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ACCA September Tips - the Skills papers

25 August 2016

BPP’s ACCA September exam tips

F5 PERFORMANCE MANAGEMENT
A new format has been introduced for ACCA F5 for the September 2016 sitting.

Section A (30%)
Objective Test Questions
15 questions worth 2 marks each. This will examine all areas of the syllabus.

Section B (30%)
Objective Test Cases
3 case questions which each include a scenario with 5 sub requirements worth 2 marks each. Each requirement will be independent and can therefore be answered in any order.
This will examine all area of the syllabus.

Section C (40%)
Constructed Response Qus
2 questions worth 20 marks each – these can be further broken down into multiple parts of varying length
This will examine syllabus areas B-D only.

As any syllabus area could be tested in sections A&B the best advice is to study all areas of the syllabus.

Section C
Areas expected to be tested in Section C include (but are not limited to) planning and operational variances, mix and yield variances and evaluation of the company performance (either as a whole, or on a divisional basis).

F5 has the following syllabus areas:

A Specialist cost and management accounting techniques.
B Decision making techniques.
C Budgeting and control.
D Performance measurement and control.

General advice
There is no longer any formal reading and planning time at the start of the exam. However, you are strongly advised to plan answers to section C questions before starting to write.

The examiner has repeatedly stated that she expects students to study broadly for all of the syllabus areas meaning that question spotting is not a good idea, instead students should expect the unexpected. Since the introduction of section A questions this advice is even more critical because more topics can be tested.



F6 TAXATION
In section A there will be a wide range of topics tested as the examiner has to set 15 OTs. We would expect at least a couple of these OTs 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
Also likely for the OT section of the exam are the following:
• 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
It is important to remember that section A offers the F6 examining team an opportunity to test THE WHOLE SYLLABUS so practising on ALL KINDS OF F6 questions from the practice and revision kit will help build and complement your existing knowledge.

In section B of the exam the questions will be similar to those of section A but there will be a longer scenario to deal with than in section A questions. This means a slightly different exam skill is necessary as you have more information to deal with and each OT will require you to find the relevant information or data in that scenario. It is not a difficult skill but we would hope you have had time to practice 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, constructed response questions with scenarios and much more open requirements. Your answers will need, not just sound technical knowledge, but also that knowledge will need to be relevant to the question you have been asked. Furthermore your answer will have to be presented logically so the marker can follow your thought processes.

At least 50% of your revision time has to be spent answering the section C questions in the practice and revision kit to build up confidence and speed in a way that will also maximise marks.

1. Remember to learn your income tax and corporation tax proformas.
2. Calculations which require no more than two or three entries into your calculator can be included on the face of your proformas (eg. Grossing up dividends/interest). Calculations which are more complex (eg. Company car benefits) need separate workings which are properly referenced (W1, W2 etc and with a heading).
3. Actually attempt the narrative parts of the requirement – aim for as many sentences as there are marks with each sentence containing something technical. Keep your paragraphs to no more than 3 sentences long (4 at an absolute maximum).
4. In both numerical and narrative answers leave plenty of space on the page. So in proformas – leave a gap between each line (you will definitely need to add something in). In narrative answers leave a line or two between each paragraph just in case you remember something later. Well spaced answers are also easier to mark – and you ALWAYS WANT TO KEEP YOUR MARKER HAPPY.
We know that the two longest questions will focus on income tax and corporation tax. This is 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 sitting we have seen a number of questions whereby you have to correct errors in computations included in the scenario
• Capital allowance computations
It is also likely that section C will include a ten mark question on VAT, inheritance tax or capital gains tax. So remember to cover the whole syllabus in the practice and revision kit.

Finally, remember the pass mark is 50% 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 have to use that incorrect figure later on in a subsequent calculation then that’s fine you can only lose the mark once. In section A and B never leave an OT unanswered, have a guess if need be.



