FTC tips for June 2007 ACCA exam

Paper 1.1 PFS

(i) Company accounts

(ii) Consolidated balance sheet

(iii) Interpretation of accounts

(iv) Cash flow statements

(v) Accounting Standards and theory

(vi) Incomplete records

(vii) Partnership accounts

Paper 1.2 Financial Information for Management

The paper will consist of 25 MCQs of 2 marks each and 5 long questions of 8-12 marks each. The MCQs will vary in difficulty, but the variety will ensure that the paper reflects the syllabus. The five long questions will be a mix of (mostly) calculations and (a few) written marks. The vast majority of the marks in this paper will be for calculations.

The nine key areas of the syllabus will make up the bulk of the exam paper:

* Cost classification and behaviour.

* Material, Labour and Overhead costs.

* Absorption and Marginal Costing.

* Process Costing.

* Standard Costing (includes variances).

* CVP analysis (includes break-even).

* Pricing Methods.

* Relevant Costing

* Limiting Factors and Linear Programming

Paper 1.3 Managing People

Primary Tips:

Structure – forms of Organisational Structure

Culture – Handy and comparative theories

Motivation – Herzberg and comparative theories

Role of Management

Effective Communication Practices

Management of Diversity/Equal Opportunities

Secondary Tips:

Management and Leadership

Management by Objectives

The Learning Process – Mumford and Kolb

Recruitment and Selection

Paper 2.1

Managing Information Systems

* Accounting for IS/IT costs

* Staff roles and responsibilities

* Flat project based structure

* Project management and control

* Centralisation/decentralisation

Designing Information Systems

* Methodologies

* Modelling

* Invitation to tender

* Quality software characteristics

* Decision table

* Testing

Evaluating Information Systems

* Changeover techniques

* Documentation

* Training

* Maintenance

* Post implementation issues

Paper 2.2

Statutory interpretation of Impact of Human Rights ACT 1998
Consideration
Sources of terms & conditions warranties & innominate terms
Remedies for breach of contract
Privet of contract
Doctrine of incorporation & advantages of incorporation (comparison with partnership)
Memorandum of Association
Issue of shares at a discount and premium
Purchase of own shares
Dividends
Types of director
Director duties
Auditors
Insolvency procedures

Paper 2.3

This is the 12th and last Paper 2.3 examination being set by the examiner. These may be the important areas this time in June 2007 examination

Section A

Q1 - Corporation Tax

CT Losses with adjustment of profits with capital allowances & industrial buildings allowance and some calculation of chargeable gain.

Q2 - Income Tax

Trading income assessment, Employment Income leading to income tax and possible gains tax payable.

Section B

Q3 - VAT

VAT return - calculation of VAT payable

Default surcharge

Cash accounting

Tax point

Q4 - CGT

Capital Gains Tax

Rollover and Gift Relief

Capital losses

As from June 2005 exam, the format of the exam has changed and questions 5 to 7 can now be set on any topic

Groups – losses or Gains group

Partnership with losses

Disposal of business with capital allowances, CGT and some planning

CT – Long period

Paper 2.4 FMC

· Investment Appraisal; to include NPV, IRR, tax, relevant costs, risk & sensitivity and lease or buy

· Sources of Finance; to include gearing, ratios, rights issues and other methods of issue and the problems of SME’s

· Working Capital Management; to include cash and/or stock

· Budgeting; to include budgetary systems and cash budgets

· Variance calculations

· Organisational objectives

Paper 2.5

Group balance sheet with an associate undertaking and fair value adjustments.

Cash Flow

Key accounting standards include: impairment, leases, segmental reporting.

Accounting theory based on the information needs of users.

Paper 2.6

Regular Tips

ETHICS - Objectivity Threats, Conflict of Interest (see below)

PLANNING - Practical Audit Risk Scenarios

CONTROLS - Suggesting control objectives and procedures

SUBSTANTIVE TESTS - Inventory, Receivables

REVIEW/COMPLETION - Going Concern audit work

REPORTS - Practical Scenarios

INTERNAL AUDIT / CORPORATE GOVERNANCE - Business Risk, Comparison of External v Internal Audit, Audit Committees

Paper 3.1

Q1 Risk appraisal, risk management and audit strategy

Q2 Assurance services - reporting on narrative statements egg environmental reports

Q3 Matters and evidence when reviewing files before signing audit reports

Q4 Audit reporting - application of ISA 700

Q5 Professional conduct and ethics

Q6 Current issues

Paper 3.2 – ADVANCED TAXATION PAPER

1 - IHT including lifetime and death gifts and the extended definition of domicile for IHT.DTR BPR and gift with reservation. Death Estate including valuation rules.

2 - CGT – Chattel rules, part disposals, principal private residence relief, gift relief, Incorporation relief.

