Dear Friends,
The following are the tips that i get from the net till this moment.I will try to get as much as i can for your reference.However i wish you to take note that all the tips are based on the lecturer's best guess, it is just for reference and should not be over-concentrated and over-relied.
Finally,accept my greatest wishes in your coming exam and wish that everyone of you pass the papers! Gambate !
Ching
~~ Tips from BPP,LVMT,FTC,LCA ~~
WARNING: Tips are no substitute for revision!
Paper 2.1 - Information Systems
FTC Singapore
Lecturer - Mr Edwin Ee
- IS Management : outsourcing
- IS Management : Legacy systems
- IS Management : make versus buy
- IS management : cost centre / profit centre / corporate overhead
- Feasibility Study : financial techniques – ROI, payback, DCF
- Feasibility Study : economic / technical / social / operational feasibility
- Project management : project quality plan / role of project manager
- Project management : risk management
- Project management : network diagrams / gantt charts / project mgnt software
- SDLC : structured approach / waterfall vs spiral
- Structured Techniques : ELH / Case Tools / 4th GL / Prototyping
- Maintenance : Change control procedures
- Quality assurance : what quality steps ? / V-model
- Quality assurance : adoption of standards
- Systems evaluation : metrics : methods for measuring system performance
- Computer security : threats / types of controls
- Computer security : disaster recovery planning
- Computer security : Data Protection Act
FTC
Managing information systems
Strategy – short question perhaps relating to reasons for the development of strategy or alignment
IT opportunities – general question in the context of a case i.e. how an organisation may use technology to enhance its position
Costs and benefits – could be a compulsory question relating to the classification of cost and description of an appropriate method to evaluate economic feasibility
Legacy systems – although the March article of for 3.4 and makes no reference to 2.1 in the header useful to read – no past exam question
Project management – potential for a theory question similar to J03 relating to the creation of a plan for the improving time management – also consider terms of reference and PQP.
Designing information systems
Methodologies – explanation of the various development approaches including waterfall, spiral and hybrid – also consideration of the benefits of each approach
Techniques – potential question on either entity modelling or entity life histories.
Case tools – discussion in relation to improving management of the design process, perhaps linked to prototyping and external design.
Evaluating information systems
Security – any aspect but viruses, remote access and legislation seem to be key issues
Quality assurance – and the V model and the improvements which result
Metrics – discussion of the creation to standards to evaluate the success of the systems – perhaps also the explanation of weighted ranking or bench marching.
LCA
- Feasibility study
- Implementation of systems
- Packages v bespoke systems
- Protyping and case tools
- Programme testing
Paper 2.4 - Financial Management & Control
FTC Singapore
Lecturer - Mr Nicholas Blain/Mr Saminathan/Ms Lee Pei Yee
Q1
Case study
Investment appraisal
- Relevant and non-relevant costs
- Lease or buy
- Advantages of each appraisal methods
- Discuss other non-financial factors
Q2 - Q4
Management accounting
- Budgets, forecasting techniques
- Performance measurement
- Activity based costing
Financial management
- Objectives of stakeholders
- Raising finances: debt vs equity
- Rights issue
- Share valuation
- Factoring
FTC UK
Investment Appraisal - to include inflation, tax, relevant cost. May be lease Vs buy, possibly capital rationing.
Working Capital - All aspects of working capital – including cash budget, stock and debtors. May also include cash management since the Miller Orr formula has ‘appeared’ on the formula sheet.
Ratios -Could be part of working capital, or more focused towards general evaluation of a company, including long term finance
Budgeting - may include cash budget as above, possibly some forecasting (especially regression)
Performance measurement -possibly divisional performance evaluation, may include index numbers to appraise performance.
LVMT
- Financial management objectives
- Management of working capital (financing types, debt factoring/discounting, cash and stock)
- Sources of finance (equity and debt)
- Capital expenditure and investment (NPV, IRR, capital rationing, borrow or leasing options)
- Decision-making (product mix, make/buy decisions)
- Standard costing and variance analysis (mix and yield variances, operating statement)
- Budgeting and budgetary control (production budget, cash budgets, rolling budgets, top-down/bottom-up)
Section A
The compulsory section A of the exam has focused on investment appraisal or working capital in the past. As Investment appraisal was the main topic of December 2004’s exam it is likely that working capital will come up in June.
