It

promised: “We will bring forward legislation to deliver these reforms when Parliamentary time allows.” Since July, the Government has completed a call for evidence on existing non-financial reporting requirements, which has identified a strong appetite from businesses and investors for reform, including to simplify and streamline existing reporting. The Business Secretary, Kemi Badenoch, has now decided to withdraw these regulations, and will be setting out options to reform the wider framework shortly to reduce the burden of red tape on businesses.

Warrener Stewart is 40 years young In 1983 Microsoft released Word, the first Apple Macintosh went on sale in the UK, and chartered accountant Peter Warrener went into partnership with Danielle Stewart to create a new firm of chartered accountants in south London – Warrener Stewart.

EY reports record UK revenues EY has achieved a second year of double-digit revenue growth, with UK revenues up 16% and fee income increasing to a record £3.76bn, up from £3.23bn the previous year. Over the past financial year, EY recruited 5,326 people and since January 2023 it has welcomed over 1,800 graduates, school leavers and interns. As part of a commitment to social equity and targeted actions to attract talent from low-income backgrounds, around 11% of EY’s student intake disclosed they were previously eligible for free school meals. EY said it has re-invested profits into the 10

Long gone are the days when the paper had a 57% pass rate (that was June 2010). The AA pass rate was a little on the low side too, at 42% this time around, but at least it’s not in the 30% range. In March 2020 the AA pass rate was 36%. The FR pass rate also slipped slightly to 47%, as did FM to 49%, when compared with the last sitting (June). ACCA SEPTEMBER 2023 PASS RATES: LW 84%; TX 54%; FR 47%; PM 40%; FM 49%; AA 42%; SBL 50%; SBR 50%; AAA 34%; APM 34%; AFM 45%; ATX 48%

Warrener Stewart now covers all aspects of audit, accountancy and business advice, as well as UK and US tax services. It has offices in Fulham and Edinburgh, employs around 50 staff and has served more than 6,500 clients over the past four decades, many of whom

business, rather than just in partner distributions. Average distributable profit per partner was £761,000 (£803,000 in FY22). Bina Mehta reappointed UK Chair at KPMG KPMG in the UK has confirmed the reappointment of Bina Mehta as Chair, following the firm’s partnership voting overwhelmingly in favour of her continuation in the role. Mehta was first appointed as non-executive UK Chair in February 2021, following the firm’s move to a new governance model separating the roles of its Chair and Chief Executive. In November that year she was then elected to continue in role until the end of February 2024. Mehta has worked at KPMG for over 30 years,

have been with them since their inception.

specialising in M&A and Restructuring and advising leading private and listed international clients. KPMG UK’s Board members comprise of 44% women, 22% ethnic minority, and 22% from a low socio-economic background. High prices put pressure on planet Cost is an increasingly large barrier to a more sustainable lifestyle in 2023, with the majority of consumers saying they haven’t adopted sustainable behaviours in the past 12 months because it is too expensive, according to the fourth edition of Deloitte’s Sustainable Consumer 2023 report. The survey of 2,000 people in the UK showed that, of the consumers who did not adopt a more sustainable lifestyle, 62% blamed cost, up 10% on 2022. PQ Magazine December 2023

PQ tech the news

DAVID ROTHERA

Balancing your carbon books

I’m delighted to recognise the ambition of 10 UK accountancy firms to address their greenhouse gas emissions with Net Zero Now’s ‘On the Road to Net Zero’ certification. The trailblazing firms are the first among those signed up to the Net Zero Accountancy Initiative to be certified – a testament to the ongoing commitment they have made to tackle the climate crisis by working towards ambitious near-term and long-term carbon reduction targets. The firms, which include Purple Lime and Prager Metis, have worked with Net Zero Now to undertake a full calculation of their greenhouse gas emissions – the vital first step in enabling action to reduce them. Together, they employ 2,500 people and were responsible for 7,000 tonnes of emissions in 2022 – equivalent to the emissions generated by driving 17 million miles in a petrol car. All these firms have committed to annual reporting of their footprint and to reducing their scope 1 and 2 emissions by 50% by 2030 and to ambitious scope 3 targets. It’s competition time! To mark this significant milestone for the Net Zero Accountancy Initiative, Net Zero Now is offering two lucky individuals the chance to develop their sustainability knowledge by giving them a free place on a short course from the prestigious Cambridge Institute for Sustainability Leadership. If you’re an accountant who would like to up your sustainability game, click here to find out more about this incredible opportunity.

Keeping control of AI vital for humanity Prime Minster Rishi Sunak has warned of the risks of artificial intelligence, as the UK pushes to take a leading role in shaping how we safely use the technology. He said AI “will bring transformation as far reaching as the industrial revolution, the coming of electricity, or the birth of the internet” – but warned there are risks attached to that ‘transformation’. The PM suggested that if we get it wrong AI will make it easier to build chemical or biological weapons and that criminals could

exploit the technology for cyberattacks, disinformation, fraud and even child sexual abuse. Sunak stated: “In the most

unlikely but extreme cases, there is even the risk that humanity could lose control of AI completely… through the kind of AI sometimes referred to as super intelligence.” He then quoted the statement made earlier this year by hundreds of the world’s leading AI experts: “Mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war.” Interestingly, Sunak said this was not a risk that people need to be losing sleep over right now.

AI only works if ethics is at the core ACCA is urging the UK government to put ethics, transparency and governance at the heart of its artificial intelligence policy. As the UK government’s AI Safety Summit met at Bletchley Park – one of the birthplaces of computer science – to discuss how AI benefits can be realised, ACCA says that the only way to ensure AI is viable for the long term and works for the whole of society is to ensure transparency around the way it is used. The key ethical concerns identified by ACCA research are:

• A lack of transparency and trust hindering AI adoption. • The ability to mitigate bias and discrimination in use. • Privacy and security of data. • An absence of a relevant legal and regulatory framework – for issues such as liability and copyright. • Inaccuracy and misinformation. • The Magnification Effect/ unintended consequences – meaning one single AI error could be much more serious than human error.

EY launches AI platform EY has launched a new artificial intelligence (AI) platform – called EY.ai – following a $1.4bn global investment. The platform is designed to help clients transform their businesses through confident and responsible adoption of AI. The Big 4 firm is also upskilling its 400,000 people globally with AI learning and development alongside the roll out of EY.ai LLM, a Large Language Model. Carmine Di Sibio, EY global

David Rothera is Climate Project Manager at Net Zero Now

chairman and CEO, said: “AI’s moment is now. Every business is considering how it will be integrated into operations and its impact on the future. However, the adoption of AI is more than a technology challenge. “That is why EY teams help clients identify how to capture the transformative power of AI from every seat at the boardroom table and across the enterprise. It is about unlocking new economic value responsibly to realize the vast potential of this technological evolution.”

Tech briefs Apple revenues in decline Profits at Apple rose 10.8% to $22.9 billion in the last quarter, but revenues are in decline as it posted its fourth quarterly sales drop in a row. Sales for the three months to the end of September were $89.5bn, down year-on-year by $500 million. That said, sales of Apple’s smartphones worldwide rose 2% to $43.8bn. This was helped by the introduction of the iPhone 15 models at the end of the quarter. However, sales of Macs fell sharply, 12

with revenue down a third to $7.6bn. On the plus side Apple has unveiled a new range of models, so it expects a significant acceleration in sales next year. NatWest launched Cora+ NatWest Bank and IBM have announced enhancements to the bank’s virtual assistant Cora, that will use generative AI to provide customers with access to a wider range of information through conversation interactions. The bank is among the first in

the UK to deploy generative AI with a virtual assistant, and it says this will enable a safe, intuitive and accessible experience. Cora+ will also be able to access information from multiple secure services that were previously inaccessible through chat alone, such as products, services, information about the bank and even career opportunities. Wendy Redshaw, Chief Digital Information Officer of the NatWest Group’s Retail Bank, said: “We are a relationship bank in a digital

world, building trusted, long-term relationships with our customers through meaningful and personalised engagement.” Musk launches chatbot Elon Musk has launched an AI chatbot to selected users of his social media site X (formerly Twitter). As you would expect, he told the world that “in some respects it is the best that currently exists”. The chatbot is called Grok and Musk suggested it has “a little humour” and “loves sarcasm”. PQ Magazine December 2023

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Time to get radical?

Well done to my institute for writing to the Prime Minister Rishi Sunak, urging for more action on the UN Sustainable Development Goals. But does anyone think he is really listening? You ask in your feature whether ‘our sustainable future is being lost’ (PQ, November ’23) and say that we are on track to meet just 12% of our sustainable development targets by 2030. We are going backwards – time really is running out. I don’t think Mr Sunak and co. are ready to take the ‘transformative action’ we need to happen. Maybe it’s time for us accountants to get more radical. I

have just looked up the Just Stop Oil website. It says civil resistance works, applying non-violent pressure until it forces change to happen. It calls our current

government ‘criminal‘ and believes we must act now to stop the unfolding climate disaster. No one, it says, is going to save us, and we need to come together to do that for ourselves. My worry is if I join a march I run the risk of being arrested. What would my professional body do if they discovered I got a criminal record for doing something they have been advocating? The letter sent by the 11 professional bodies was dated 18 September 2023. Did they get a response from the government, I wonder? I haven’t heard anything – no surprise there, either. Name and email address supplied

2XU VWDU OHWWHU ZULWHU ZLQV D IDQWDVWLF o, ORYH 34p PXJ New Zealand bound

I was intrigued to read about the new deal between the UK and New Zealand that will allow auditors from one country to work in the other fairly seamlessly. It will certainly boost access to a wider pool of auditors. I have always wanted to work overseas too, and I can’t think of a nicer place to do that than New Zealand. I had a quick look to see what the pay would be like and found that the average annual salary for internal auditor jobs in New Zealand ranges from $80,000 to $95,000 (£46,000). There is also an ongoing shortage of auditors, with one article saying it was going to be an issue for the ‘foreseeable future’, and that New Zealand has traditionally relied on overseas recruitment to fill the shortage. I am getting my bags packed! So come on FRC, let’s get some more deals done. Singapore would be nice and maybe Canada too? Name and email address supplied

The human calculator

I must say PQ magazine loves an ‘all accountants are stressed’ story!