3 - Income tax computation including property business profits, employment income Calculation of benefits – salary versus company car or mileage allowance versus company car. Share options and share incentive plans. Overseas aspects (including overseas aspects definitions of residency and ordinary residency) and DTR.

4 - National Insurance

5 - Financial planning – sources of finance, lease versus buy, investments including ISAs the Financial Services and Markets Act 2000. Pensions

7 - Close companies maybe a letter on this.

8 -Corporation tax including IBA, loss relief (S393A) and group and consortium relief. Overseas aspects of corporation tax including controlled foreign companies and transfer pricing.

9 - VAT – cash accounting scheme, annual accounting scheme, due date for registration.

10 - Stamp duty land tax

Paper 3.3

* Contribution based decision-making – possibly involving expected values, maximax, maximin & minimax regret.

* Practical aspects of pricing policy

* Performance evaluation - NFPIs

* The strategic framework – specifically a question based around the examiner’s article on “Business Strategy and Performance Models” (Student Accountant – April 2006). This is likely to focus on Porter’s 5 Forces

Paper 3.4

• Value of information systems

• Groupware

• Data warehousing and data mining

• Outsourcing

• SWOT

• Earls three legs

• Earls Grid

• Information strategy

• Virtual company

• Business and IT strategies

Paper 3.5

Key Areas:

A fundamental appreciation of the key activities associated with strategic analysis, choice and implementation will always be required in interpreting the scenario.

The relevance of ethics and corporate governance to strategic decision making

Issues related to globalization and international business management

Marketing and how it may be influenced by ethics and globalisation

Be able to comment in general on how things like HR and IT can help underpin a strategic plan

Paper 3.6 ACR (IAS & GBR)

Section A

This compulsory question will be on the preparation of consolidated accounts and the twist that is due is that it will have a foreign subsidiary.

Section B

Mixed scenario based questions involving some of the following standards

Impairment

Share based payments

Deferred tax

Financial instruments.

Reirement benfits

Discussion question on accounting theory in repect of recognition and measurement issues

Paper 3.7

Section A:

1) OverseasNPV:ThistopicwaslastexaminedinDecember2003andthereforewillbeoneverybody’stiplist.Thespecificitemsthatyouneedtobefamiliarwithare:theapplicationofdoubletaxagreements,remittancesfromsubsidiaries,useofpurchasingpowerparitytheoryandtheoverallstructureofanOverseasNPV.ExcellentquestionsareAxmine(Pilot94)andAVTO(Dec03).HehasalsowrittenaslightlydifferentstyleofquestionWickern(Dec01)wherehegivesyouallthePVcalculationsinthequestionandasks you to analysis the numbers. This is worth reviewing. Basic awareness of political and economic risk is essential.

2) Risk management:

CurrencyRisk:ScottwroteawonderfulquestioncalledLammer(Q2Jun06)whichyoushouldreviewindetailasitincludeshismaintricksonallthemajortechniquestohedgetransactionrisk.ItisalsoworthreviewingVertid(Jun95)inwhichScotttakesamoretheoretical approach to currency risk.

Interestraterisk:Thistopicappearedasacasestudyinthelastexam.However,beawarethatyourexaminerhasalreadywrittenacasestudythatcombinedCurrencyRiskandInterestraterisk(Autocrat-December2002).Playitsateandreviewthistopic.Excellent questions are HYK Communications Dec (99) and Interest Rate Hedge (Jun 05).

3) Huntingdownthediscountrate:WACC-RiskadjustedWACC–APVcalculationswithinthecontextofastandardinvestmentappraisalquestion.HoweverriskadjustedWACCcouldalsobeexaminedwithinthecontextoftraditionalgearing.WACC-Jetter(c)(Jun02)andSemer(a)(Dec05).RiskAdjustedWACC–RomageJun(00).TraditionalGearing-Bentras(Dec01).APV–Strayer(Jun 02).

4)MergerandAcquisitions:AFCFcalculationpossiblywithinthecontextofGoingPrivate.Alsoreviewtheshareforshareexchange style questions Raywood( Dec 92).

Section B:

1) Economic Value Added – EVA This is a topically area and you should review Toutplut (Jun 02) and Remuneration (Dec 04).

2)PortfolioTheoryandCAPMHasder(Jun03)isanexcellentquestionasitcoversbothPortfolioTheoryandCAPMcalculationsandthetopicofinternationaldiversification.ThePortfolioTheorysectionistechnicallydemandingasyouaregiventhecovarianceasopposedtothenormalcorrelationcoefficient.ItisalsointerestingtonotethatinScott’sanswerhecalculatedthecoefficientofvariation for the first time. This will now be a standard requirement in all portfolio theory questions.

3) Term Structure of Interest rate - review Bond Prices (Jun 03) and BNG (Dec 00)

4)Internationaleconomics–I.M.F-(Dec96),Currentaccountdeficit(Pilot01),Foreigntraderisks(Jun01)andPoliticalrisk(Dec01).