- Stock management (EOQ and JIT systems) – Q95 FRANTIC, Q58 JIT and EOQ
- Cash flow forecasts – Q88 (a) JACK GEEP, Q92 AMBER PLC
Section B
In section B of the exam there will be two questions on Financial Management (one of which will be on investment appraisal). The other two questions will be on areas from the Management Accounting section of the syllabus.
- Net present value (NPV) calculations - Q70, Q80 BENLAND, 87 WATER SUPPLIES LTD 93 SPENDER CONSTRUCTION
- Sensitivity analysis - Q77 BURLEY PLC
- Capital Rationing - Q82 Filtrex, Q83 PI
- Sources of equity - Q62 Burnsall, Q63 Newsam
- Mix and yield variances - Q20 Hairdressers
Paper 2.5 - Financial Reporting
FTC
Lecturer - Mr
1. Consolidated Balance sheet with fair value adjustments and other interco. adjustments.FRS 31 Joint ventures could be included with proportional consolidation.
2. Published accounts - Income statement & balance sheet with adjustments on - leasing, revaluation of assets, deferred tax,provisions & financial instruments.
3. FRS 18 -revenue recognition issues together with other substance over form issues.
4. FRS 7 - Cash flow statement - possibly direct method with ratios included.
5. Mini std. questions
- FRS 8 & FRS 35/FRS 105
- FRS 33 - EPS
- FRS 12 - deferred tax
FTC
INTERNATIONAL
CBS and CP&L
Published accounts,EPS ?(maybe restatement or something bit different to normal IS and BS)
Interps (but don’t neglect cashflow)
Substance/IAS37
IFRS 1
BPP
Section A
Section A will comprise of one compulsory question that will examine group accounting. Group accounting is a core area and this question could ask you to produce a consolidated balance sheet and/or income statement (profit & loss account) and usually includes a related discussion element.
Section B
Section B will comprise four questions out of which candidates should select three questions. The examiner, Steve Scott has stated that the style of the paper would remain fairly static:
Question 1
- The first question will be preparation/restatement of an income statement (profit & loss account) and balance sheet. It could also include a statement of changes in equity (reconciliation of movements in reserves note). This question normally requires adjustments for depreciation, tax and dividends. Others may relate to debt factoring or other substance over form issues, finance leases, financial instruments, share issues and inventory (stock) valuation. There may be further disclosure requirements re discontinued operations or an earnings per share calculation.
Question 2
- The second question will be a written question examining theoretical/conceptual areas or accounting standards. This could be on tangible or intangible assets, impairments, accounting policies or leases with reference to the Framework for the Preparation and Presentation of Financial Statements (Statement of Principles).
Question 3
- The third question is likely to examine interpretation and/or cash flow statements, and may include discussion of why, for example, related party or discontinued operations disclosures are useful.
Question 4
- The fourth question has no specified format or content and will cover other areas of the syllabus. The examiner frequently includes a mixed bag question, which examines three or four different accounting standards. Possibilities this sitting are: IFRS 1, governments grants, substance over form issues, accounting policies or financial instruments.
Relevant Articles
First time adoption of International Financial Reporting Standards - Steve Scott
Paper 2.6 - Audit and Internal Review
FTC
Lecturer - Ms Helena Johnson
Alan Lewin is a new examiner. He has not been responsible for any of the 2.6 papers to date and as a result it is impossible to identify the topics that will be examined in June.
I suggest you focus your revision on the key syllabus areas:
(a) Professional ethics especially the specific guidance in respect of independence
(b) The use of the audit risk model by external auditors
(c) The role of the internal auditors in risk management and corporate governance
(d) The control objectives and internal control procedures you would expect to find in the sales, purchases
and payroll systems.
(e) The substantive tests used to gather audit evidence in respect of the five balance sheet assertions,
especially in relation to inventory, accounts receivable and accounts payable.
Corporate governance is a particularly important topic as Alan Lewin has recently moved it from the 3.1 to the 2.6 syllabus.
Other topics to consider include:
(a) The concept of materiality
(b) The use of analytical procedures during the planning, evidence gathering and review stages of the
audit process
(c) The use of computers to increase efficiency
(d) Engagement letters, management letters and management representation letters
(e) External audit reports
(f) The responsibilities of auditors and directors in respect of events after the balance sheet date, the going
concern assumption,fraud, error and non compliance with laws and regulations
(g) The advantages and disadvantages of outsourcing the internal audit function
Remember Alan Lewin is very keen to examine your understanding of the audit process rather than simply your knowledge. Therefore you must be prepared to handle practical scenario based questions.