That said, I am not a fan of some of the repetitive work my firm has me doing. I can’t wait for the AI to take on that stuff. It’s also hard not being seen as the human calculator machine (lead story, PQ, November ’23), because that is what people want from us. We are the people who make sense of the numbers and

help provide an overview of their business. The one part of your story I do agree with is the fact that many senior professionals seem to question their juniors’ work ethic. It is still a case of we had to suffer doing the mundane stuff, and so should you. Name and email address supplied

The latest seminar in our series with Queen Mary University of London, on ethics, went viral this month. Professor Atul K Shah (pictured) was on hand to provide a stimulating public debate, and he told his followers on LinkedIn that he wants ethics to become central to professional life and to see a reduction in the intoxication that comes from greed and materialism. Marie Speakman agreed that we have moved away from helping each other to being in competition. She stressed that greed and materialism do not bring happiness. PQ magazine also travelled to Wales for the University of South Wales special event to celebrate 50 years of training ACCA finance professionals, and it was great to meet up with ACCA CEO Helen Brand (pictured below) for a chat. While we headed back to London, Helen was off to India. We were at the Finance Awards (London & South East) too, sitting on table 60 with ASOS director of tax Clare Heard. She thought she was too far back in the room to win. How wrong she was, as she collected the Tax & Treasury Leader of the Year award. As comedian Russell Kane said, if she didn’t like the award she could always send it back in the prepaid envelope! We always like to see how other awards compare with ours (which are obviously the best). Let’s just say the awards themselves didn’t start until 9.30pm, we didn’t get away until well after 11pm and the disco hadn’t even started! You had to be hardcore to stay for that.

PQ Magazine PO Box 75983, London E11 9GS | Phone: 07765 386489 | Email: graham@pqmagazine.com Website: www.pqmagazine.com | Editor/publisher: Graham Hambly graham@pqmagazine.com | Associate editor: Adam Riches | Art editor: Tim Parker Contributors: Robert Bruce, Prem Sikka, Lisa Nelson, Anna Kate Phelan, Tony Kelly, Phil Gammon, Edward Netherton | Subscriptions: subscriptions@pqmagazine.com | Origination services by Classified Central Media If you have any problems with delivery, or if you want to change your delivery address, please email admin@pqmagazine.com 14

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PQ Magazine December 2023

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PQ PQ awards 2024

THE AWARDS ARE HERE! Time to get writing! We want your nominations for the PQ magazine awards 2024 – it’s our 21st awards night

PQ AWARD 2024 CATEGORIES PQ OF THE YEAR NQ OF THE YEAR DISTANCE LEARNING STUDENT  OF THE YEAR ACCOUNTANCY GRADUATE OF  THE YEAR ACCOUNTANCY APPRENTICE OF  THE YEAR STUDENT BODY OF THE YEAR  ACCOUNTANCY COLLEGE OF THE  YEAR – PUBLIC SECTOR ACCOUNTANCY COLLEGE OF THE  YEAR – PRIVATE SECTOR ONLINE COLLEGE OF THE YEAR  LECTURER OF THE YEAR –  PUBLIC SECTOR

he search is on for the winners of our 2024 PQ magazine awards – and we will have lots of shiny PQ awards up for grabs at our 21st awards night. There will 20 handed out next April. But before all that you need to get nominating! As we always say, this is not the time to go all shy on us. We positively encourage you to nominate yourself. It is also a chance to nominate someone who never gets the plaudits they deserve. Maybe you know a PQ who deserves recognition or a tutor/mentor who has helped pick you up when you were down. Well, we want to shine a light on them all. Our 20th awards night certainly went off with a bang. We had fire-eaters, acrobats and even found some ‘accountants with talent’. Honest! Proud was our venue for a second year in a row, and our star-studded event saw Evie Todd crowned PQ of the Year (you can read more about her on the page opposite). ICB student Lillian Okolie won Distance Learning Student

of the Year, and CASSL (pictured) won Student Body of the Year. Personality of the Year went to Rachel Harris, and CIPFA won Accountancy Body of the Year. You can download the nomination form from our website, at www.pqmagazine.com. Just click on ‘PQ Awards’ button on the home page. You then have up to 500 words to make your case. If you still don’t think that is enough provide your supporting material separately when you email us, and we will make sure the judges see both. Once you have got it all together send it to awards@pqmagazine.com or post it to: the Editor, PQ magazine, PO Box 75983, London E11 9GS. Our independent judges see everything before deciding the shortlist for each category. And if you make it onto that list you will be invited (free, of course) to the fantastic awards night in London. The deadline for entries is Friday 8 March 2024. So don’t delay – get your nomination in asap!

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PQ Magazine December 2023

PQ awards 2024 PQ

MEET OUR PQ OF THE YEAR… We asked our current PQ of the Year, Evie Todd, to tell us a little about herself Why accountancy and ACCA? Accounting is a fundamental part of any business – who doesn’t need an accountant? I love the idea of being part of a profession which makes a difference to future generations. From an early age, I was a very organised person. I liked learning, structure and, above all, numbers! I believe accounting has and will provide me with many opportunities. It opens the door to many different industries, sectors and roles, providing me with the chances that you couldn’t dream of in other careers. How are you getting along? How far have you got with your studies? It depends what day you ask me. Some days everything seems overwhelming and too much, whereas other days I feel like I can take on the world. I am currently on my second professional paper out of four, meaning I could be qualified by June 2024. When I started back in January 2022 I thought two to three years was a long time and I might not ever qualify. I can proudly say I have sat all exams as planned and even managed to pass them all first time. I don’t think I would have been able to come as far as I have without my amazing support network. Connecting with like-minded individuals has been the best part of my journey so far. So how have you found the exams? Any tips for studying? Intense. I don’t think I fully understood the jump from AAT to ACCA. Saying that, if the exams weren’t as challenging as they are the qualification wouldn’t be as accreditable as it is. My plan from the beginning was to sit an exam every sitting (quarterly); this can be tricky sometimes while working full time, trying to socialise, see everyone important in my life, as well as planning exciting adventures.

stay accountable. On Sunday night I often plan the week ahead. Don’t get me wrong, I might swap a revision session for a night in with some friends, but I can then look at my week and see where I can reschedule and keep the guilt clouds at bay! We are human at the end of the day, and these hurdles are here to test us and support us to become the best versions of ourselves. What has it been like being our PQ of the Year? Were you surprised to be the winner? I am still in shock! I already felt like a winner just being there, so you can imagine how overwhelmed I was to hear my name. Little old Evie from Essex… an award winner?! For me, winning PQ of Year reflects the passion and enthusiasm I have for the industry. It means that I am making a difference (despite how small). I never would have imagined I’d be where I am today. There is still a lot of lessons to be learnt, but I am proud of how far I’ve come.

The key is adopting your mindset, the ACCA qualification should support your journey towards a fulfilling career, it shouldn’t be seen as an obstacle. Like many accountancy professionals you have a full-time job. How do you find balancing work/ study/life? Difficult, this has been my biggest challenge and sometimes the guilt cloud takes over. During my ACCA journey I have moved jobs, gone on various holidays and have even bought a house. It can be tough but setting a plan helps me

What is the best piece of advice you have ever had? I have had the honour to meet so many incredible people, all providing me with advice I won’t forget. I have put two of my favourites below and I shall let you decide! “There is no such word as can’t” – my big brother. Our thoughts determine how we react to things and quite often we have faults in our thinking that lead us to have self-limiting beliefs, believing we cannot do something when we can. “There is a solution to every problem” – a finance director I once worked for. When you are faced with any problem it’s essential to put in the time and energy to find a solution. Don’t focus on the problem, there are always many solutions!

UP CLOSE & PERSONAL Job Title: Management Accountant First job: Selling apples at a market stall in London! What are you reading: The Secret Barrister: Stories of the Law Favourite podcast: Help I Sexted My Boss What album are you listening: Anything by Anees Favourite TV show: GBBO When was the last time you laughed out loud? Yesterday, my partner and I had a little dance and karaoke session in the car on the way to collect Nando’s. How do you chill out? I love spending time with friends and family, my nieces and nephews bring out my inner child. What is your claim to fame? I was in a double-page spread of my local newspaper for raising over £200 from just £1. I was around 11 years old and all funds were raised in aid of my local hospice.

PQ Magazine December 2023

PQ AAT pass rates

CBA pass rates are in Here’s the latest AAT assessment pass rates for both the A2022 and AQ2016 assessments based on the CBAs only and not achievements rates for the qualification. Graded qualifications Here’s the summary of the grades awarded for each qualification between 1 September 2022 and 31 August 2023. Qualifications and grades awarded Level 2 Certificate in Accounting

Pass 21%

Merit 56%

Distinction 23%

Level 2 Certificate in Bookkeeping

26%

43%

31%

Level 3 Certificate in Bookkeeping

36%

52%

11%

Level 3 Diploma in Accounting

33%

52%

15%

Level 4 Diploma in Professional Accounting

53%

43%

End Point Assessments The following table shows the pass rates for the End Point Assessments for year-ending 30 June 2023. ere are the global pass rates for computer-based assessments (CBA) for the Qualifications 2022 (Q2022) for the 12 months ending 30 June 2023. Pass rates are normally only published for assessments that have been available for at least 12 months or where there has been a minimum of 500 sittings. As only two assessments (AUDT and CSFT) had less than 500 sittings up to 30 June 2023, AAT has made an exception in order to publish pass rates for the complete Q2022 suite.

Percentage

EPA In-tray test

ITAF

54.4%

Structured interview

SIAF

83.5%

Advance Diploma Synoptic assessment

ADSY

62.6%

AAT Assistant Accountant End Point Assessment

Short code

95.7%

Global

Assistant Accountant Portfolio and Reflective AAT Professional Accounting Technician End Point Assessment

AARF

Assessment name

Bookkeeping Fundamentals

BKFN

86.2%

Professional Diploma Synoptic assessment

PDSY

68.7%

Business Skills

BUSK

88.0%

Professional Accounting Technician Portfolio and Reflective

PPRF

94.4%

The Business Environment Synoptic assessment

BESY

67.8%

Introduction to Bookkeeping

ITBK

84.6%

Principles of Costing

PCTN

75.1%

Principles of Bookkeeping Controls

POBC

67.3%

AQ2016 CBA pass rates The pass rates shown are the rates for AQ2016 assessments sat between 1 July 2022 and 30 June 2023. These are the last pass rates to be published for AQ2016.

