ACCA Examiner tips for SBR
The ACCA Examiners tips for the SBR wants candidates to make the connection between textbook reading and any supplementary reading and published financial statements. ACCA Examiners tips
It is important to remember too that the specimen exams are not blueprints for future exams, they are simply examples of the style of the exam that they can expect. Each SBR exam will have a unique set of questions. And remember previous P2 exams do not reflect the nature of future SBR questions – these are two very different exams.
The exam does test a certain amount of technical knowledge and some calculation is required, but most of the examination is based around the application of that knowledge.
Candidates should be familiar with the content of published financial statements of multi-national companies and should be able to explain that content to third party users such as investors. There is also a significant ethical content in each paper and sitters will be asked to demonstrate their understanding of the professional and moral judgments that accounts need to make in practice.
In December some candidates spent a disproportionate amount of time on Q1, which seems to indicate that they have not made the transition from P2 to SBR.
Q1 looked at the statement of cash flow. The first part of the question required candidates to draft an explanatory note to the directors, which should have included a calculation of cash generation. The second part of the question asked for an explanation of how changes to the group structure and dividend would impact the consolidated statement of cash flows. The final part of the question wanted candidates to the discussion (with illustrations) how the probability criteria could be applied across different standards.
Q2 required a discussion of specific accounting issues and the ethical implications of certain events. Candidates had to show how a property should be accounted for and explain the implications of the accounting treatment for the financial statements and a debt covenant.
Q3 tested IFRS standards and the application of the Conceptual Framework. The second part of the question tested the treatment of reconditioning costs and whether the decline in the price of coal was an impairment indicator.
Q4 wanted sitters to look at the arguments for and against issuing the IFRS practice statement management commentary as a non-binding framework. Candidates were also asked to discuss the qualitative characteristics of understandability, relevance and comparability.
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The examiner gives the 8 reasons why candidates perform ‘less well’ at this paper. They are:
- Lack of detailed knowledge of parts of the syllabus areas.
- Poor time management, which was less evident in December. Sometimes candidates spent too much time in carrying out relatively simple calculation tasks, and sometimes discuss one area repeatedly.
- Failing to respond fully to question requirements.
- Poor structure to the numerical and written answers.
- Presenting the discursive answers in brief bullet-point format, often in incomplete sentences, as statements and not as discussion-based, analytical, or evaluative, narrative.
- Focussing more on either the numerical parts of the discursive parts of a question, instead of a balanced approach.
- Not reading the requirement properly and answering a different question.
- Failing to take account of the marks available.
Q1 in December focused on restructuring through a management buy-in, and an acquisition. You had to be able to discuss the differences between an IPO and reverse takeovers when undertaking a listing.
Q2 asked candidates to evaluate whether futures contracts or option contracts would result in higher receipts and the options exercised. Students struggled with the mark-to-market process and maintenance margins in this question.
Q3 asked candidates to undertake an adjusted present value (APV) computation and discuss long-term finance.
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The first tip from the examiner – read the Examiner’s Report!
Areas in December exam where student’s basic knowledge was lacking was particularly clear in Q2(c) on six sigma method and questions and 3(a&b) on methods of assessing the impact of risk and uncertainty. Without this knowledge, candidates cannot apply methods and have little information to evaluate.
Q1 required candidates to consider issues of performance reporting and benchmarking at a listed engineering company. It required an evaluation of the performance reporting system and many candidates showed a tendency to have learned a set response to such questions and repeated points regardless of their relevance.
Q2 dealt with issues of performance measurement and management. Students had to use the performance pyramid.
Q3 examined risks associated with a foreign expansion opportunity. Many students had a poor understanding of the methods of analyzing such situations.
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The examiner felt December’s sitters were better prepared and demonstrated ‘improved exam technique’ for this paper. That said the majority of candidates still simply state learned points rather than the ability to apply their knowledge appropriately.
Section A question tested the candidates’ ability to tackle the planning stage of an audit alongside audit acceptance considerations. Q2 was focused on audit completion, including reporting and going concern assessment, with Q3 covering money laundering, ethics, and professional issues.
The examiner wants candidates to avoid repeating large sections of information from the question, explaining theories or providing definitions. Candidates also need to be selective in their calculation of ratios rather than producing pages of calculations, which are then not referred to or discussed in their answers.
Before answering the question ask yourself: Which stage of the audit is the question set? Is it before or after the year end? Is the question asking for answers to be applied to the client or to the firm? What type of engagement is it?
Q1 focused on audit planning for an existing client. There was also some non-audit client and acceptance procedures to look at.
Q2 covered the going concern assessment for a non-listed client and was set at the completion stage of the audit.
Q3 centered on money laundering and ethics at an existing audit client.
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