BPP: DEC’07 EXAM TIPS (F4, F5, F6, F7, F8, F9)

ACCA Paper F4
Corporate and Business Law
December 2007 Exam Tips and Useful Articles
This exam consists entirely of compulsory questions; this makes question spotting particularly dangerous. The purpose of this analysis is to highlight the major syllabus areas that we would expect to be regularly tested, based on the pilot paper and the sittings of the old syllabus 2.2 paper which was also examined by your examiner David Kelly

Use the following tips as important areas to cover 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.

English Legal System:

This will always feature as the first question in the exam; the most examinable areas being Court Structures, Legal Precedent and the Interpretation of Statute.

The Law of Obligations:

At least two questions will be drawn from this wide ranging area – so expect an application as well as a knowledge style question. The basics of contract covering offer, acceptance, consideration and intention have been a frequent source of questions as well as remedies and breach of contract.

The Law of Tort is new to ACCA law, and questions are likely to feature a small element on Accountants and Auditors – ensure you are familiar with the meaning of the Caparo and Hedley Byrne cases.

Agency and Partnerships

Most examinable in these areas are the rights and duties of agents and partners as well as the distinction between simple and limited liability partnerships.

Company Law

Given it sheer size in the syllabus at least 2 maybe 3 questions will be drawn from this area. Company formation and legal personality are core areas, along with the duties of directors and the rules governing meetings and resolutions. Questions may be of knowledge of application type.

Capital maintenance and Finance

Capital maintenance is highly unlikely to be tested frequently, however it is expected that either share or loan capital (including fixed and floating charges) will be tested at every sitting.

Employment Law

The examiner has stated that he would like to test this at every sitting; however it may occasionally be omitted due to the breadth of the syllabus. Likely areas to be examined are the distinction between employees and self-employed (including how their status is determined), and types of dismissal (wrongful, unfair and redundancy) including the remedies that may be awarded. Questions may be of knowledge of application type.

Ethics and Corporate Governance

Another new area for ACCA law the pilot paper question seems a likely template for questions in this area, focusing on the impact of Corporate Governance on listed companies in the UK and the role of Non-Executive Directors.

Insolvency

Likely to be tested every second or third sitting. The examiner has traditionally tested the distinction between compulsory and voluntary liquidation or; the differences between members’ and creditors’ voluntary liquidations.

Fraudulent Behaviour

It is likely there will always be a question in this area, and these could be of the application variety as well as knowledge questions. Alternate sittings are likely to test Money Laundering, Insider Dealing and Wrongful/Fraudulent Trading. Money Laundering seems most likely in December 2007.

Useful Articles

Examiner’s approach to F4

ACCA Paper F5

Following are the topics that are Expected to appear in F5 Performance Measurment for December 2007 attempt.

• Decision-making techniques – linear programming, relevant costing, pricing, risk & uncertainty
• Budgeting – possibly focusing on conflict between techniques such as incremental or ZBB
• Performance measurement and control: ROI/RI, transfer pricing, financial and non-financial measures
• Variance analysis
• Management accounting techniques: target/lifecycle costing

ACCA Paper F6
Taxation (FA 2006)
December 2007 Exam Tips and Useful Articles
This exam consists entirely of compulsory questions; this makes question spotting very dangerous. The purpose of this analysis is to highlight areas of the syllabus that we would expect to be regularly tested based on the pilot paper and the sittings of the old 2.3 papers which was also examined by your examiner David Harrowven. We can also predict some of the areas that questions will cover from the guidance already given by this examiner.
Use the following tips as important areas to cover but remember that no one knows what is in the exam, apart obviously from the examiner. Your safest best is to achieve good syllabus coverage in your revision, as the examiner aims to do in the exam.

Question one

This question will cover income tax. Key areas expected to be tested are profit adjustment and capital allowances for a sole trader and the benefit rules for an employee. Smaller areas like property income and investment income could be bought into the computation with a number of marks being allocated for return submission and payment of tax dates.

Question two

Question two will cover corporation tax. Profit adjustment and capital allowances for both plant and machinery and industrial buildings allowances are regularly incorporated into this question. Smaller areas like property income and capital gains involving rollover relief are also likely.
Groups or overseas aspects could appear in part b).

Question three

This question will cover capital gains tax. The question will be split into a number of different disposals, covering part disposals, shares and securities, chattels and gift relief.

Question four

Income tax losses or partnerships are likely candidates for this question

Question five

VAT focusing on registration rules, calculation of VAT liability, special schemes like cash accounting and annual accounting.

Useful Articles

Examiner’s approach to Paper F6 (UK) by David Harrowven; December 2006
Finance Act 2006 by David Harrowven and Rory Fish; December 2006

ACCA PAPER F7 (GLOBAL)

DECEMBER 2007 EXAM TIPS

The whole exam is compulsory
• Q1 (25 marks): Consolidated income statement (P&L) and/or balance sheet with one subsidiary plus associate (including adjustments for fair values, unrealised profit, intragroup trading, goods/cash in transit. Discursive part (b) on fair values or other group topic.

• Q2 (25 marks): Accounts preparation/restatement with adjustments e.g. current/deferred tax, depreciation, inventory (stock) valuation, leases, construction contracts, substance over form issues, financial instruments (amortised cost), revaluations, share issues or government grants. May include disclosure of discontinued operations, movement in reserves/ statement of recognised income & expense (gains & losses) or EPS calculation.