FTC
Ethics -
Planning - assessing audit risks
Internal Controls - sales/purchases
Substantive Testing - stock, fixed assets
Review of audit - going concern
Audit reports - practical scenarios
Internal Audit - role in corporate governance / business risk analysis
BPP
Please note that there is a new examiner this sitting.
- Internal audit/ Internal review – Following the new examiner’s recent article on how the internal audit department can assist in corporate governance and risk management, it is possible that this area could be tested, although articles are not frequently examined in this paper. Note that in addition to a specific question on internal audit or reviews conducted by internal or external staff, the question could be in the form of a report to management on control weaknesses with recommendations, very similar in substance to that produced by an external auditor (see Systems and Controls below) (P&R kit practice: Q7 Internal Auditors, Q8 Roxy Hotels)
- Substantive testing – This will be in the exam, but what will be tested? In December 2004 substantive testing of payroll balances was tested (Q4). In June 2004 inventories (stock) (Q3) and payables (creditors) and accruals (Q4) came up. In December 2003 payroll audit was tested (Q2). In June 2003, Inventories (stock) (Q2) and provisions were tested (Q3). In the December 2002 exam, payables (creditors) (Q3) and inventories (stock) were tested (Q5). In June 2002 cash was tested (Q2) and in December 2001 receivables (debtors) were tested (Q4). That would appear to leave non-current (fixed) assets, bank/cash and receivables (debtors) as likely candidates for examination this time round. (P&R kit practice: Q38 Springfield Nurseries, Q43 Goodfoot & Q45 Villawood Computers)
- Systems and controls – Again this topic will be included in the exam in some format. In December 2004 Q3 risks from a scenario had to be spotted, and controls recommended. In June 2004, they came up in the context of outsourced catering and payroll (Q5). In December 2003 controls over payroll were tested in Q2 and Q1 included controls over business risks in the areas of human resources, procurement and marketing. In June 2003, controls over non-current (fixed) assets were tested (Q6). In the December 2002 exam the sales system was tested (Q2). In June 2002 the cash system was tested (Q2) and in December 2001 Purchases/ capital expenditure were tested (Q3). Any of these could come up again: the purchases/payables and sales/receivables systems looking the most likely. (P&R kit practice: Q32 Cosmo & Q27 Internal Control Systems)
- Planning and risk assessment (from a scenario) – risk in one form or another comes up at every sitting. It is one of the key stages of the audit, but can also be examined in the context of a company's business risk as it was in June 2004. In December 2004, Q2 was centred around planning and the information you require, and Q1 was about spotting the risks of fraud and error. (P&R kit practice: Q17 EWheels & Q18 Nepco)
- Professional ethics – This is a core area not examined at the last 2 sittings. It is still a topical issue with all of the recent corporate collapses bringing the independence and professionalism of their advisors into question. Recently, confidentiality came up in December 2003 (Q6), conflicts of interest in June 2003 (Q3) and objectivity in December 2002 (Q1). Any independence issues would be ripe for examination again at this sitting. (P&R kit practice: Q10 Billington Travel & Q11 Manly).
- Audit/ Assurance Reports – This is a very important area of the syllabus, it is deliverable from the end of all assurance engagements. You also need to be aware of the differences between internal audit reports/ external audit reports and other assurance reports such as review reports. It has been tested in December 2003 (Q3 b and c), June 2003 (Q3c and Q5), June 2002 (Q3b) and December 2001 (Q5), but not in the last few sittings. (P&R kit practice: Q54 Audit and Review Reports, Q55 Cremorne)
- Parts of questions – The following topics could form discrete parts of questions at this sitting: fraud, management representations, audit regulation, materiality, e-technology (see article below) so make sure you are up to speed on these areas.
