THE INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS IN IRELAND EDUCATORS BRIEFING 2010/2011 PROESSIONAL 1 CORPORATE REPORTING Comment on Performance in 2010

Examination April 2010 Paper Overall, the examiners were pleased with the performance of candidates in this sitting. It was clear that candidates had practiced past papers and other questions relevant to key areas of the syllabus. A minority of candidates still insist in not attempting either questions 4 or 5 and as a consequence, are unlikely to achieve enough marks to pass the paper. There was a noticeable improvement in the candidate performance in the multiple choice question in this sitting compared to April 2009. Prospective candidates are reminded that future multiple choice questions will cover the full range of the syllabus. Comments on individual questions in the April 2010 sitting are as follows: Question 1 This question dealt with consolidated financial statements. On the whole, candidates answered this question reasonably well, with a small number of students completing part (a) correctly. The goodwill adjustment with non-controlling interest was attempted well by some candidates. This area, which is covered by IFRS3 Business Combinations (revised), is one which candidates should be familiar with for the future. Part (b) of this question was reasonably well answered but candidates should develop their skills in answering narrative type questions.

Question 2 This question was the best answered on the paper, with most students demonstrating an ability to make adjustments and prepare a statement of financial position and statement of comprehensive income. A minority of students only attempted one of the key financial statements. Answers to part (b) were less satisfactory with some students either not providing memorandums or failing to comment on all areas. Question 3 This question was generally well answered by most candidates. Question 4 This question covered IAS38 Intagibles and was attempted by the vast majority of candidates. In general, candidates did display a good understanding of the accounting treatment and scored reasonably well in part (b). However, some candidates did not support their answers with appropriate rationale. Part (a) was not well answered.

Question 5 This question on IAS11 Construction Contracts was attempted by very few candidates. Those attempting this question were able to gain reasonable marks in part (a). However, responses to the narrative elements in (b) and (c) were variable, and in several cases, not attempted. August 2010 Paper Question 1 Overall, this question on consolidation was well answered with the majority of candidates demonstrating an understanding and ability to make the relevant adjustments, and prepare a consolidated statement of comprehensive income. Question 2 This question required a consolidated statement of cash flow with adjustments. This question was reasonably well answered by the majority of candidates. Answers to part (b) were satisfactory. Question 3 Some candidates answered this question reasonably well with others performing very poorly. The examiners would emphasise the need to practice multiple choice questions on a regular basis prior to the examination. Often, it is reasonably straightforward to eliminate one or two answers very quickly. Question 4 This question on IAS16 Property, Plant and Equipment and IAS 40 Investment Property was reasonable well answered by the small number of candidates who attempted this question. Candidates should expand on their answers to the narrative elements. Question 5 This question on IAS 37 Provisions, Contingent Liabilities and Contingent Assets, and IAS 10 Events After the Reporting Period, was answered satisfactorily. Candidates demonstrated a technical understanding, but a limited ability to apply their knowledge. Additional practice questions may help to improve this area. As in question 4 above, candidates are advised to elaborate on their answers. 2. Syllabus for 2011 and Recommended Reading List: Educators should focus their efforts on ensuring that candidates have the requisite familiarity with the appropriate level of technical knowledge, and can apply their knowledge to a range of examples. The recommended texts provide a number of detailed examples, which should be studied carefully. Candidates should be encouraged to think their way through the scenarios presented. It is essential that candidates fully understand and are able to explain the accounting treatment of the various items/issues. As in previous years, the paper will continue to examine candidates on the preparation of financial statements. Candidates are advised to show their working on the answers in the examinations and to practice multiple choice type questions before the examination. Multiple choice questions will continue to examine across a broad range of the topics on the syllabus.

Reading list: Core Text: Connolly, C, International Financial Accounting and Reporting Chartered Accountants Ireland, 2009, 2nd Edition, (ICAI). Elliot and Elliot, Financial Accounting and Reporting, 2010, Prentice Hall 13th edition. Kirk, R.J. International Financial Reporting Standards in Depth, Volumes 1 & 2 Subject Manuals: CPA P1 Corporate Reporting - BPP Latest Edition, CPA P1 Corporate Reporting - Griffith College Latest Edition, See detailed syllabus for supplementary text and useful websites.