• Q3 (25 marks): Interpretation and/or cash flow statement

• Q4 (15 marks): Theoretical/Conceptual question – possibly on provisions, inflation, accounting policies, leases or substance over form issues with reference to the conceptual framework

• Q5 (10 marks): Mixed bag question (e.g. tangible/intangible assets, impairment, deferred tax, governments grants, financial instruments, substance over form issues or EPS)

 

ACCA Paper F8
Audit & Assurance
December 2007 Exam Tips

All of the questions in this exam are compulsory and the examiner aims to test the syllabus widely at each sitting so it is very dangerous to rely on question spotting as you revise for this paper. The following outline aims to indicate the type of questions that may come up in the exam. Only the examiner knows what has been put into the paper, so these suggestions have been based on the content of the pilot paper, comments made and articles written by the examiner and the content of the old syllabus paper 2.6. The paper F8 examiner, Alan Lewin, set the old syllabus paper 2.6 from June 2005 to June 2007.

Suggested practice questions from the BPP Practice and Revision Kit (2007 edition) for the International stream or the UK stream are shown after the relevant area. It is also worth reviewing the past exam questions mentioned to give you an idea of how a topic has been examined recently. These are easily available on the ACCA website (www.accaglobal.com/students).

Question 1 (30 marks)
This will take the form of a case study with four or five separate requirements. The main requirements are likely to focus on audit procedures on a core area of the financial statements, such as revenue and receivables, purchases and payables or inventory.

Other parts of the question may look at internal controls in the same areas of the accounting system, or the auditor’s use of computer-assisted techniques.

2007 P&R Kit Questions: Q39 Tracey Transporters (non-current assets), Q43 Rocks Forever (inventory), Q45 Coogee (receivables) Q46 Duckworth (bank) Mock exam 3 (pilot paper) Q1 Westra (purchases and payables)

Question 2 (10 marks)

This will be a 10 mark factual question and likely to cover at least three separate topic areas. The requirements are likely to test basic knowledge of ISAs. The examiner’s aim in this question is to broaden his coverage of the syllabus, so these could be drawn from any area.

2007 P&R Kit Questions: Mock exam 3 (pilot paper) Q2, Q44 Receivables circularisations Q55 audit confirmations, Q59 Sheraton

Questions 3, 4 and 5 (20 marks each)
The examiner has said that these will be very similar in style to the questions he used to set in the old syllabus paper 2.6. This means that they will tend to have three or four separate requirements, and be based on short scenarios and syllabus areas as listed below. (Relevant questions from the 2007 P & R kit are listed separately after each topic.)

• Audit ethics Mock exam 3 (pilot paper) Q3 (a),Q11 Confidentiality and independence
• Audit risk Q20 Parker, Q18 Tempest
• Corporate governance and its links with either internal or external audit Mock exam 3 (pilot paper) Q3 (b) and (c)
• Internal controls, possibly with requirements in the style of a “report to management” Mock exam 3 (pilot paper) Q4 (a),Q33 Cosmo
• Audit completion and areas such as going concern, management representations, events after the balance sheet date and audit reporting
Mock exam 3 (pilot paper) Q5 Q61 Mowbray Computers

Relevant Articles
The following articles can be found in the Student Accountant magazine (or ACCA website)
• Audit working papers, Namasiku Liandu, February 2007
• Examiner’s approach to paper F8, Alan Lewin, February 2007
• Audit risk in a brave new world, Namasiku Liandu, 30 September 2004
• Internal audit and review reports, Katherine Bagshaw, January 2003
• The role of internal audit in risk management, Katherine Bagshaw, April 2002
• Directional testing – a methodology, Kim Smith, May 2001

ACCA Paper F9
Financial Management
December 2007 Exam Tips and Useful Articles

This exam consists entirely of compulsory questions; this makes question spotting particularly dangerous. The purpose of this analysis is to highlight areas the major syllabus areas that we would expect to be regularly tested based on the pilot paper and the sittings of the old syllabus 2.4 paper which was also examined by your examiner Anthony Head (since 2003).

Use the following tips as important areas to cover 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.

Financial management function:

Key ratios such as return on capital employed, return on equity, earnings per share and dividend per share and total shareholder return can be used to evaluate an organisation’s performance from the point of view of its shareholders. Don’t forget value for money as a useful framework for assessing the performance of not for profit organisations.

Working capital management:

Ratios, including inventory days, average collection period and average payment period & average payable period can be used to calculate the operating ratio. This is often tested with numbers and a discussion of how to improve working capital management. This discussion could include debt factors and invoice discounting.

The sales revenue/ net working capital ratio has been specifically mentioned and can be used to forecast finance needs.

Investment appraisal:

NPV with tax is commonly tested with a discussion either of alternative methods of appraisal (e.g. ROCE, IRR or payback) or an analysis of risk or uncertainty.

Business finance:

You may be asked to assess the impact of sources of finance using ratios such as operational and financial gearing and interest coverage.

Cost of capital:

Questions are likely to focus on the calculation of the weighted average cost of capital and a discussion of strategies to reduce the weighted average cost of capital in the style of the pilot paper question on this area.

Business valuations:

This was not tested in the pilot paper but is a major syllabus area. Questions are likely to focus on the use of the share valuation models (asset, dividend, earnings) and a discussion of their limitations.

Risk management:

A risk management question is likely to focus on currency hedging using forwards and money market hedging. Other topics that are likely to be tested here include interest rate parity theory and the purpose of currency futures and options (without numbers).

Useful Articles:

If you want to read around the subject or improve your understanding there are a number of articles on the ACCA website. Scott Goddard (the examiner) has not written anything recently although the following articles are still relevant to the syllabus.