Relevant Articles
The following articles can be found in the Student Accountant magazine (or ACCA website)
- The regulatory environment, Alan Lewin, 4 January 2005
- Audit risk in a brave new world, Namasiku Liandu, 30 September 2004
- Confirmation as audit evidence, Graham Cosserat and Katherine Bagshaw, 28 October 2003
- Electronic technology and the auditor, Katherine Bagshaw, 25 June 2003
- Service organisations, Katherine Bagshaw, 26 March 2003
- Internal audit and review reports, Katherine Bagshaw, 29 January 2003
- Corporate governance in the 21st century, Namasiku Liandu, 30 September 2002
- The independence of accountants, Namasiku Liandu, 10 June 2002.
- The role of internal audit in risk management, Katherine Bagshaw, 1 March 2002.
- Technique in auditing questions, Kim Smith, 4 September 2001
- Audit and internal review, Katherine Bagshaw, 1 June 2001
Paper 3.1 - Audit & Assurance Services
FTC
Lecturer - Mr Rhys Johnson
Q1:Risk assessment and implications of an acquisition for the conduct of an audit. Group audits
Q2:Approach to an assurance engagement - engagement process,planning, procedures. Will include how
to audit” certain specified balance sheet or income statement items. Possibly PFI.
Q3:Three accounting issues - discussion of matters (accounting treatment, risks, materiality and reporting) and audit evidence.Provisions, impairments, asset valuation, RPT's are all favourite topics
Q4:Audit report - suitability of the audit report in the specified circumstances
Q5:Ethical and professional issues – likely to focus on independence,quality control, publicity, fees
Q6:Discussion question - possible topics are environmental reporting/international standards/ corporate
governance/independence and the provision of other services
Money laudering will feature at some point in the examination –most likely Q6.
FTC
Risk analysis and audit strategy … possibly with Money Laundering thrown in to the case study
Assurance Services - Performance measurement / prospective financial information
Accounting treatments / Materiality / Audit evidence –applied to 3 scenarios – covering usual FRSs – 3, 8, 10, 11, 12, 15, 18, 21
Audit reporting – First-Time Application of IFRSs in the
Professional / Ethical Issues or Practice Mamangement – Quality Control
Current Issues – SOX (Sarbanes Oxley Act) / Liability / Money Laundering
LVMT
- Business risks/financial statement risks
- Audit planning and audit strategy
- ■ Audit implication of accounting standards; FRSs 10, 11, 12 and 15 are of particular relevance
- Comment on suitability of audit opinion involving going concern
- Comments on ethical and professional issues involving confidentiality/non-compliance with laws and regulations
- General discussion on money laundering and its implication on the responsibilities/liabilities
BPP
Section A
Questions 1 and 2
Scenario questions in the context of audit risk/business risk.
May also include:
• Control suggestion and/or evaluation
• Audit evidence on Paper 2.5 accounting areas (see Q3)
• Group audit issues (including audit work on fair values)
• Planning/practice management/quality control issues
• Assurance services
Question 3
Audit evidence. Comment on the matters you would consider and the audit evidence you
would expect to find as audit manager conducting a review of audit files.
Likely to be several scenarios covering various Paper 2.5 level accounting standards, e.g:
• Earnings per share
• Borrowing costs
• Revenue recognition
• Standard costing
• Impairments
• Deferred tax
• Discontinued operations
• Intangible assets
• Related party disclosures
Section B
Question 4
Part (a): Any syllabus area. Part (b): A related question on reporting.
Question 5
Ethics, professional and quality control issues scenario question.
Question 6
Discussion question on current issues, e.g:
• Money laundering (make sure you read the examiner's recent article as likely to be
examined!)
• International convergence
• Audit exemption for small companies
• Risk-based auditing
• Corporate governance
• Laws and regulations
Relevant Articles
The examiner, Kim Smith, has written many articles and expects you to have read them and
know them. (See www.accaglobal.com/students) She often comments that students fail for
not having read the articles explaining how to tackle questions.
Read as many as you can, particularly the following:
• Money laundering, 4 February 2005
• 'Technique in auditing questions', 4 September 2001
• 'Technique in auditing questions – part 2', 17 October 2001
• 'Tackling the 'Discussion' question', 1 November 2001
• 'Professional ethics – a kloser look', 30 April 2003
• 'Divided opinion' (auditors' reports), 5 November 2002
• 'Rest assured' (assurance), 1 June 2001
• 'Audit and assurance services', 27 July 2001
Paper 3.2 - Advanced Taxation ( MYS )
PERSONAL TAXATION
a) Resident status
b)Exemption on Employment Income - 60 days, gratuity, compensation for loss of employment,
dual employment contract
c)Joint Assessment
d) Personal Finance - saving shares, unit trusts, EPF Planning
e) Partnership
f) Business ventures - sole/ partnership/ sdn bhd
g) settlement
h)Trust
RPGT -
A) RPC,
B) PARA 3 b,
C) Exchange,
D) para 17
E) para 12
F) Administrative
Islamic Instruments -
wadiah, BBA, Ijara, HP vs Leasing
Tax Administration -
a) self assessment individual, co,
b) evasion, incorrect return,
c) record keeping
d) tax agent, auditor liabilities,
e) capital statements.