Business Awareness

BUAW

59.3%

Financial Accounting: Preparing Financial Statements

FAPS

53.0%

Management Accounting Techniques

MATS

64.8%

Tax Processes for Business

TPFB

63.1%

Applied Management Accounting

AMAC

62.6%

Audit and Assurance

AUDT

58.0%

Business Tax

BNTA

Credit and Debt Management

4 4 4

Level*

Level

Assessment name

Access

Access to Accounting Software

Short code AASW

Access

Access to Business Skills

ABSK

92.7%

Access

Access to Bookkeeping

ATBK

94.3%

Foundation

Bookkeeping Controls

BKCL

65.4%

Foundation

Business Communications, Personal and Learning Skills

BPLS*

66.7%

64.4%

Foundation

Bookkeeping Transactions

BTRN

87.7%

CRDM

49.8%

Foundation

Elements of Costing

ELCO

88.5%

Cash and Financial Management

CSFT

65.2%

Foundation

Foundation Synoptic Assessment

FSYA

85.2%

Drafting and Interpreting Financial Statements

DAIF

74.0%

Foundation

Introduction to Business and Company Law

IBLW*

47.8%

Internal Accounting Systems and Controls

INAC

62.4%

Foundation

Introduction to Payroll

INPY*

100.0%

53.5%

Foundation

Using Accounting Software

UACS

84.8%

Advanced

Advanced Diploma Synoptic Assessment

ADSY

53.0%

Advanced

Advanced Bookkeeping

AVBK

65.9%

Advanced

Final Accounts Preparation

FAPR

80.1%

Advanced

Indirect Tax

IDRX

84.3%

Advanced

Management Accounting: Costing

MMAC

86.7%

Advanced

Spreadsheets for Accounting

SPSH

78.2%

Professional

Business Tax

BSTX

72.2%

Personal Tax

PNTA

*Level 2 = SCQF Level 6, Level 3 = SCQF Level 7, Level 4 = SCQF Level 8 Please remember that the new qualifications are very different to their AQ2016 counterparts, both by way of content and assessment approach. For this reason, AAT says you should avoid making direct comparisons between Q2022 and AQ2016 pass rates. CBA pass rate*

Level 1

Level 2

Level 3

Level 4

86.7%

75.1%

58.9%

63.7%

Please note that the information in the above table refers to the pass rates 18

Short code

End Point Assessments AAT Accounts/Finance Assistant End Point Assessment

Global 81.8%

PQ Magazine December 2023

the PQ Professional

Credit Management

CDMT

70.3%

Professional

Cash and Treasury Management

CTRM

77.1%

Professional

External Auditing

ETAU

72.1%

Professional

Financial Statements of Limited Companies

FSLC

64.4%

Professional

Management Accounting: Budgeting

MABU

69.3%

Professional

Management Accounting: Decision and Control

MDCL

58.5%

Professional

Professional Diploma Synoptic Assessment

PDSY

57.6%

Professional

Personal Tax

PLTX

62.7%

*Number of assessments sat for BPLS = 3, IBLW = 23 and INPY = 5

CBA pass rate*

Access

Foundation

Advanced

Professional

89.8%

80.9%

71.2%

63.9%

Please note that the information in the above table refers to the pass rates based on the CBAs only and not achievements rates for the qualification. It is not possible for AAT to calculate and provide qualification achievement rates. Graded qualifications Qualifications awarded by AAT include four graded qualifications. The table below shows a summary of the grades awarded for each qualification between 1 September 2022 and 31 August 2023. Qualifications and grades awarded

Pass

Merit

Distinction

Foundation Certificate in Accounting

11%

50%

39%

Foundation Diploma in Accounting and Business

67%

33%

Advanced Diploma in Accounting

28%

55%

17%

Professional Diploma in Accounting

55%

44%

PQ Magazine December 2023

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Take it one step at a time… Nasheen Wuisman outlines how you can progress through your CIMA studies by taking it just one small step at a time e often hear this from students: “The last set of exams was a real challenge, and the next ones are harder. Am I up to this?” This is a genuine question that you might worry over once you have completed one level of your CGMA professional qualification and are moving onto the next. The answer is, yes, it is a jump up and yes there is new technical content and the skills required are more advanced. But you are up to it! The important thing to remember is that once you have gone through the hard work that you have done to complete your current level or exam you are already more skilled and have more technical knowledge than you probably realise. The good news is that progress is gradual. Each level you work your way through builds on the last, enhances what you have already gained and smoothly takes you to the next level. As with every subject you come across in your CGMA qualification there will be a balance. There will be some topics that you are able to breeze your way through and others where more time is needed to understand and absorb. Knowing this is the case helps you start your next level with the awareness that you are moving up but it is not all going to be out of reach.

Operational level Whether you have completed the Certificate in Business Accounting or have received exemptions from your prior studies, chances are you will have found this level challenging. Is it after all your first attempt at professional CGMA PQ Magazine December 2023

exams. The learning curve is a steep but a very worthwhile one. You have learnt how your Objective Test question exams work and the skills you need to be able to succeed in them. You have climatised to the balance of theory and numerical content between the different streams and you will even have found out which subjects you like and which you do not. You may have already seen how some technical content fits into either your day job or allows you to understand the business world around you. Your Case Study preparations will have made you more aware of short-term decision making and how to turn them into actionable plans. There are key skills you will have had to learn for this exam, too. Operational to management level As you move up to this next level your focus goes further into the future, looking at longterm decisions and the medium-term plans that would allow for them. You will move onto understanding data more and using this data to manage performance and report on it. You will also take your financial accounting focus further on the preparation and interpretation of financial statements to highlight business performance. These areas build on everything learnt at the Operational level and assumes you have a higher level of responsibility in a work situation when presented with the Case Study scenario. Management to Strategic Level In your third and final level of the CGMA Professional Qualification the focus now shifts to

a more strategic approach to long term decision making. This includes designing business strategy, evaluating and manging risks and developing knowledge on sourcing financial resources required to implement strategy. Here you are being prepared to take on the role of a key member of an organisation – being promoted from your position in the Management Level Case Study. One step at a time To help make your study journey smooth and manageable, bear in mind the following: Make sure you do not rush through a level. A sound knowledge of any subject that will then be assumed knowledge in the next level goes a long way. If a topic/skill feels a struggle, try to get the support you need sooner rather than later – the CGMA Study Hub has many resources to help. Practise is key – be it questions, skills for Case Study exams or time management. Give yourself the opportunity to develop these as much as you can. As you get further into your journey you will need to devote more time to study. Just remember it is worth it, as it will lead to succeeding in your chosen path. Finally, you know you have the application to succeed because you have already demonstrated it to get as far as you have in your studies and your career. • Nasheen Wuisman, Senior Manager of Global Academic Progression at AICPA & CIMA, together as the Association of International Certified Professional Accountants 21

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CIMA spotlight PQ

PQ ACCA SBL

The examiner knows best! Taking ACCA in December 2023? Make sure you read the September 2023 examiner’s report, says Sean Purcell

ou will see many tips on what is coming up in the SBL exam and to be honest all of them are pure guesswork (so please ignore them). The only real tip list that you can rely on are the areas which the examiner says were not well done in the last exam and need improvement. It is in those areas that future questions will be addressing, so make sure you read the report carefully. The first part of the latest report talks about how you should not use the pre seen information for question spotting, and you can look at how I used the pre seen information given for September 2023 exam on my YouTube channel. You can also join me for a review of the December 2023 pre seen material at a special PQ event later this month. Keep an eye open for this! In summary, if you can analyse of the pre seen information from a strategic perspective and look at where the organisation could be challenged, you will provide yourself with a great tool box of knowledge that proves to be very useful whatever questions may come your way. Another point the examining team made, which I keep going on about, is reference to the fact that candidates are strongly recommended to take mocks on the ACCA’s practice platform. That means don’t do it on Word, Excel or any other copycat software, but do it on the same platform as the ACCA will use in your examination. That is why, despite the platform being a little clunky and not so user friendly, I upload all my mocks to time on the ACCA CBE platform, so my students get an exact replica of what the real exam is like. If you do not do this you may get a surprise in the exam. Other key points to draw your attention to in the report include:

Most candidates managed to answer all three tasks The examining team were encouraged by

this, believing it indicates that many students are starting to take control of their time management, which is a positive. I would argue that you should see your exam as a project management exercise in mark acquisition and have strict control of time relative to the marks available. However, be aware of time-wasting by some

students: • They wasted time by including material not relevant to the task requirements. For example, there were explanations of the TARA framework in answers to task 2b for which no marks were awarded. • Writing elaborate and lengthy plans, resulting in too little time to produce

PQ Magazine December 2023

ACCA SBL PQ meaningful answers. • Making the same point twice or more in slightly different ways. This was particularly evident in Task 1a in this exam, where some candidates repeatedly referred to the motivational leadership style of Corjetz’s current CEO. Markers will not give additional marks for points that are repeated or re-stated, even if they are slightly reworded. Key causes of failure • Lack of development of the points made (that is, not fully explaining why the point was relevant/important in the context of the task). The best way to overcome a lack of development of points is to think about the point you have made and consider the consequence, or the “so what if this happened?”, and the “why?” regarding the points you have made. • Lack of application of points made to the case scenario. My advice to improve this would be to try to visualize what is going on. In the case of the September 2023 exam, try to get into the mindset of a low-cost airline and how they operate and how they achieve competitive advantage. • Lack of analysis skills (demonstrated through an inability to select, and then appropriately use, the full range and most relevant information to answer task requirements). In SBL, there will be

