Acca Tips

ACCA

On the right track PASS calls on top tutors at 7city, First Intuition, Kaplan and Marcus Evans to bring you the topics they believe are favourites to come up in next month’s exams

WARNING: These tips come with a health warning. Do not use these exam tips at the expense of thorough revision

Fighting fit: these tips will help get you in shape

F1 7city n Business structure, culture, ethics and corporate governance n PEST analysis n Porter’s Five Forces model n Accounting and other business functions n Internal control and fraud n Leading and motivating staff n Recruitment and development n Diversity n Appraisal

F2 7city n Cost classification and behaviour n Correlation and regression n Material, labour and overhead cost n Marginal and absorption costing n Specific order costing n Process costing n Budgeting n Variance analysis n Short-term decision-making techniques

F3 7city n Regulatory framework

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24/04/2008 08:34:04

ACCA

F7 candidates – focus on ratio analysis, say 7city

n Accounting conventions

n Decision-making, either apply decision criteria or linear

n Double-entry bookkeeping



n Adjustments for stock, accruals, debts and provisions n Trial balance preparation n Preparing financial statements

F4 First Intuition n Judicial precedent/interpreting statute n Consideration n Tort, auditor liability for negligent misstatement n Articles n Remedies for breach of contract n Distinguishing employee from contractor n Comparison of different business entities, incl. partnerships and limited companies n Exclusion clauses in contracts n Separate legal personality, including lifting the veil n Directors’ duties

Marcus Evans n Personal tax admin as a sub requirement of Q1 n Always worth knowing how to do corporate tax re long financial statements for Q2 – if you know how to deal with long financial statements you also know how to do standard annual ones or those less than 12 months n Capital gains Q3 – company share pooling rules would be sensible to test (to avoid testing the now out-of-date personal rules). PPR would also make sense n Q4 and Q5 – corporate losses and personal basis periods?

F7 7city n Consolidated income statement including subsidiary and associate n Ratio analysis

7city n Throughput accounting n Non-financial and/or public sector performance indicators n Decision-making under conditions of risk and uncertainty n Qualitative aspects of budgeting n Flexible budgeting n Activity-based costing/budgeting n Variances with operating statement

F5 First Intuition n ABC/throughput n Multiple limiting factors n Expected values n Types of budget n Time series forecasting n Labour & overhead variances n Divisional performance n Public sector performance.

n Revenue recognition n Framework

F7 First Intuition n Consolidated income statement, goodwill, associate n Cash flow statement n Ratios n Deferred tax n Long-term contracts

F7

F5 Marcus Evans n Linear programming n Pricing decisions n Activity-based costing n Variances analysis (including mix & yield, planning & operational variances) n Divisional performance and transfer pricing

Marcus Evans n Group accounts – income statement and statement of financial position (balance sheet) n Published accounts – from trial balance n Statement of cash flows – with analysis and interpretation n Non-current assets/impairment n Construction contracts n Provisions n EPS

F7 Kaplan n Consolidated statement of financial position/balance sheet plus income statement/profit & loss, subsidiary only, possible mid-year acquisition. n TB to financial statements, including non-current assets/

F5 Kaplan n Performance measurements with both financial and non-financial indicators n Budgeting with learning curve or ABB n Variances mix and yield

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F6

n Published financial statements and EPS

F5

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programming





fixed assets (possible sum of digits depreciation), deferred taxation. n Cashflow and related analysis report. n Impairment n Framework/statement of principles n Construction contracts

PASS: 40,000 copies circulated each and every month

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ACCA

n Not-for-profit entities (3 E’s: effectiveness, efficiency, economy)

management.

n Valuations

Marcus Evans n Audit planning n Internal controls n Substantive testing (either non-current assets, sales or payroll are due) n Corporate governance n Internal audit n Regulation and responsibilities, including ethics and the engagement Letter n Audit evidence, including sampling, working papers and reliance on experts

F9 7city n Asset replacement decision with unequal lease lives n Business valuation and the use of geared betas n Working capital management, debt factoring and EOQ with discounts n DCF calculations with uncertainty and taxation n Single period capital rationing or lease vs buy decision n Interest rate risk and hedging techniques

F9 First Intuition n Economic environment (Section B) n Investment appraisal (Section D) n Cost of capital (CAPM) (Section F) n Risk management (Section H)

F9 Marcus Evans n WACC/CAPM/risk-adjusted WACC n Objectives & three decisions n Working capital – cash & Miller Orr model n Interest rate management n NPV – standard calculation n NPV – application – possibly asset replacement or capital rationing n Sources of finance

F9 Kaplan n Investment appraisal n NPV/IRR with tax and possibly inflation. Payback, replacement analysis and capital rationing. n Working capital management n Receivables and payables. n Business finance n Gearing/capital structure calculations and comment thereon. n Cost of capital n CAPM theory, its advantages and disadvantages, and its use in calculating a cost of equity and a risk-adjusted WACC.

