Stick your neck out

ACCA paper 3.6, ACR, is the specialist subject of FTC's Tom Clendon

As you should know Section A contains one compulsory number crunching group accounts question for 25 marks. It has been some time since the examiner has set a consolidated profit and loss account. If he were to set such a question then an obvious twist would be to include the partial disposal of a subsidiary mid-year leaving an associate to be accounted for. It is reasonable to expect in these circumstances the usual type of adjustments such as the impairment of goodwill, elimination of inter company transactions, and fair value adjustments.

However the examiner is more than capable of also including any accounting adjustment or correction. For example there could be a lease that has not been accounted for. As a long shot there could even be another subsidiary, but an overseas one, so it will need to translated before consolidation! The best way to prepare for this question is question practice. Given the compulsory nature of this question it would of course be foolish to ignore group balance sheets and cash flow. The group accounts questions can be very technically challenging but with the right approach, and time management there will be enough marks for you to pass this question.

In Section B there are four questions, all of equal marks, but you only have to attempt three. The most striking question is Q5, which will require a discussion or report. This question will not have any debits or credits in it and neither will it be based on a technical accounting standard.In the past this question has required discussion of human asset accounting, environmental reporting. This question is difficult to tip and therefore to prepare for. The examiner likes to touch on current issues in financial reporting. So what is topical at the moment - well corporate social responsibility is one area, as is corporate governance and of course the impact of listed companies in the European Union switching over to international accounting standards.

Traditionally students do well on this question. That leaves three other questions in Section B. Probably two of these will be about the application of a couple (or more) accounting standards in a scenario. This could mean commenting on why a particular accounting treatment used in the question is wrong, and what the effect on the accounts of making the correction would be. There are several accounting standards like, pensions, foreign currency, deferred tax and leases which could be examined in this regard. Traditionally each exam paper has a question on a current issue.

Historically the introduction of international accounting standards has been very popular, and there is no reason to suppose that this will not continue to be examined. Perhaps though the examiner may look to require the preparation of reconciliations required by IFRS1 First Time Application of International Accounting Standards. Please note that IFRS1 is both examinable on the UK and the IAS paper. The actual accounting of share based payments is something that ought to be examined at this level with figures as well.