3. Format of the Examination Papers for 2011: The format is unchanged from the 2010 sittings. Time allowed: There will be no change, i.e., the exam will still be 3.5 hours in length, with 10 minutes allowed to read the paper. Number of questions: There will be no change, i.e., the paper will consist of five questions, three compulsory questions and one of two optional questions. Question 1: Compulsory 30 Marks Question 2: Compulsory 30 Marks Question 3: Compulsory 20 Marks Question 4: Optional 20 Marks (See comments below under Time Management) Question 5: Optional 20 Marks (See comments below under Time Management) Either Question 1 or Question 2 will examine consolidated financial statements. Other topics for examination include preparation of financial statements and interpretation of accounts. Question 3 will consist of eight Multiple Choice Questions. Questions 4 and 5 will each focus on the reporting standards and may examine theoretical and /or practical items. Style of question The style of questions will remain similar to the 2010 sittings. Underlying the Corporate Reporting syllabus is the need for candidates to understand and apply examinable accounting standards and it should be expected that questions will reflect this. It is important to note that, as in the 2010 papers, candidates may be asked to explain their treatment of items/adjustments with respect to the relevant examinable accounting standards. Time Management: Where a student attempts both questions 4 and 5 the student must clearly indicate on the front of the answer booklet precisely which of these questions is to be assessed. In the absence of any clear indication, the overall mark awarded will be based on any solutions to questions 4 and 5 encountered in strict sequential order. Any other attempt will not be marked. Where an attempt is made in either question 4 or 5 and the student wishes to change his mind, he should clearly cross out the attempt that he does not wish to be marked and then proceed with the attempt he wishes to be assessed on. The paper is designed to be completed in the candidates interest to attempt more than the means that they are effectively reducing their success!) on the other questions. Candidates choice to optimise their results. time frame allowed and hence it is not in requisite number of questions. To do so, time allocation (and hence expectation of are advised to focus on correct question

Extended Trial Balance: Candidates, where appropriate, for the P1 Corporate Reporting will be provided for optional use, an extended trial balance template. Use of the extended trail balance is not mandatory. As the formats for the Income and Expenditure Account and Statement of Financial Position are already provided, this is available to assist candidates time management.

4. Education Focus for 2011 Consolidated accounts will be examined in detail in a compulsory question. This includes consolidated statement of comprehensive income statements, consolidated statement of financial position and consolidated statement of cash flow. It also includes accounting for associates as well as subsidiaries. Such a question may include a written element which will test some of the principles of business combinations such as definition of subsidiary and the treatment of intra-group items. Joint ventures will not be examined in detail. It is envisaged that a single statement of comprehensive income approach will be adopted. Candidates should be aware of the new approach to calculating goodwill under IFRS 3 Business Combinations (Revised) whereby non-controlling interest is measured at fair value to include their share of goodwill, with the various consideration methods. As per previous exams, consolidated statements of comprehensive income and consolidated statements of financial position will not be required in the same question. In the case of foreign entities, the closing rate method of foreign currency consolidation only is examinable. Piecemeal acquisition or piecemeal disposal and sub-subsidiaries are not examinable. The Multiple Choice question allows a wide range of material to be examined and will continue to include computational style questions The 2011 syllabus requires a strong technical knowledge of a large number of international standards. Basic Earnings per Share only is examinable .i.e. fully diluted earnings per share is not examinable. As in 2010, candidates may be required to complete journal entries where relevant. This is NOT restricted to just consolidated accounts. Candidates may be asked to explain their treatment of items or adjustments, included in a question scenario, with respect to the relevant accounting standards. Marks will be awarded for presentation and this will be noted clearly on the paper. IAS 12 Only current taxation is examinable. Deferred tax is excluded from the current syllabus. Financial Instruments are examinable in the following areas only: Definitions and examples Presentation of financial instruments, in particular preference shares and compound instruments. Types of financial risk Recognition and measurement Categories of financial asset; Initial measurement and subsequent measurement, including amortised cost method; Initial and subsequent measurement of financial liabilities. Treatment of gains and losses.

Candidates should be advised not to focus exclusively studies. The best strategy for candidates to adopt in the core topics and pay particular attention to areas where practice from the core texts and past examination Candidates should make real attempts at past paper solutions.

on computational aspects in their revision stage is to concentrate on they feel they are weak. Question papers is highly recommended. questions, not simply audit the