f) public ruling,
g) fraud, wilful default, negligence,
h) anti tax avoidance
Tax planning for company -
a) dividends imputation,
b) utilisation of unabsorbed CA + losses,
c) acquisition of company and biz,
d) S.44 (8) and S34(6), e) rental income S.4(a),
f) Tax Audit and investigation,
g) stamp duty - computation and exemption
h) controlled transferred - interest exp, withholding tax, S4A, 107A and permanent
establishment
Specialised Industries -
a) property developer,
b) investment holding, ( May 2005 Article )
c) close end fund,
d) leasing
Special organisation -
a) co-op,
b) club,
c) charitable institution,
d) trade association
Investment Incentives -
a) acquisition of foreign owned co,
b) proprietary rights,
c) approved food production,
d) increased export for service sector,
e) pioneer status,
f) infrastructure allowance,
g) R&D,
h) approved offshore trading
Paper 3.3 - Performance Management
FTC Singapore
Lecturer - Mr Saminathan
1. Case study with CVP analysis & learning curve included to measure financial performance.Other non
financial indicators could also be included to measure performance of a service business.
2. Divisional performance measures and rewarding of managers in divisions.
3. Management control & budgeting in private & public sector.
4. Risk analysis in decision making.
5. Theory question on modern developments in MA & building sustainable cost advantages.
6. Knowledge of strategy & gap analysis could also be included as part of a question.
FTC
Contribution based decision-making
Practical aspects of pricing policy
Performance evaluation – financial v. non-financial & business v. non-business
The strategic framework
In addition to the above, the examiner has still not examined in any great depth the
content of the articles he has written for the students’ newsletter
Environmental management accounting – Jan 2004
http://www.acca.co.uk/publications/studentaccountant/107348
JIT & backflush accounting – Apr 2004
http://www.acca.co.uk/publications/studentaccountant/1143053
Management control – Sept 2004
http://www.acca.co.uk/publications/studentaccountant/2244397
BPP
Section A
Question 1
The longer question is likely to feature some short term planning (e.g. budgeting), requiring a
statement of profit or costs. It may include analysis of relevant costs and the scenario will be
a substantial length. The discursive elements will draw on the scenario to illustrate models
(e.g. strategic planning) and/or candidate’s own experience.
2005 P&R Kit Questions: 55 Fork Lift Trucks, 61 Privmed, 62 Motor Breakdown Services
Question 2
The second, usually shorter question, will cover either numerically calculations (e.g. costing)
with a short discursive requirement or this part of the exam may be used to test performance
measurement using KPI’s as well as more traditional performance targets.
2005 P&R Kit Questions: 45 Eatwell Restaurant, 41 Management Accounting and the Public
Sector
Section B
It seems likely two questions will be wholly discursive, following more numerical emphasis in
section A.
• If performance management hasn’t appeared in section A, a 20-mark question could
be inserted in this section.
2005 P&R Kit Questions: 30 Mission, 48 Internal and External Factors
• Modern Management Accounting Techniques within a scenario or specific industry
could require candidates to apply their knowledge.
2005 P&R Kit Questions: 20 Shipping Industry, 9 Stock Alternatives
• Finally numerical topics that could appear: learning curve, risk and uncertainty,
divisional performance (RI and ROI)
Paper 3.4 - Business Information Management
FTC Singapore
Lecturer - Mr Alex Watt
Linking IS/IT strategy to business strategy (Note: this is the core topic of the syllabus)
Web based technology – internets, extranets, intranets
Applying IS/IT for competitive advantage – five forces, value chain and generic strategy models
PEST
Outsourcing
Data warehousing and data mining
Lewin’s model for change management
Legacy systems
Project risk
FTC UK
Strategy –application of an IS/IT/IM strategy in the context of a scenario
Porters 3 generic strategies in relation to the development of e-commerce systems or the Internet
Knowledge management – problems of knowledge sharing and solutions within a business context – perhaps relating to knowledge and data workers
Data warehousing and data mining – problems of amalgamating company wide databases to facilitate data sharing
Value chain – identification of IS to support the value chain along with an explanation of its importance to the development of business strategy
Legacy systems and risk – based around the article in the March Student Accountant - could be linked to the decision to outsource the development to reduce the risk.