PQ Magazine December 2023

no marks given for regurgitation of the information provided in the case and it is important that you take on board the information given, interpret it and draw from it your own conclusions. Try to think about what story is being told here. If you do that, you should be able to help yourself to do much better analysis. • Not answering the question that has been asked. It is natural in an exam to be nervous, and the chemicals produced by nerves can hijack our brain and cause us to behave in a way which might lead us to miss read the question. Therefore it is essential that you have a strategy to minimize this risk and my advice would be read the requirements once, and then read the requirements again. Having done that, do a brainstorm and a mark focus on what you think the main answer outcomes are going to be. But before you actually start writing your answer just read the requirements for one final time in case you were suffering tunnel vision on the first two readings. Dealing with requirements this way will make it very difficult to misinterpret the question. • Poor level of technical knowledge. No real excuse for this, and it is important that you undertake an appropriate timetable of study so that you are familiar with all the areas required by the syllabus. • Lack of commercial acumen. In SBL, we

need to act as a strategic business leader, and as such we don’t just regurgitate information. Instead, we draw conclusions from it and commercial acumen even if not asked in the professional skills marks is an important observation to make. Suggestion of actions that would not be profitable or even loss-making should be avoided, and always try to picture your points in the context of their commercial viability. • Wasting time by including irrelevant content. Often students will copy and paste large amounts of the material into their answers, which gets no marks – so please avoid such behaviour. • Failure to provide everything that the requirements specified. Again, this is something that can happen because we are stressed – we often miss the second part of the question. I refer to this as a rule of “and”, because a task will usually ask you to “do X and Y”. Under stress candidates often answer the X but miss out the Y. Again, careful reading is required. You can find the whole report on the ACCA website and make sure you take on board the points I have made above. I look forward to chatting about December 2023 pre seen material later this month. • Sean Purcell Is an ACCA expert tutor who was voted 2020 the PQ magazine Lecturer of the Year. Check him out at https://www. seanpurcell.co.uk

PQ ACCA PM

Five things to do to pass PM Subject expert Jean-Paul Noel-Cephise explains how you can get a pass in the dreaded Performance Management exam

aving taught PM for many years I am often asked, “Why does PM have such a poor pass rate?” and “How can I pass PM first time around?” I used to struggle with the paper too, because no matter how many questions I did I struggled to ‘start’ the question. It seemed to me that no matter how many questions I did, each new question seemed to present itself in a way that I had never come across before. But I learnt that PM is about developing an exam technique. Developing this technique takes time, and hours of attempting questions and failing them miserably! No one likes the ‘F’ word, but that is what it takes to develop this technique. Hours of failing questions at home until you begin to grasp the focus of questions. It’s all about being able to structure a question with your technique and then filling in the blanks in that structure. You simply cannot develop that technique properly by looking at exam answers and working backwards. There are no short cuts, no matter what anyone else tells you. The current PM pass rate in 2023 is around 40%, one of the lowest for the applied skills level. Remember that this is a performance

management paper not management accounting. There is also a heavy discursive focus on the paper, not just calculations to do. So, without further ado, here are my five top tips: 1. The most obvious one first – question practice. You’ve heard this many times, but here’s a tip with a difference. I would like you to simulate the exam from the beginning as much as possible. Take 10 minutes only with a section C question or five minutes only with a section B question and see if you can begin structuring your answer. If you can’t do it at home under time pressure, you cannot do it in an exam. 2. Section C technique! It’s absolutely vital that you show your workings and state your

assumptions. You also need to be able to interpret and apply your answer to the context given in the question. This is sadly where students just do not focus their exam preparation – and it shows. Full follow-on marks are given for discussion that follows your own numbers. If you’ve been unable to do the calculations you will still usually find that you can make some valid observations simply from the data given in the question. 3. Cover all topics. Do not miss out anything as everything will be tested in the PM exam. 4. Time Management – you hear about this all the time. Do not get stuck on one question. Keep an eye on the clock constantly, and make sure to attempt all questions. It’s better to have a fair answer for every question rather than having some perfect answers and leaving out the rest because you ran out of time. 5. Keep your answers to the point and brief. One sentence per point will be just fine. Don’t make them longer as you will take more valuable exam time and still not earn any marks! • Jean-Paul Noel-Cephise is a tutor at FME Learn Online – see https://www.fmelearnonline. com/jean-paul-noel-cephise/

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PQ Magazine December 2023

ACCA spotlight PQ

The benefits of booking early Dorothy Wood stresses the importance of careful planning when it comes to timetabling your exams n a recent article we looked at ‘3 simple steps to success in your first accountancy exam’ (PQ, October ’23). Those steps are: • Book your exam as soon as possible. • Be prepared – get to know your exam format and available study resources. • Practice, practice, practice. In this article we’ll delve deeper into why you should book your exam as soon as possible, looking at practical, educational and motivational reasons to do this. Although I’ll use ACCA examples, the themes should resonate for all accounting students.

Get practical Booking your exam early has benefits whether you are taking an on-demand exam or sitting on a fixed date in a quarterly exam session. For on-demand exams it will give you the best opportunity to get the date you want at

your ideal exam centre. For those sitting on a specific date it will allow you the widest range of exam centre locations to choose from. For those sitting exams at home, you will have the widest choice of exam times the earlier you book. If you need to travel to an exam centre you will also be able to book any travel or accommodation in advance and hopefully secure the best prices. There are also real educational benefits to early exam booking. It facilitates proper planning and allows you sufficient time for a thorough learning and revision phase. Ideally this will be through a study programme with an approved learning partner to give yourself the best possible chance of success in your exam. Proper planning also gives you flexibility to deal with the curve-balls that life throws at you that get in the way of studying.

And probably most importantly, booking your exam early avoids one of the biggest dangers to exam success – procrastination. By booking early you are setting yourself a clear goal and committing to it, which leads me on to the final area – motivation! You’ve made a commitment and you’ve a clear goal in front of you. You’re able to plan a route to exam success as you’ve time to create a realistic and thorough study timetable. Booking early will add that little bit of pressure and this will help you stick to your plan. As you make progress towards your goal you can tick off your work done and seeing these small steps being completed will give you a sense of achievement and further boost your motivation to reach your goal. Just one more piece of advice and another benefit of making that early commitment to booking your exam – make sure you tell those around you about your plans so they can support you as well. Whether it’s friends or family, or both, we all know that passing your ACCA or other accountancy exams takes commitment and time. The more your support network is aware of your plans, the more they can support in small ways. Remember, exam success is very much achievable with the right planning and dedication, and making an early commitment to your exam just helps you on the way. • Dorothy Wood, head of education relationships, ACCA

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depreciation PQ Example: Annual depreciation charge = Carrying amount x % If a business purchased an asset with a cost of £200,000 and depreciates this at 15% per annum using the reducing balance basis, we would calculate the depreciation as follows in the first year: Annual depreciation charge

£200,000 x 15% = £30,000

For the second year the calculation would be: Annual depreciation charge

£200,000 - £30,000 x 15% = £25,500

As you can see, the depreciation amount reduces every year.

Value judgment For both your AAT Level 3 and Level 4 studies, you will be required to calculate depreciation. Karen Groves explains how to do it epreciation is the reduction in value of an asset mainly due to wear and tear, and obsolescence, for example, caused by changes in technology. If you purchased a new car today it would not be worth the same as what you paid for it in a year’s time – the drop in value is called depreciation. The non-current asset will be shown at cost on the Statement of Financial Position, together with accumulated depreciation and the carrying amount for your Level 3 studies. At Level 4 the carrying amount only is shown with the depreciation calculations shown in the notes to the financial statements. The accumulated depreciation represents the total amount of depreciation charged to date. The carrying amount represents what the asset is worth now (cost minus accumulated depreciation). Depreciation is an estimate, and it is very unlikely an asset would be sold for the same amount as the carrying amount.

How do we calculate depreciation? Before calculating depreciation, we need to establish if there is a residual value. The residual value is the amount that the business expects the asset to be sold for at the end of its useful economic life; however, this isn’t assessed in every question. The useful economic life can be in years or in activity output. There are three methods of calculating depreciation as follows, with the most suitable method being chosen by management: Straight Line This method assumes that the asset will have the same amount of depreciation charged each year, so a consistent amount charged over the asset’s useful economic life. Example: Annual depreciation charge

Cost – estimated residual value

Useful economic life Or: Cost – estimated residual value x percentage given = annual depreciation charge. If a business purchased an asset with a cost of £500,000 and an expected useful economic life of five years, we would calculate the depreciation as follows:

Annual depreciation charge

£500,000 5 years

£100,000

Reducing Balance (also called Diminishing Balance) This method assumes a higher amount of depreciation to be charged in the early years, which reduces over time. The method uses the carrying amount of the asset to base the depreciation calculation on rather than the cost. PQ Magazine December 2023

Units of Production This method is based on usage of the asset, so more activity equals a higher depreciation charge, lower activity equals a lower depreciation charge. Example: Annual depreciation charge = Cost – residual value x

Current years activity

Expected activity in useful life If a business purchased machinery with a cost of £120,000 and an expected useful economic life of 60,000 machine hours, we would calculate the depreciation as follows, if the year one machine hours used were 12,000: £120,000 x 12,000 = £24,000

Annual depreciation charge =

60,000 A further example of an asset that this method would be suitable for could include a photocopier, which has an average life of a set number of photocopies. Questions 1. If a business purchased an asset with a cost of £700,000 and an expected useful economic life of five years, what would be the annual depreciation charge? 2. If a business purchased an asset with a cost of £400,000, estimated residual value of £50,000 and an expected useful economic life of four years, what would be the annual depreciation charge? 3. If a business purchased plant and machinery with a cost of £880,000 and an expected useful economic life of 200,000 machine hours, what would be the annual depreciation charge if the year one machine hours used were 10,000? Answers 1 Annual depreciation charge

