One compulsory question worth 50 marks which uses a lengthy scenario, often based on real-life events, to test all three main syllabus areas. Typically, this consists of four written requirements, some of which may be broken down into smaller sub-requirements where discrete syllabus content will be tested both as knowledge and application.
Within the total of 50 marks, there will be 4 professional marks available for producing some form of written communication (such as a briefing note, press release or letter to shareholders) which tests a candidate’s ability to write logical, structured and appropriate content suitable for a particular purpose, often with the aim of presenting a certain point of view.
A choice of two from three written questions that are each worth 25 marks and typically test up to two syllabus areas by applying the syllabus to a smaller real-world scenario. Again, candidates will be expected to apply their knowledge to the scenario in order to score well
At the beginning of the exam you are given 15 minutes “reading and planning” time. During this time you can read and annotate your question paper and so this is a perfect chance to make notes next to the information in each scenario of things to include in your answer. Where questions are based on a scenario it is essential that you use the information in the scenario to make your answers relevant.
During this time you should also think about how you will produce your answer – pay attention to the verbs used in question requirements as these indicate the number of marks available. For example, the verb “explain” requires a sentence and will score one mark if properly explained whereas the verb “list” simply requires you to present information with no further explanation: this will typically only score ½ mark per point listed.
The June 2015 exam tested content from the examiner’s technical article on strategic corporate social responsibility (CSR) so you should ensure you are familiar with any new articles just in case – they can be found here:
ACCA P1 Technical Articles
You can expect to see the use of stakeholder, ethical and other CSR theories applied to scenarios, as well as the use of risk and governance syllabus content – you should be aiming to revisit as many past-paper questions as possible as we are starting to see exam requirements that reflect those we have seen before.
– This will be a 50 mark compulsory case study including preparation of a group statement of profit of loss and other comprehensive income and/or statement of financial position or statement of cash flows which may include a foreign subsidiary, discontinued activities, disposals and/or acquisitions. This will include other accounting complications such as financial instruments, pensions, share-based payment and impairments.
– There will also be discursive requirements on a linked accounting adjustment and social/ethical/moral aspects of corporate reporting.
Section B normally includes:
– Q2 & Q3: 2 case study questions: one a multi-part question covering a range of topics or a theme such as deferred tax, foreign currency transactions, financial instruments, pensions, share-based payment, non-current assets (recognition and/or impairment of tangible and intangible assets), borrowing costs, the effect of accounting treatments on earnings per share or ratios; the other an industry-based question (NB: no specific knowledge of the particular industry is required) testing a range of standards such as accounting policies and the framework, leases, grants, IFRS for SMEs, reorganisations, provisions, events after the reporting period and related parties.
– Q4: a discussion question looking at current developments in corporate reporting and problems with existing standards, such as revision of the conceptual framework, regulatory issues over adoption and consistent application of IFRSs, implementation issues, revenue recognition, management commentary, application of the definition of control and significant influence (equity accounting), improvements in performance measurement, classification in profit or loss vs OCI (see exam team article), integrated reporting (see exam team article). Will also normally include a related computational part based on figures from a case study.
One of these questions can also include elements of group accounting, especially if question 1 is a statement of cash flows question.
If we look back at the June 2015 P3 exam we can see that the examiner has again required students to have a very good grasp of the syllabus, both breadth and depth, combined with an ability to apply that knowledge (along with a decent amount of commercial common sense) to the specific circumstances of the scenario.
In addition it is clear that the examiner likes to keep students on their toes by including substantial elements within questions that are from areas that could be considered the fringes of the syllabus. For instance in December 2013 there was a 25 mark question which required a detailed knowledge of regression analysis, time series analysis and budgeting.
In December 2012 there was a 25 mark question based largely on decision trees.It is therefore extremely dangerous for any student to focus on certain elements of the syllabus at the expense of others. To stand the best chance of passing P3 students need to have a good understanding of the entire syllabus. This will enable them to choose the questions where they believe they will find it easier to pick up marks (for instance because it is easier to understand the requirements, or easier to structure an answer, or easier to pick up knowledge marks) rather than having to choose questions because of the syllabus area.
In addition if students were to look at the exams in the past couple of years they will see that all of the key areas of the syllabus have been examined over the past four or five sittings which again shows the danger of question spotting or ignoring areas.
Important areas to cover for the September exam include: It could be argued that the following areas, despite being key syllabus areas that have been regularly examined, have not been examined significantly in the past couple of papers, and therefore may be a little more likely to surface (however remember that this is a very dangerous game to play if it distracts students from other syllabus areas):
‐ Value Chain.
‐ Critical success factors and KPIs.
‐ Role of the corporate parent including BCG matrix/Ashridge.
‐ Managing strategic change including Force Field Analysis.
Finally it is worth pointing out that the June paper contains some compulsory calculations in Section A, as well as in some of the optional Section B questions – a trend we expect to continue throughout 2015.
We would expect section A questions to be mainly based on core syllabus areas such as: project appraisal, business valuations (both are likely to include cost of capital calculations) and risk management (hedging).
– currency risk management
– business re-organisation
– real options
The 50 mark compulsory question will, inevitably, draw from a number of different syllabus areas. The examiner has said that he does not plan exams by referring to past exams (i.e. checking that the whole syllabus is being tested over the course of a number of exam sittings).
These factors mean that question spotting extremely difficult for this paper. However we would expect section A questions to test core syllabus areas as listed above.
In section B one of the questions may be entirely discussion based (but this is not guaranteed from June 2013), and often involves ethical issues and general financing issues (e.g. dividend
Remember that this paper is not a maths exam – in all exam questions the examiner is as interested in your ability to communicate well and to give good management advice as he is in
your numerical ability.
Keep checking the ACCA website for articles written by the P4 examiner in the lead up to the exam, these are often tested.
Section A (50 marks) contains one compulsory question. In recent exams question 1 has often required a significant level of data analysis using numerical techniques e.g. KPIs, EVA. Any numerical techniques in this paper (e.g. transfer pricing, ratios, analysis of quality related costs, ABC) need to be mastered to prepare yourself for this question.
Performance management frameworks (e.g. Building Blocks model) are also commonly tested in question 1.
In section B (2 25 mark questions from a choice of 3) commonly tested areas include quality management, information reporting (e.g. CSFs and KPIs), the application of strategic models (such as PEST, Porter’s 5 forces, the Value Chain), HR frameworks (e.g. reward & appraisal systems), risk management and environmental management accounting.
Keep checking the ACCA website for articles in the lead up to the exam, these are often tested.
This comprises two compulsory questions worth 35 marks and 25 marks respectively. Typically question 1 will test planning, risk assessment, evidence gathering and practice management issues using a scenario where audit client details are presented, often including financial statements extracts, which candidates need to consider as part of their answers.
However, the topics covered by question 2 will be more uncertain to predict – possibly a non-audit engagement such as prospective financial information (PFI) or due diligence, or a question testing specific parts of the syllabus, such as audit completion or consolidated groups. Whatever the subject, application is vital for success here.
Within one of the compulsory questions, there will be 4 professional marks available which reward candidates for the layout and presentation of their answers.
A choice of two from three written questions that are each worth 20 marks and typically test the following syllabus areas: audit evidence and financial reporting issues, practice management including ethics and quality control and reporting including completion and communication. Again, candidates will be expected to apply their knowledge to the scenario in order to score well.