Lewins model and managing change – the application of the model and how problems can be reduced in relation to policies which address behaviour.
Reasons for the development of strategy and alignment issues – core topic area – yet to examine the reasons for the development of an IS strategy – alignment issues could be linked to one of the above models g value chain
Globalisation
Eis
Ssm
BPP
For each area described below, please note the reference to useful questions from BPP's
2004 Practice and Revision kit (P&R kit).
Section A
The examiner tends to provide fairly lengthy case studies, which provide information about
the business strategy, the IT history to date and the current situation. As you are likely to be
dealing with an organisation that needs to make decisions about its IT systems and
strategies, questions are often based on strategic models and approaches from the syllabus.
Questions in the June 2005 exam could ask you to analyse an organisation's current position
regarding its IT, perhaps using a model such as Porter's value chain (Q11). In order to tackle
this type of question, you need to be able to recognise the relevant business strategy in order
to make appropriate IT suggestions. Questions 51 and 52 are excellent ones to practice on
this.
A key area that all students must focus on is how to develop a business case for Information
Technology. IT facilitates business decisions, and the examiner is likely to ask you to analyse
the key business issues. A key model to understand and use is ‘Where We Are, Where We
Want to Be, Going to Get There’, and it would be useful to review the first BIM exam paper
set.
There could also be questions asking you to improve a project or development that is
experiencing problems (Q26, Q28)
Another key to review would be the human and social issues relating to IT development, and
the syllabus lists several change management theories, such as Lewin, which have yet to be
examined.
Exam technique is extremely important in this paper, so working through as many case
studies as possible is to be advised. Questions 64-66 are the questions from the examiner's
pilot paper.
Section B
Section B questions could come from anywhere in the syllabus, and there are often questions
which focus on one particular theory. The examiner also uses these questions to get
candidates to bring in 'real-life' examples, to illustrate theories, so be sure to have at your
fingertips some examples which you can use, either from your own experience, or perhaps
from other exam scenarios and questions which you have used. There is also usually one
question with a mini-scenario that can be a good one to choose, as you have a context to
work with. The examiner also uses section B to test knowledge about specific types of
technology.
Key theories that need to be understood are those of Nolan, Parsons, Porter, Earl and
Zuboff, and reviewing past BIM papers can be extremely helpful to see the style of questions
on these areas.
Key areas to cover in depth are as follows:
• E-commerce is an area that usually appears on information papers ((Q8)
• The human impact of IT has not yet been examined extensively (Q31 &32)
• Knowledge management is an area that may be prominent in future exams (Q5)
Paper 3.5 - Strategic Business Planning and Development
FTC Singapore
Lecturer - Mr Rhys Johnson
Strategic management approaches – rational, emergent
Strategic analysis – PEST, 5 Forces, BCG, Value Chain
Stakeholder mapping
Strategic options – Ansoff’s matrix, vertical integration
Marketing mix
Change management
Quality and culture
Human resource management – recruitment, motivation
Accountants role in new product developement
Any of the questions may be set in a global business context.
FTC
Ethics
Evaluate the importance of international issues including competition, management and regulation.
Discuss ways in which conflict between centralised control and individual creativity can be managed.
Structure
Marketing
Evaluate current position
Evaluate the tools which can be used to influence behaviour in the work place
LVMT
The examiner for this paper is Ralph Bedrock, although relatively new to this position has proved to be his own man. He has examined topics that can be considered to be ‘unfamiliar’ such as business-to-business marketing (B2B), new product development (NPD), and corporate governance. Having said that, he hasn’t deviated from the core aspects of a strategy paper so there is no cause for panic. In his examiners’ feedback, he expressed concern on the issue of time management and examination techniques and said the two ‘often proved to be the difference between candidates who passed and those who marginally failed’. So what can we expect this time:
- Stakeholders - using the Mendelow matrix
- Internal analysis for strengths and weaknesses with more emphasis on value chain and/or BCG matrix
- Environmental analysis using the PEST in a multi-national environment
- Globalisation - ‘Ethnocentrism’, ‘Polycentrism’ and Geocentrism
- Marketing - the role of the accountant in NPD
- Strategic options and evaluation - Porter and Ansoff
- Dangers of implementation Finally, we cannot over emphasise the importance of understanding the core aspects of strategic management: strategic analysis, choice and implementation. Most of the questions tend to be from these areas, so get ready.