£700,000

= £140,000

5 years 2 Annual depreciation charge

£400,000 - £50,000

= £87,500

4 years 3 Annual depreciation charge

£880,000 x 10,000 200,000

= £44,000

• Karen Groves is an AAT tutor and AAT Faculty Director at e-Careers

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30,000 SMEs and startups, providing all the help and guidance you need to start or grow your business. As an entrepreneur you will find everything you need to help you on your business journey, including advice and guidance from some of

the biggest names in business. There will be more than 750 exhibitors showcasing the latest products and services for small businesses, 200 educational seminars and masterclasses and keynotes from the UK’s biggest entrepreneurs. You’ll also be able to enjoy endless networking opportunities with like-minded individuals and create meaningful business relationships. The keynote addresses will be delivered by experts from some of the biggest companies in the world, including Head of Retail at Google, Harmony Murphy, and Head of SMB Sales at Spotify, Daniela Tabor. This is a rare opportunity to get first-hand advice from the people who started right where you are, so take advantage of this unique learning opportunity. Throughout the show you will find interactive masterclasses that offer you the chance to learn first-hand from industry leaders. Find out how to start a property development business, how to market on social media, get tips on getting more clients, and access a range of other insightful and educational topics. These masterclass spaces are limited and on a first-come firstserved basis, so make sure you sign up on the website to secure your place. This year is set to be better than ever before. If you don’t want to miss out then register for a FREE ticket here – it will give you access to all of the show’s features. For more information contact the marketing team on 01179 902094 or email marketing@ thebusinessshow.co.uk

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PQ Magazine December 2023

CIMA SCS PQ

It’s time for another Strategic Case Study Don’t be left on the shelf with the latest SCS on warehouse management

obobryce will be the company all Strategic Case Study students will need to get a handle on for the next two sittings. A quoted company, Robobryce creates ‘solutions for handling objects’ in warehouses and factories. It’s good to see the simple wooden pallet gets an early mention in the warehouse handling section. But did you know goods in shipping containers are rarely shipped on pallets because the pallets themselves can take up to 10% of the available volume? We are also told all about block storage and racking systems. I had almost forgotten about the joys of a visit to Ikea’s warehouse section. But it’s important stuff and the organisation of warehouses can significantly impact capacity. Remember, no warehouse should be operating at 100% capacity, it’s better to be 90%. We then move on to pickers and picking –

individual order, cluster, batch and zone. And it’s here collaborative robots (cobots) come in handy. Automated Storage and Retrieval Systems (ASRS) are also available! The advantages of ASRS are set out clearly in the case: • Faster than human pickers. • Less likely to drop or damage inventory through mishandling. • Enhances security because fewer operators have access to stores. • Reduces risk of injury by collecting and transporting items mechanically. • Fewer picking errors. Concern over job losses because of automation is brought up in one of the news stories at the end, with an emphasis on skilled labour. So what else about the company where you are senior manager in the finance

function? Well, it was established in 1952 as a manufacturer of warehouse fittings and equipment. It produces the carts that help transport the goods, and also produces shelves and forklift trucks. Since 2008 these have been produced overseas. The first autonomous products were produced in 2005. The company is now one of the world’s largest manufacturers of automated warehouse systems. It designs warehouse solutions on a global basis, supplying hardware and software to help implement its designs. Going though Robobryce’s principal risks we see it has significant IT risks because of it relies heavily on software for its autonomous products. It also depends on its technical and management staff to ensure it stays ahead of the game. And there’s some hedging of currency risks, as it does business in many different countries. As is normal in the case you are given extracts from a competitor’s financial statement– the Pavrobot Group. Robobryce is one of six major companies that compete for design and implementation of automated warehouse systems. The case is just 26 pages long and after reading it we think many CIMA students with a shed or garage will have a reorganisation on their list of things to do after the exam!

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PQ with AAT, ACCA, ICAEW We need green accountants The accountancy profession must help drive the migration to sustainable economies and businesses by becoming experts in green finance, says a new report from ACCA, called ‘Green finance skills: the guide’. At a time when access to cheaper capital is more vital than ever to an organisation’s survival, access to green finance can be a lifeline to businesses. However, recent research by ACCA and the Institute

such as the Integrated Reporting framework, of Management Accountants (IMA) access to social and environmental GREEN FINANCE SKILLS: THE GUIDE reveals that business are unsure capital including audits, environmental about climate finance opportunities green finance management accounting, and climate risk management. is critical for an the measurement of Some 59% of the respondents to organisations environmental and social the Global Economic Conditions long-term survival. performance, and the Survey Q2 2022 said they are not Fast track Sustainability impact of sustainability your career by using your existing qualifications considering using green finance already issues on strategy toisjoin the world’s largest bookkeeping organisation. products – an opportunity that must firmly integrated within the ACCA formulation, business performance be addressed. coreaqualification as one of the andbenefit financialfrom: decisions. As Certified ICB Bookkeeper you’ll Report author Emmeline Skelton seven capabilities it believes all The full report can be accessed said the profession needs upskilling, professional accountants need. at www.accaglobal.com/ Professional status and recognition especially in volatile times, where All ACCA students cover topics greenfinanceskills.

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Local and national events Start your AAT’s journey at the right level Resources, webinars, templates and help sheets

The new AAT Q2022 syllabus and understanding of relies on strong familiarity of is proving more challenging fundamentals in order to double entry bookkeeping Accounting news, emails and updates for many students than the succeed as the move on principles covered at level outgoing AQ2016 syllabus, through the levels. 2. Students starting FAPSDiscounts with 100s of retailers including according to First Intuition’s “It's more important than without some previous Sainsbury’s, Tesco, ASOS, and Curry’s Gareth John. ever that students start experience of debits, credits, And being part of a community that He said that at the right level TBs, suspense accounts and really cares much of the to ensure they journals are finding it hard. Well, he did it! Accountant James Cope has duplication of succeed,” John John felt students need completed his RNLI press-up challenge. Although content and stressed. to avail themselves of First day 1,000 was on 16 December, and that’s assessment For example, Intuition’s free AAT level when he hung up his proverbial press-up gloves, has been pointed outICB Exemption checker, which is a useful For more information and to receive he 15% off your application, donations kept coming in and he has now achieved removed, meaning thatand the quote new level diagnostic to help ensure call ICB HQ on 0203 405 4000 ICBPQ The Institute his fundraising target of £10,000. Withofgift aid that students 3 FAPS (Financial students can make a fully Certified Bookkeepers www.bookkeepers.org.uk/PQ Email us at exemptions@bookkeepers.org.uk he raised £11,644.96 in total, completing over now need to have Accounting: Preparing informed decision about the 500,500 press-ups. a strong knowledge Financial Statements) paper best level for them to start at.

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ACCA exam tips PQ

YOUR DECEMBER TIPS Another set of ACCA exams are upon us! Here are the latest updated guidance and tips, with the help of BPP’s top tutors

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 essential 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 important 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 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 OTQs 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 must 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 in the relevant cell 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. 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 Continued on page 32

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PQ Magazine December 2023

PQ ACCA exam tips Continued from page 31 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. Wellspaced 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. • Chargeable gains calculations. 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 areas such as 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. sustainability). • 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. There is no negative marking. Section B (case questions): • Three separate scenarios with five OTQs

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These tips should only be used in conjunction with proper study. We cannot guarantee that these topics will appear in the actual exam as we have not seen the exam papers. Examiners are not predictable so it is vital that all core syllabus areas are revised fully. 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, as are 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 interpretations of financial statements 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 be faced with a single company interpretation and a groups preparation or vice versa. • 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. • Accounts preparation questions may require

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full financial statements or extracts – read the requirement carefully. Students can expect questions on statement of profit or loss and statement of financial position, but should not forget comprehensive income, the statement of changes in equity, and the statement of cash flows. 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 valuation, 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 previously clarified that a consolidation accounts preparation question could include up to two subsidiaries and one associate which allows additional scope for examining the disposal of a subsidiary (including as a discontinued operation). 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 previously clarified wording to emphasise the importance of the statement of cash flows in interpreting financial statements.

PQ Magazine December 2023

ACCA exam tips PQ 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 mini-case 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 identification and explanation of direct controls and description of test of control). • 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.

PQ Magazine December 2023

The exam often 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/gb/en/student/exam-supportresources/fundamentals-exams-study-resources/ f8/examiners-reports.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 these questions will test your understanding of financial management and objectives (ratio analysis), as well as the economic environment and financial institutions topics (financial intermediation, fiscal & monetary policies). Section B consists of three 10-mark mini case studies. The case study will then be broken down into 5 separate 2-mark MCQs (so 15 questions in total). Areas expected to be commonly tested in this section are working capital management (e.g. the operating cycle, the impact of a change in credit period or accepting a factor’s offer), business or security valuations (e.g. methods of valuation), and financial risk management (currency risk and interest rate risk). Section C’s two 20-mark questions will be broken down into sub requirements and be scenario-based. These two questions will focus mainly on syllabus sections C, D and E. Section C is working capital management, section D is investment appraisal, and section E is business finance. Whichever of these three topics does not feature in section C is likely to appear in section B of the exam. Questions from syllabus section C (working Continued on page 34