F7 FINANCIAL REPORTING
Section A
• Fifteen 2 mark multiple choice questions on a wide range of topics including several on consolidation and interpretation of financial statements
• Expect a few questions on non-core areas (e.g. inflation, specialised entities)

Section B
Case questions
• Three case study questions each with five 2 mark questions
• 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
• Questions are not dependant on each other and can be answered in any order
Long questions
• Two twenty mark questions, one covering interpretations and the other preparation of financial statements
• One question is likely to be in the context of a single company and one in the context of a group, so you could have a single company interpretation and a groups preparation or vice versa
• Accounts preparation questions may include extracts or stand alone calculations or full statements of profit or loss and other comprehensive income and/or statement of financial position
• Both questions will cover the accounting for items from other areas of the syllabus
• May include a short separate part, e.g. with a statement of changes in equity, statement of cash flows extract, earnings per share calculation or linked written topic
• A consolidation question would include one subsidiary and often an associate, with adjustments, e.g. fair values, deferred/contingent consideration, PUP on inventories/PPE, intragroup trading and balances, goods/cash in transit
• A single entity question could be preparation from a trial balance or restatement of given financial statements with the usual adjustments for depreciation, revaluation and current/deferred tax (including deferred tax on 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, revenue recognition or construction contracts.



F8 AUDIT & ASSURANCE
ACCA F8 has a new exam format from the September 2016 exam sitting.

Section A: Three mini-case style scenario based questions each with five 2 mark questions based on the scenario (total 30 marks). Each mini-case question will test single topic areas of the syllabus and so will either test syllabus area A, B, C, D or E. We would particularly expect questions in Section A to focus on syllabus areas A and E.

Section B
Q16: One 30 mark question.
Q17, Q18: Two 20 mark questions.
All three questions in Section B will be broken down into sub requirements and be scenario based. The majority of marks in each question will test syllabus areas B, C and/ or D.
Areas expected to be tested in questions 16 to 18 include:
• audit planning
• audit risk (identification and explanation of audit risks from a scenario and explanation of the auditor’s response to each risk)
• internal audit
• internal controls (identification and explanation of deficiencies in internal control and the recommendation of suitable internal controls or description of tests of controls); and
• audit procedures (both substantive procedures and tests of controls).

F8 has the following syllabus areas:
A Audit framework and regulation
B Planning and risk assessment
C Internal control
D Audit evidence
E Review and reporting

General advice
Where questions are based on a scenario it is essential that you use the information in the scenario to make your answers relevant. You should also think about how you will present your answer – try to use a tabular format in your solutions where relevant as the examining team have stated that candidates who do this score better.
Finally 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 ½ mark per point.



F9 FINANCIAL MANAGEMENT
ACCA F9 has a new exam format from the September 2016 exams onwards.

Section A: 15 multiple choice questions worth 2 marks each. The MCQs will largely be knowledge based and will balance out the questions in Section B and C to make sure that all aspects of the syllabus are examined. It is likely that some of the MCQs will test your understanding of financial management and objectives (ratio analysis, the concept of shareholder wealth) as well as the economic environment and financial institutions topics (financial intermediation, fiscal and monetary policies). The efficient market hypothesis is likely to be tested here too.

But bear in mind that the whole point of setting MCQs is to test good coverage of the syllabus in the exam.

Section B
Three 10 mark mini case-studies. Each case-study will be broken down into 5 separate 2 mark multiple choice questions (so 15 questions in total).

Areas expected to be tested in this section are working capital management (the impact of a change in credit period or accepting a factor’s offer), business or security valuations (assets method and earnings valuation), and financial risk management (most likely in the form of currency risk but it is possible that an aspect of interest rate risk is examined here)

Section C
Two 20 mark questions which will be broken down into sub requirements and be scenario based. These two questions will focus sections C,D and E. Section C is working capital management, section D is investment appraisal and is likely to feature NPV with inflation and tax. Section E is business finance; either an evaluation of financing options (interest coverage and gearing ratios are likely to be important here) or a cost of capital calculation are most likely. Whichever of these three topics does not feature in section C is likely to appear in section B.

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