BPP
Suggested practice questions from the BPP Practice and Revision Kit (2005 edition) are shown after the relevant area. Remember also that questions drawn from the 2003 and 2004 exam sittings, which are not contained in the 2005 P&R Kit but can be taken off www.accaglobal.com, are also an excellent source of preparation.
Section A
Always difficult to predict the subject matter of the case scenario, and in December it was rather unusually based around the control and management relationships within a large group structure of a manufacturing company. Therefore this time it might be something less complex in structure and based on the service sector.
Areas that could be included within the requirements could include
• A discussion of the relative merits of different ways of making strategy
• Stakeholder analysis and objective setting
• Application of strategic analysis models
• Evaluation of strategic objectives, using the numbers included
• Marketing issues
2005 P&R Kit Questions: 52 World-Wide Agricultural, 51 Bethesda Heights, and 50 Playwell.
Section B
• Marketing, including new product development. In part suggested by the recent article but also due the lack of marketing in the December 2004 exam.
2005 P&R Kit Questions: 24 Westport University, 26 Karaoke, 27 Product Launch, and 34 Sports Centre
• Change management. This is feasible this time because it is an important subject, which has been absent for the past few sittings.
2005 P&R Kit Questions: 20 Apex Culture, and 49 Lionel Cartwright.
• Globalisation strategy. The strategic development of global businesses was very popular when the paper was first introduced. It remains relevant and could be due another appearance.
2005 P&R Kit Questions: 41 Excalibur Sportswear, 42 Global Marketing, 43 Clothing Supply Company and 48 ALG Industries
• Ethics and corporate social responsibility. With all of the talk (and recent cases) of corporate scandal ethical behaviour is a very topical area of the syllabus
2005 P&R Kit Questions: 16 Digwell, 17 Large Financial Services Company, and 18 Acquisition
Relevant Articles
The role of the accountant in new product development - Ralph Bedrock (the examiner),January 2005
Paper 3.6 - Advanced Corporate Reporting
FTC
Lecturer - Mr Saminathan
1. Computational question on group accounts.
- piecemeal acquisition
- vertical consolidation
- disposal of subsidiary
Look out for adjustments related to financial instruments & goodwill impairment .
2. Issues related to FRS 21 especially hedging for investment in a foreign entity.
3. Issues related to fixed assets - impairment of assets with reversal of impairment losses,intangible assets
with finite & infinite life.
4. Issues related to FRS 12 - deferred tax.
5. FRS 105 Discontinuing operations
6. FRS 19 - Retirement benefit & share based payments.
7. Issues related to consolidation & groups could be a full question.
8. Environmental reporting & human capital management
Also FRS 39 issues could be included as part of any of the issues above
FTC
Group Income statement - with disposals / complex group structures / associates
or Group Balance sheet - with accounting adjustments
Share based payments
Accounting standards in a case study situation e.g. Pensions, EPS, deferred tax.
International issues (again!)
Corporate Governance and CSR
LVMT
- Consolidated balance sheet including adjustments for accounting errors when applying recent standards
- Leases including sale and leaseback arrangements, the differences between IAS 17 and SSAP 21 and the discussion paper on leases
- Events after the balance sheet date (FRS 21/IAS10)
- Earnings per share (FRS 22)
- Joint ventures and associates (FRS 9/IAS28& IAS31)
- Investment properties (SSAP19/IAS40) and Government grants
- A combination of different standards in one question possibly involving FRS 15, FRS 23, FRS 24, SSAP 25, FRS 11, etc
- OFR, Corporate governance and environmental reporting
- FRSs 22 through 26, with emphasis on the changes to current reporting
Finally, ensure you thoroughly understand the basic principle underpinning a broad spectrum of the syllabus. For this you MUST fully appreciate the usefulness of the Statement of Principles and its applicability to the elements of financial statements.