PQ ACCA exam tips Continued from page 33 capital management) are likely to be broad ranging, so a good broad knowledge of this syllabus section is important. Candidates are sometimes exposed by a weak understanding of working capital finance. Questions from section D (investment appraisal) are likely to feature NPV with inflation and tax, however it is important to also be able to answer questions that include risk, leasing, asset replacement and capital rationing. Section E (business finance) questions often either feature an evaluation of financing options (interest coverage and gearing ratios are likely to be important here) or calculation and analysis of a company's cost of capital. Strategic Business Reporting SBR It is vital that you read the examiner's approach article on the ACCA website. ACCA has also published several exam technique and technical articles that you should read as part of your exam preparation. These are available in the exam technique section of the SBR exam support resources section of the ACCA website www. accaglobal.com. The exam section A will be 2 questions, worth 50 marks in total – both are compulsory. Question 1 - 30 marks: • Q1 will be based on group accounting. Be aware that this question may test any aspect of group accounting, including consolidated statements of cash flows, foreign subsidiaries and associates and JVs. This question will include a pre-populated spreadsheet containing a consolidated statement which you will have to adjust for information given in the scenario. The requirement related to the pre-populated spreadsheet will be worth between 10 and 14 marks. • Make sure you provide calculations if these are asked for. A recent examiner's report stated that some candidates are not attempting the required calculations and therefore struggling to gain a pass mark on this question. • To score well, you need to do the calculations and, where asked for, explain the principles underlying the calculations you have performed. If a question simply asks for a calculation, you do not need to provide an explanation, unless this is specifically indicated in the requirement. • Time-keeping is key to passing this question. A recent examiner report identified that students were spending too long writing detailed answers to the first parts of Q1 and then not attempting the later parts. The marker cannot award more than the allocated number of

marks for each part of the question, so to maximise your marks, you must make sure you attempt each part of the question. Make sure you work out the time you have available for each question, and for each part of the question and then stick to it. Question 2 - 20 marks, including two professional marks: • Q2 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. • Two professional marks are available in this question and going forward the examiner has stated that the question will make it clear what these marks will be awarded for. Section B will be two questions (compulsory), worth 25 marks each: • Section B can deal with any area of the syllabus and may be based on a short scenario, a case study with several parts, or an essay. • Section B will always include a question or part-question involving the analysis or appraisal of information from the perspective of a stakeholder. Make sure you have a go at answering this question. There is no 'right' answer at this level - marks will be awarded for sensible points that have been applied to the scenario. • There are two professional marks available for the question that covers the stakeholder's perspective. To gain these marks, you must discuss the issue from the perspective of the stakeholder – e.g. if asked for the investor's perspective, you must answer from the investor's perspective! • Current issues are usually examined in section B as a part of a question (not a full question). However, current issues could be examined in either section A or section B of the exam. A question on current issues may require the application of existing accounting standards to a current accounting issue – for example, accounting for cryptocurrency, accounting for the effects of a natural disaster, or global event. General advice: Make sure you plan your time at the beginning of the exam (and stick to it) to ensure you don't over-run on a particular question – it is 1.95 minutes per mark (or 1.8 minutes per mark if you allocate 15 minutes to reading the paper). Generally, you will be awarded 1 mark for each relevant well-explained point in the SBR exam. Make sure you make enough points for the

marks available – for example, if the requirement is worth 8 marks, you should aim to make 8 relevant, well-explained points. It will be easier for the marker to award you marks if you lay out your answers clearly, leaving space between your points. You can use the spreadsheet (and spreadsheet functionality) to do calculations. If you do use the spreadsheet, make sure you cross reference to any narrative discussion, if appropriate. Some requirements state that you do not need to refer to an exhibit to answer that particular requirement. Where this is the case, then it is recommended that you follow that advice and stick to general discussion, rather than referring to the scenario. Use the 'cut' and 'paste' tools wisely – e.g. do not cut and paste into your answer large sections of the exhibits as the examiner has stated in a recent examiner's report that this will be obvious to the marker, and will gain no marks. If you wish to use cut and paste, the examiner recommends just copying and pasting relevant parts of sentences and then adding your own comments. Strategic Business Leader SBL For exam sittings up to June 2023, the SBL exam had a duration of 4 hours, and no pre-seen information was provided in advance of the exam. However, this all changed from September 2023, so for the December 2023 exam the new format applies: • The exam will be 3 hours and 15 minutes in duration. • You will be issued with pre-seen information two weeks in advance of the exam. • Further information, and the question requirements, will be given to you in the exam itself. ACCA has indicated that the information in the pre-seen will not be examined directly, but will provide context and background for the exam questions (for example, the industry in question, the organisation’s history and background, board structure, KPIs, and competitor information.) You need to be familiar with this information before you begin the exam. The exam will focus on one main organisation (which has been introduced in the pre-seen information), and the question requirements will relate to that organisation. The exam will contain some additional exhibits (typically four or five) and the questions will be based on these new exhibits. The questions in the exam are referred to as ‘tasks’. There will be three tasks in the exam, although these may include sub-tasks. All of the requirements (tasks; sub-tasks) in the exam are compulsory. Question requirements in the exam

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PQ Magazine December 2023

ACCA exam tips PQ could assess and link several subject areas across the syllabus and will test your ability to construct appropriate responses to practical problems an organisation is facing. Every SBL exam will consist of 80 technical marks and 20 Professional Skills marks. Each professional skill will appear once per exam, for four marks. General advice: The SBL exam is demanding, and as such you need to give careful consideration to how you will manage your time to make the most effective use of it. You are recommended to spend about 20 minutes reading the exhibits and starting to plan your answers (for example, identifying the exhibit, and information, which is most relevant to each task). This then leaves you 2 hours 55 minutes (175 minutes) to tackle each task. Since there are only 80 technical marks, this works out at 2.2 minutes per technical mark. So, if a task has 15 technical marks, and 4 professional skills marks, you should spend 33 minutes on it (15 × 2.2). No time is allocated for professional skills marks, as you earn the 20 Professional Skills marks by virtue of the way you attempt the 80 technical marks. It is important to note that you can spend longer than 20 minutes reading and planning your answer if you choose to. The 20 minutes – 175 minutes split is just a recommendation. However, if you choose to spend longer on reading and planning then you will need to bear this in mind when you come to writing your answers, and adjust your time allocation for each task accordingly. Regardless of the time allocation you choose, it is crucial that you stick closely to your timings, to ensure that you do not spend too long on one task to the detriment of those you are yet to attempt. Planning your answer: Clearly, if you have gone to the trouble of preparing an answer plan it is important that you use it when writing up your answer. To get the most from your answer plan, it is therefore important that you include as much detail as you think will be helpful when the time comes to write up your answer. Numerical analysis: Some question requirements may require you to conduct some numerical analysis. For example, you may be asked to analyse the performance of the organisation feature in the exam, or a potential investment it is considering. When doing numerical analysis, though, it is important that you focus only on performing any calculations that are going to support your answer and provide you with something to talk about. Producing lots of unnecessary calculations for the sake of it will not earn marks, and will only serve to waste time in the exam. Using computer software: Ensure you practise timed exam questions using the ACCA CBE software. You need to be comfortable reading and highlighting the exhibits on the screen, as well as taking notes in the scratch pad. It will be easier if you plan your ideas and set up your answer structure in the software, in the form of headings. The exam software comprises a word processor, a spreadsheet, and some presentation software. The word processor should be used for discursive answers (e.g. reports; memos; letters) and is likely to be used for answering most of the tasks. Any calculations you perform should be in an appendix in the spreadsheet software. Tasks requesting slides PQ Magazine December 2023

reports and the balanced scorecard and/or information systems could well be tested in this context. Assessing the performance of an organisation is likely to be tested and this could include benchmarking as a theme. Financial performance measures (ROCE/RI/EVA etc) are also likely to be examined in this context, but don't neglect nonfinancial issues from syllabus section C such as quality management, value for management and reward systems.

should be completed in the presentation software. Appropriate use of theoretical models: To stand the best chance of passing the SBL exam, you will need to have a good understanding of the entire syllabus. However, it is important to remember that tasks in the SBL exam will not ask you to simply regurgitate your knowledge of a particular topic or theoretical model. The task requirements test your ability to apply your understanding of the topics covered in the SBL syllabus in the context of the question scenario (for example, in order to provide advice to the Board about how to respond to a particular situation or issue). Furthermore, tasks will not specifically ask you to use a particular model. Whether you use a theoretical model when constructing your answer will be a matter of judgement that you need to weigh up in the light of the information presented to you in the exam. Doing plenty of question practice in the lead up to your exam is the most effective way of developing your judgement in this area. Technical marks and Professional Skill marks: Technical marks relate to the knowledge which you demonstrate and apply in your answer. There are 80 technical marks on offer in the exam. The 20 Professional Skills marks are awarded for displaying the following skills and behaviours: Communication, commercial acumen, analysis, scepticism, and evaluation. Every Professional Skill will be tested in every SBL exam sitting. The Professional Skill being tested will be specified under each question requirement. As you prepare to attempt the exam it is crucial that you take the time to attempt as many practice questions as you can. To increase your chances of exam success you need to ensure that you take sufficient time to develop your understanding of the Professional Skills. Advanced Performance Management APM Q1 section A: Q1 of the APM exam will focus on a range of issues from syllabus section A (strategic planning and control), section B (performance measurement systems and design) and section C (strategic performance measurement). Section A (50 marks) contains one question broken down into sub requirements. You will often be required to link 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

Q2-3 section B: ACCA have said that one of the section B questions will come from syllabus section D (performance evaluation). This means you need to have sound knowledge of the balance scorecard, building block and performance pyramid models. In addition you will also need to have a good working knowledge of activity based management (ABM) and value based management (VBM). The other question can be sourced from a variety of syllabus areas including quality management, information reporting (e.g. big data, lean information), HR frameworks (e.g. reward & appraisal systems), transfer pricing and environmental management accounting. General advice: APM is primarily a skills-based exam which tests the ability to apply knowledge to practical problems. This is now even more important as 20% of the marks are awarded for professional skills. Make sure you aware what these skills are and that you are confident in your ability to integrate these into your answer to the technical requirements of a question. However, application of knowledge is only possible if you have a good range of technical skills in place. So, even though APM is not about reciting technical knowledge, it is absolutely vital that you ensure that you have a good broad knowledge of core technical areas. Advanced Taxation ATX (UK) The exam will comprise of one compulsory 50-mark question within section A. The requirements will be detailed in the manager’s email marked ‘work to be carried out’ and there will be several exhibits containing further information. The answer will need to be prepared in a specific format as set out in the manager’s email which will include mark allocations for the sub-requirements. Due to the size of the question it is possible that the scenario could involve more than one client or a personal client in addition to a corporate client. The question will comprise of 35 technical marks, 5 ethics marks and 10 professional skills marks. Each of the four professional skills will be tested. Section B will comprise of two compulsory 25-mark questions. These will be in a more succinct, note form style, and will comprise of 20 technical marks and 5 professional skills marks. A minimum of two of the three professional skills will be tested in these questions (not including communication). The exam will test candidates’ ability to analyse and evaluate the tax implications of various situations, numerical calculations will only be required to assist in producing an answer and no purely numerical questions will be set. Due to the introduction of the professional Continued on page 36 35