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n Hedging foreign exchange risk and interest rates and risk



F8

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n Risk management

F8 candidates – Marcus Evans say corporate governance may be tested

n Asset and cash flow-based values. n The financial management function and the



economic environment’s impact on it

n Objectives in both the corporate and NFP sectors.

P1 Section A 7city n Corporate governance principles and objectives n Stakeholder analysis n Internal controls and internal audit n Directors remuneration n Risk assessment and management Section B n Ethical theories and CSR n Tucker’s 5 Question model n Professional ethics and Kohlbergs stages of moral development n Audit committee and risk committee

P1 First Intuition n Corporate governance – rules vs principles approach n Non-executive directors n Business risk – a methodical approach to identifying, categorising and managing risks n Stakeholders n Professional values and ethics n Corporate social responsibility

P2 7city n Consolidated statement of income including disposals n Consolidated statement of cash flows n Foreign exchange n Related parties n Segmental reporting n Intangible non-current assets n Impairment n Off-balance sheet finance n Share based payment n Specialised entities (eg not-for-profit) n Global harmonisation

P2 First Intuition n Group topics: n Foreign subsidiary n Disposal n Other topics: n Pensions

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24/04/2008 08:34:25

ACCA

P7 candidates – look out for audit evidence, say Kaplan



P5

n Financial instruments n Provisions n Impairments n Conceptual framework

P2 Marcus Evans n Group statement of cash flows n Ethical and social responsibilities n Intangibles n Financial instruments n Segment reporting n Related parties n Current developments – harmonisation, changes to IAS 27 and IFRS 3

P2 Kaplan n Foreign entity statement of financial position/IS (comprehensive income)/reconciliation or cashflow Revision of IAS 1/ethics n Mixed transactional n Financial instruments/deferred tax/actuarial gains and losses/revaluation of assets/forex gains/losses n Segmental reporting/related party transactions/ revenue recognition n Current issue n Harmonisation of accounting standards (IFRS and US)

P3 Marcus Evans There is always likely to be an element of analysis, choice and implementation in the compulsory question. Specific areas to be tested on the exam may include: n 5 Forces n Strategy lenses /different approaches to strategic planning n Portfolio matrices (maybe public sector?) n BPR n Stakeholders, ethics & culture n Change management

P4 Kaplan Section A n NPV or APV of a foreign investment project, with discussion of political risk n Business valuation for a takeover, using book plus model, and including discussion of defence tactics and ethical issues Section B n Interest rate management including a recommendation to the board n Discussion question on stakeholder conflicts and dividend policy. n Cost of capital and free cash flow for a valuation.

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P6 Kaplan n Corporation tax including IBA, loss relief (S393A), group and consortium relief, overseas subsidiaries, group gains and VAT n Key scenarios: One or more of the following is likely to feature on the exam: n CGT vs IHT for lifetime gifts n Employed vs self-employed (IT and NICs) n Badges of trade (IT vs CGT) n Employee vs partner (IT and NICs) n Extraction of funds from company: salary vs dividend (IT, NICs, Corp. Tax) n Incorporation (IT, NICs, VAT, CGT), perhaps with incorporation relief vs gift relief n Comparison of employment packages and benefits (eg. cash vs car, share options vs bonus) n Corporation tax – disposal of business: sale of shares vs sale of assets n Close companies – maybe a letter on this n VAT – cash accounting scheme, annual accounting scheme, due date for registration n Financial planning – sources of finance, lease versus buy, investments including EIS vs VCT, the Financial Services and Markets Act 2000, pensions

P7

n Quality in information systems

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Kaplan n Transfer pricing n Performance appraisal question (financial and non-financial measures, maybe benchmarking) n Strategy – missions & objectives n Gap analysis, pest or SWOT n Corporate failure (z score) n NPV & ROCE or RI n EMA

Kaplan n Risk assessment/risk management/ audit strategy n Audit evidence n Practice management – obtaining professional work/tendering n Assurance Services – prospective financial Information/due diligence reviews n Reporting/application of GAAP n Professional conduct & ethical issues

PASS: 40,000 copies circulated each and every month

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