BPP
For each area described, please note the reference to useful questions from BPP’s Practice
and Revision kit (P&R kit).
Section A
The section A question can be on any of the traditional higher-level group accounting topics
that are not examinable in paper 2.5. Complex group structures or disposals of subsidiaries
appear to be the most likely topics having not appeared for quite some time. (Questions: X
Group, Wright)
Section B
Section B questions tend to range over a number of topics and may include:
• International reconciliations and the continuing attempts to bring about international
harmonisation. IFRS 1 on First time Adoption of IFRS has already been examined but
could reappear due to its topicality.
• “Mixed” questions can include a wide range of new and longer-established areas of
accounting. Issues relating to recognition and impairment of tangible and intangible
assets have been a recurring theme along with provisions and retirement benefits.
• Accounting for financial instruments could be tested.
• The new standards on share-based payment could be tested in numerical detail.
• Performance and valuation measures and how these are affected by accounting
policies often appear in the ACR exam. (Good questions for practice on these areas
include: Impairment of assets, Finaleyes, Retirement Benefits, Vacs, Low Paints (Q2 within
Mock Exam 2 in the UK kit), Desolve, FREDs 23 and 30)
• A discussion question looking at current developments in corporate reporting. Social and
environmental reporting can appear here as well as business ethics, and reporting on the
internet. (Questions: Glowball, Mineral)
Relevant Articles
Useful articles – www.accaglobal.com/students
• Disposal of non-current assets and presentation of discontinued operations, David
Towers, April 2004
• Improving standards, Graham Holt, August 2004
• First-time adoption of International Financial Reporting Standards, Steve Scott,
January 2005
• Convergence of UK GAAP to IAS : Parts 1, 2, and 3, Steve Lawrence, July 2002,
September 2002, December 2002
• Deferred tax, Paul Robins, July 2002
• A review of recent FREDs, Graham Holt, September 2002
• Group accounting: associated companies and negative goodwill, Steve Scott, April 2003
Paper 3.7 - Strategic Financial Management
FTC
Lecturers - Mr Nicholas Blain/Mr Saminathan
- Mergers & Acquisitions, Restructuring
- Valuations
- International investment appraisal
- Interest rate risk and hedging (futures/options)
- theory of CAPM
- Capital structure, inc Modigliani & Miller
- Corporate governance
- WTO and free trade
- International trade risks
FTC
Section A:
1) Merger and Acquisitions - Company Valuation (NAV, DVM and P/E Methods) and Management Buy
Outs. Share for Share exchange, Going Private.
2) Risk management - Interest rate risk / Currency Risk
3) Overseas NPV - including the measurement of past performance and ethics.
4) Investment Appraisal - WACC, Risk adjusted WACC, The management of cash flows.
Section B.
1) Dividend Policy/Term Structure of Interest rate
2) Portfolio Theory and CAPM – summary and alpha tables
3) International economics – I.M.F., Political Risk, Foreign Exchange Rate Systems, Balance of payments deficits. Control of foreign subsidiaries, Treasury Management.
4) The Black Scholes Option Valuation Model – the application of the Put Call Parity Rule
LCA
- Acquisition decision/MBO
- Foreign exchange risk
- Capital structure
- Investment appraisal/FDI
- Interest rate collars
Section A
Question 1
Question 1 my feature a question on mergers & acquisitions. This could include valuations based on several techniques as well as changes in shareholder wealth post-merger. Similar questions in the BPP revision kit: Q34 Oakton, Q35 Minprice
Question 2
Question 2 could revolve around interest rate management, specifically hedging. Similar questions in the revision kit: Q56 Projections, Q58 PZP
Section B
Subjects likely to feature include:
• Adjusted Present Value - Q32 Strayer
• International Financing - Q61 Trade Blocs, Q62 IMF, Q63 Beela
• Dividend Policy - Q76 Serty, Q77 Tigger
• Corporate Objectives - Q1 Stakeholders, Q2 International Corporate Governance
Health Warning! The examiners deliberately try to avoid question spotting. Just because a question featured last time, doesn’t mean it won’t feature this time. Use the tips as areas to have a good look at, but remember that no one knows what is in the exam, apart from the examiner. Your safest bet is to achieve good syllabus coverage in your revision, as the examiner aims to do in the exam.