PQ ACCA exam tips Continued from page 35 skills marks, students will now have more time to attempt each question than under previous sittings. The ACCA has stated that the additional professional skills marks should not be considered as additional requirements but that the extra time they allow should be used for planning and thus to prepare a more comprehensive answer. Topics/scenarios we 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 a takeover. • Unincorporated business – particularly including loss reliefs, partnerships or basis period rules. • A question focussing on overseas issues – this could be income tax, capital gains tax, inheritance tax or a corporate scenario. • Capital gains tax versus inheritance tax including availability of reliefs. • Corporate scenarios – likely to focus in more depth on intangibles; research and development; losses; 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 trade business, incorporation, or, in a corporate context, the sale of shares versus the sale of trade and assets. • Other common types of question/calculation to expect are: • 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”. Don’t forget that across the scenarios you can expect to see VAT marks available. Partial exemption rules, VAT on land & buildings, transfer of going concern, the capital goods scheme, overseas VAT transactions, and registration/group registration/deregistration tend to be frequently examined. There will also likely be a couple of marks for stamp duty points if you remember to think about it in your planning! Finally, don’t forget your basic administration points are also likely to be examined – when do we need to pay tax, when do we file a return and what if either of those are late? Advanced Audit & Assurance AAA Recent AAA exams have contained no real surprises, although you should be prepared for the look and feel of the embedded email and supporting exhibits and the split of both technical and professional skills marks. Section A will comprise a case study, worth 50 marks, split into 40 technical marks and 10 professional skills marks, and will be set at the planning stage of the audit, for a single company, a group of companies or potentially several audit clients. Candidates will be provided with detailed 36

information, which will vary between examinations, but is likely to include extracts of financial information, strategic, operational, and other relevant information for a client, as well as extracts from audit working papers, which could include the results of analytical procedures. The date will be set as 1 July 20X5. Candidates will be required to address a range of requirements, from syllabus sections A, B, C and D, thereby tackling a real-world situation where candidates may have to manage a range of issues simultaneously in relation to planning, risk assessment, evidence gathering and ethical and professional considerations. Ten professional marks will be available in section A and will be awarded based on the demonstration of professional skill within a candidate’s answer, including communication, analysis and evaluation, professional scepticism and judgement, and commercial acumen. Section B will contain two compulsory 25-mark questions, with each being predominately based around a short scenario. The marks will be split into 20 technical marks and five professional skills marks. There are no optional questions in AAA. One question will always test syllabus section E, and candidates should therefore always be prepared to answer a question relating to completion, review, and reporting. There are a number of formats this question could adopt, including, but not limited to, matters to be considered and evidence expected to be on file, a going concern assessment, 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 which is to be provided to management or those charged with governance. The second section B question can be drawn from any other part of the syllabus, including sections A, B, C, D and F. Syllabus section G on current issues is unlikely to form the basis of a question on its own, but instead will be incorporated into the case study or either of the section B questions depending on question content and the topical issues affecting the profession at the time of sitting the exam. Five professional marks will be available in each Section B question for demonstrating

professional skill in analysis and evaluation, plus at least one of professional scepticism and judgement and commercial acumen. General advice: This subject often tests topical issues which have been covered by the examining team’s technical articles (e.g. quality management in September 2022 and the impact of data analytics in September/December 2020). From September 2023, as well as changes to auditing standard relating to group audits and the reliance on component auditors quality, there has also been an increased focus on sustainability reporting. All the examining team's technical articles can be found online, including two recent articles on quality management, two articles on planning questions and risk, plus another two articles that discuss recent developments in social, environmental and sustainability reporting. There is also a ‘tricky topic’ video on audit procedures. Read/watch them! Advanced Financial Management AFM All AFM exams will have questions which have a focus on section B of the syllabus (advanced investment appraisal) and section E (treasury and advanced risk management techniques). These syllabus areas are therefore high priority areas for your revision. Q1 (50 marks): You can expect questions to cover at least two different syllabus areas. This emphasises the importance of having a good broad knowledge of the syllabus and not targeting your final exam revision on a small number of syllabus areas. Questions are often based on core syllabus areas such as: project appraisal (domestic or overseas), business valuations and business/ financial reorganisations; these areas often include cost of capital calculations. Risk management may also feature in a number of different ways, e.g. value at risk, real options, interest rate or current hedging, and risk management (e.g. mapping). Q2-3 (25 marks each): Areas to be tested: • Risk management (currency or interest rate) including the functions and structure of a treasury department. • Dividend policy and general financing issues. • Real options including limitations of approach. • Business reorganisation. General advice: The examining team have stressed that exams are designed to make question spotting extremely difficult for this paper, so it is important to have a broad understanding of the key aspects of each syllabus area. Don't over-emphasise numerical analysis in your final revision – remember that this paper is not a maths exam and, in all exam questions the examiner is interested in your ability to communicate well and to give good management advice that relates to the scenario in the question. This is now even more important as 20% of the marks are awarded for professional skills. Make sure you are aware what these skills are and that you are confident in your ability to integrate these into your answer to the technical requirements of a question. PQ Magazine December 2023

AAT level 3 PQ

Cracking the code

Nat Hammond explains what you need to know about accruals and prepayments – a topic that often trips students up

t each level of AAT, there are topics that have a reputation as areas of increased difficulty and challenge for students, and as a tutor this observation is somewhat true. At level 3 accruals and prepayments is arguably the most common example of this phenomenon, but is the reputation justified? Or can we break through the noise and build the skills to consistently solve such questions with little issue?

Deciphering accruals and prepayments We can break down dealing with such questions into two distinct elements: • Calculating the correct amounts. • Posting the correct double entry. Depending on your own knowledge you may wish to focus on one element more than the other, but let’s start with calculations. Calculating the correct amount In truth, this is normally the area students are more comfortable with, regardless there are still some pitfalls to be wary of. In your questions you will always be required to pro-rata the income or expenditure into the relevant periods, making sure you select the correct amount of months based on the information given is critically important, for example: 01/01/X3 to 31/03/X3 = 3 months 31/01/X3 to 31/03/X3 = 2 months It is a natural response to just count the months in your head, but the devil is in the detail here – notice how we are not including all three months in the second example as this is from the end of January (the AAT always show dates in such questions at either the start or end of a month so be on the lookout). As mentioned, students are normally okay when is comes to the calculation-based work in these task, but double checking your working is always a good idea. PQ Magazine December 2023

Double entry Arguably the ‘meat’ of these tasks is in correctly recording your entries and at face value it is easy to lose track of all the entries needed. However, there are some handy techniques you can use to really nail these questions. Firstly, let’s just recap the key concept of double-entry bookkeeping. There must be a debit and credit entry for each transaction. A simple concept that we can use to our advantage here; in theory you do not need to remember where all the debits/credits fall into place. Instead, if you can say with 100% certainty you know where one side of the double entry sits, by the laws of double entry you also know where the other entry is. A reasonable assumption, but how can we now apply this? Accruals and prepayments focus on two things, income and expenditure, which will be increasing or decreasing depending on the type of accrual or prepayment. These are our anchor points. At this stage of your studies you have already posted entries into these types of accounts numerous times, here is no different! If you can understand what is happening in the income/expense account, you can identify the debit/credit entry needed, meaning you also know where the opposite entry sits. Here is this logic in action. For example, let’s say we have an accrued expense, and I know that accrued expenses increase my total expenditure for the year. How do I increase the amount in an expense account? I place a debit entry in there (the mnemonic DEAD CLIC can be used here and should be something you are familiar with from previous studies). If my debit entry sits in the expense account, the credit entry has to be in the accrued expenses account. Let’s take the same logic and look at prepaid

income. I know this reduces the amount of income for the period, so how do I reduce the amount in an income account? I debit it (don’t forget to use DEAD CLIC for help!). If the debit entry sits in the income account, the credit entry must be in the prepaid income account. By focusing on the income/expense account you are able to recall simple double entry you have done numerous times already, this is a superb way of cutting to the chase. The final consideration is for reversals. Reversals This is as complicated as the topic gets, but again we can take the logic above of “what is the effect in the income/expense account” and make a simple adjustment; we work in the opposite direction! Take our example above of the accrued expense which has the following entry: Debit: Expense account (increased the amount present) Credit: Accrued expense To post the reversal I simply need to remind myself the original impact in the expense account, and work backwards. So I know originally the accrued expense increased the amount in my expense account, if I am now reversing this effect I am essentially asking myself how to reduce the amount in an expense account. Debit: Accrued expense Credit: Expense account (reversing the original effect) Again the basic law of double entry shows me clearly where my other entry must go! Summary This method may seem a little over-zealous at first, but once you begin to piece things into place you are guaranteed to nail these questions each time they appear. Have a go yourself at applying the logic above to the two other types of accruals and prepayments we did not mention here (prepaid expense, accrued income). • Nathaniel Hammond, is an AAT distance learning tutor, First Intuition 37

PQ CIPFA spotlight

CIPFA’s updates Better Business Cases course Brendan McCarron outlines why the institute is refreshing this module and explains what it entails

he public sector has faced insurmountable challenges over the past few years and has had to adjust in order to tackle such difficulties. This means that public finance professionals need to be more skilled, more adaptable and more dedicated than ever before. They are responsible for finding solutions for the biggest problems of the day and providing vital services for their communities.As government funding has decreased, there has been an increase in local authorities’ borrowing and investing to generate financial revenue. Local authority borrowing and investing should always be done for the best interests of the public they serve and CIPFA also encourages the use of HM treasury guidance on programme and project business cases. Recently, this guidance has been updated, which is why CIPFA is launching a new Better Business Cases Foundation eLearning course. The changes to the course reflect the latest guidance and highlight some of the key areas needed to deliver an effective business case. The qualification is aimed at anyone involved with, or overseeing, the work that is necessary to prove a case for investment within the public sector. The latest version of the guidance introduces a programme business case model, which is similar to the previous project version and still includes the ‘five cases’: • The strategic perspective, which addresses the need for spending public money. • The economic perspective, which identifies the options for addressing the need for spending. • The commercial perspective, which ensures a well-structured deal. • The financial perspective, which demonstrates the affordability and availability of funding. • The management perspective, which shows that the programme or project is deliverable. In refreshing CIPFA’s Better Business Cases

eLearning course, we have focused on the areas that require interpretation or are unclear to delegates. For instance, there is often confusion about the idea of ‘business needs’. The guidance, and the Green Book itself, insist that the whole reason for a programme or project is to address the business need, and not simply to deliver benefits. The Better Business Cases course sets out in a practical way how a business need is developed and explains why it is so central to the business case itself.

We will doubtlessly see more local authorities borrowing and investing over the next few years, which is why understanding this guidance is so crucial. Public finance professionals of today have a huge task on their hands, so keeping skills updated is a vital part of the profession. CIPFA’s new Better Business Cases eLearning course is available to book now. To find out more visit CIPFA’s website. • Brendan McCarron is a Senior Consultant at CIPFA

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PQ Magazine December 2023

careers PQ

Dear Karen Ask PQ’s very own agony aunt Karen Young when you need advice from a real expert. Email your dilemma to graham@ pqmagazine.com, and he will pass on the best ones to Karen THE DILEMMA I feel I am being underpaid but I’m nervous about asking for a pay rise. What’s the best way to go about this?

Beware job burnout Addressing physical and emotional exhaustion is a must, says ACCA study

Professional burnout must be addressed as a priority, according to the latest ACCA European Talent Trends survey. In one of the largest-ever studies of its kind, over half (57%) of respondents stated that their mental health suffers because of work pressures, with over threequarters (77%) saying they would like a better work-life balance. One in two accountants said they would like more support from their organisations in managing mental health, and 39% claim their organisation does not consider

employee mental health a priority. ACCA said the data also suggests that younger people are more likely to say their mental health is suffering because for work pressures, and more likely to want more support from their

employers. The impact of work pressure was highest (63%) for those working for the Big 4 and mid-tier accountancy firms. There is a stark difference in the way accountants across the generations are now working in Europe. While almost two-thirds (64%) of Gen Z respondents are fully office based, just 17% of Baby Boomers are now totally office based. Although hybrid and remote working has gained significant traction in Europe, ACCA said there are areas where “significant evolution is needed to respond to engagement and productivity challenges”. Read the full report at https:// tinyurl.com/3d364y7

In brief KAREN’S RESPONSE It’s understandable to find asking for a pay rise daunting but you’re well within your right to question whether you’re earning what you’re worth. Being able to ask for what you want and negotiate is an invaluable skill that will accelerate your personal growth and enhance your career. When putting forward your case for a salary increase there are a few key things to consider. Ensure you have identified the reasons why you deserve a pay rise and are prepared to discuss these with your manager. Compile a list of your achievements to highlight how you’re adding value to the team and the wider organisation, as reinforcing how much of an asset you are will certainly help to justify a pay increase. Another thing to bear in mind is that salary rises are often a result of a promotion or taking on additional responsibilities, hence the importance of timing for navigating your request; consider whether you’ve reached the next stage of your career progression pathway at the company, which should be outlined by objectives, and have evidence to hand to demonstrate your success. Whilst asking for a pay rise can be nerve-wracking, if you prepare well enough and craft a strong business case you’ll be more likely to approach the conversation with confidence. Lastly, be prepared for all outcomes, consider your next steps and remain positive. • Karen Young is a director at Hays. She is passionate about helping people to find the right job and companies the right person PQ Magazine December 2023

Time for AI upskilling There is now significant public concern regarding job security because of AI, with research showing that this is now the top worry for employees. A survey conducted by The Boost, an AI marketing newsletter, revealed that the UK public is nearly as apprehensive about AI job security as it is of AI security itself. The survey results also shed light on a growing demand for AI education and training. Tim O’Shea, founder of The Boost, stressed: “Without a concerted effort to educate our workforce in AI, we risk not only job security but also our overall security as a nation.”

Virtue signalling vs profit Business secretary Kemi Badenoch has criticised businesses for focusing on virtue signalling rather than the bottom line. She also feels that UK plc has become too afraid to take risks. She told the Alliance for Responsible Citizenship summit that there has been a fundamental cultural shift of attitude around risk and ‘safetyism’. Badenoch explained: “We talk about risk as if it’s a bad thing rather than something that generates creativity, innovation and reward.” Lawyers told to join union The ‘dire state’ of the UK

criminal justice system has prompted two criminal solicitors’ associations to urge their members to join the Unite union. The committees of the LCCSA and the CLSA have said “that only the collective force of our numbers can make a critical difference in the fight for legal aid, for our professional futures, and for the trial right of our clients”. They say legal aid has become the forgotten pillar of the welfare state. Unlike workers in other pillars – health, education and social security – legal workers have not yet had a major union fighting for their pay and conditions on a scale and in a way that is both professional and coordinated. It has now!

The PQ Book Club: books you should read Mindfulness for the Wandering Mind: Life-changing Tools for Managing Stress and Improving Mental Health at Work and in Life, by Pandit Dasa (Wiley £20.99) Author Pandit Dasa is a former monk, and this is his second book. His first was called The Urban Monk! Meditation plays a big part in his life, and he believes someone who can practice every day will ‘find’ mindfulness. As a monk he got up at 4am to meditate, but he doesn’t want to be too prescriptive. When he suggested people meditate for 15 minutes a day he got a lot of push-back. So now he encourages people to start with three to five minutes daily

practice. All the chapters end with a nice summary, with reflective questions and exercises, which works well. On the chapter about working from home, for example, he asks the very pertinent question: what do you currently do to create boundaries between your work and personal life? Dasa compares the mind to a hard drive, which can store millions of files. The human brain similarly can process and retain more data than we could ever imagine, and science still cannot fully explain how this organ operates. Each time we see, smell, taste or touch something the experience is recorded in our mind, regardless

of our level of awareness. There isn’t anything that the mind does not register. He thinks we have some ‘apps’ in our mind that are factoryinstalled. These include the money app and food app, but like our smartphone he wants you learn to close some of those that have been instinctively left open. Then our minds can function with greater clarity and focus. PQ rating: 4/5 His 15 years as a monk seem to have shown Dasa how we can try to control our wandering minds to find inner peace. 39

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

Bernie Eccleston convicted of tax fraud

#ICAEWROAR Launched in 2015, #ICAEWROAR scopes the social media landscape of accountancy to identify the profession’s top online influencers. For its sixth #ICAEWROAR Top UK Online Influencers ranking the institute has chosen to concentrate on UK-based individuals using X (Twitter) within the realms of accountancy. The winners will be revealed Thursday 7 December 2023. The top five online accountancy influencers in 2022 were: 1. Richard Murphy @RichardJMurphy 2. Keith M Gordon @keithmgordon 3. Alex Cobham @alexcobham 4. Michael Izza @MichaelIzza 5. Sanjay K Shah @sanjaysahFCCA

Billionaire businessman Bernie Ecclestone has been sentenced to 17 months in jail, suspended for two years, and ordered to make a payment of more than £650m in relation to his financial affairs covering tax, interest and civil penalties. The 92-year-old former Formula One motor racing boss admitted fraud by failing to declare a trust that held assets worth more than £416m. The investigation started more than a decade ago when HMRC began a civil tax investigation in 2012. Ecclestone was offered the chance to correct any mistakes in his tax and pay what was owed plus a penalty through a formal civil process known as a Contractual Disclosure

Scaling back Christmas?

The scale of Christmas spending cutbacks due to the cost of living crisis is highlighted in new research from KPMG UK, which shows

What is EBITDA?

consumer intention to cut back on buying gifts, groceries and socialising. Over 2,600 UK consumers were surveyed for KPMG –

ChatGPT as they find it faster and less embarrassing than asking colleagues. The top five financial terms that finance workers find most challenging to explain are: • EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) (19%). • Liquidity ratio (19%). • Leverage ratio (18%). • Accrual accounting (17%). • Treasury management (15%).

Confused by financial terminology? Well don’t worry, you are not alone, as more than half (57%) of UK finance workers are too! New research from AAT also shows that 45% of finance workers have witnessed serious errors in their workplace due to misunderstandings of basic financial terminology. Many are turning to Google, AI and

’ WEV E

Facility (CDF), or ‘COP9’. Eccelstone admitted a single charge of fraud by false representation during a hearing at Southwark Crown Court on 12 October 2023. with the largest percentage (45%) saying that their giftbuying budget would be the same as last Christmas. But nearly four in 10 (39%) of those polled said that the cost of living meant that they would have a smaller budget to buy gifts this year. Those saying they will have to cut back their gift budget were most commonly aged 35-44. Only 4% of all the consumers surveyed said they would have more to spend on gifts this Christmas.

It’s not just making errors that concern finance workers either – nearly half (47%) are worried that a lack of terminology understanding will result in them losing their current job. Over half (57%) wish it was easier to discuss gaps in financial knowledge with their colleagues or managers, 54% wish their workplaces provided better resources and 50% felt their workplace lacks training.

GOT THE L OT

Fiendish Su Doku

We have three copies of The Times Fiendish Su Doku Book 7 best seller to give away this month. You can immerse yourself in 200 of the most fiendish puzzles out there. In fact we lied – there are only 180 fiendish ones, as 20 are ‘super fiendish’! The claim is that these Su Dokus will be enough to exercise the grey matter of even the most experienced enthusiast. To be in with a chance of winning one of these books send an email headed ‘Fiendish Su Doku’ to giveaways@ pqmagazine.com, along with your name and address.

Disneyland Park

This month we are giving away three copies of the ‘Disneyland Park Colouring Book’. Get ready to ride the Jungle Cruise with Mickey Mouse and get spooked at the Haunted Mansion with Goofy! With over 90 images to colour this beautiful book really does bring the magic of Disney to life. To be in with a chance to win one of these fab books simply email us at giveaways@ pqmagazine.com with your name and address and we will put you in the hat for the prize draw. Head up your email ‘Disneyland Park’

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 15 December 2023. The main draw will take place on Monday 18 December 2023.

TO ENTER THESE GIVEAWAYS EMAIL GIVEAWAYS@PQMAGAZINE.COM

PQ Magazine December 2023

PQ magazine, December 2023

Articles inside

Win an AAT scholarship

Finding the ethical accountant

A profession you can trust?

CIMA SCS and MCS pass rates down

The PQ magazine Awards are here!