Kaplan ACCA Key Examinable Areas for December 2011 Exams (P1 - P7)

ACCA P1 Key Examinable Areas for December 2011

Corporate governance: external actors stock exchanges & Company secretary Sound system of Internal controls Normative / instrumental stakeholder views Deontological and Teleological Ethical Decision making Tucker/AAA CSR / corporate citizenship Remuneration committee Risk perception and ALARP Role of Chairman and/or NEDs Directors Performance Evaluation ACCA P4 Key Examinable Areas for December 2011

The examiner has expressed his desire to move the paper away from the highly technical papers set by the previous examiner and to make them more strategic and practical. This has been afeature of the last 2 exam papers in December 2010 and June 2011. At the March 2011 ACCA Lecturers Conference, the examiner explained that question spotting is dangerous at this level it is important that students should study all parts of the syllabus in detail. However, for December 2011, we would advise students to focus on the following core syllabus topics in particular:

Net Present Value including foreign currency cash flows Bond yields and bond values Risk adjusted WACC Discussion of financing options Interest rate hedging options, futures and FRAs ACCA P5 Key Examinable Areasfor December 2011

It is not easy to predict questions for this paper and the examiner may test a topic that has come up in the last or recent exams.

CSFs and KPIs Strategic analysis tools, i.e. SWOT, benchmarking

Gap analysis External analysis Ethics / CSR Budget preparation/forecasting IT developments Performance measurement Not-for-profit organisations Quality League table and targets in the public sector Evaluation of financial and non-financial performance (may examine the performance pyramid/ prism)

Kaplan ACCA Exam Tips for December 2011 Exams

P1 Professional Accountant

Corporate governance: external factors stock exchanges & Company secretary Normative / instrumental stakeholder views Ethical Decision making Tucker/AAA Risk perception and ALARP Directors Performance Evaluation

P4 Advanced Financial Management

Net Present Value including foreign currency cash flows Bond yields and bond values Risk adjusted WACC Interest rate hedging options, futures and FRAs

P5 Advanced Performance Management

CSFs and KPIs Strategic analysis tools Ethics / CSR Budget preparation/forecasting League table and targets in the public sector Evaluation of financial and non-financial performance

First Intution ACCA Exam Tips for December 2011 Exams

P1

50 mark scenario question, to include: TARA risk model, ethics, absolutist v relativism, chairman and CEO powers need to be separate, also corporate social responsibility, ISO 14001 Optional questions to include: importance of internal control, NEDs and remuneration committee, business risks, Grays Owens and adams

P4

Q1 International investment appraisal techniques focusing on risk management tools such as value at risk Q2 Impact of WACC following hedging of interest rate risk Q3 Company valuation-based scenario, possible MBO finance structure Q4 Adjusted present value with link to real options and Black Scholes option pricing model Q5 Written question on credit ratings and difficulties of raising debt finance in current credit markets. This could be linked to current challenges faced by Eurozone governments attempting to raise debt capital amidst falling credit ratings

P5

Performance pyramid Performance management hierarchy Quality costs EV and risk Impact of external factors on performance Activity based principles

i-count ACCA Exam Tips for December 2011 Exams

P1 Transaction cost versus agency theories Board committees Risk management and the role of internal audit Controlling organisational risks Absolutist versus relativist ethical theories Professional ethics

P4 Overseas Net Present Value Financing incorporating change in Business Risk Black Scholes Corporate failure Interest rate risk management P5 Quality measurement PEST/Porters 5 forces Incremental Budgeting Public sector performance measurement Activity Based Costing

BPP ACCA Exam Tips for December 2011 Exams (P1 - P7)
P1 Governance, Risk & Ethics In the long 50 mark scenario question you can expect to see all areas of the syllabus being tested. For this reason you should ensure that you have not neglected any of the broad syllabus areas of governance, risk and ethics. The topic of risk can be further subdivided between risk and control. Some good areas of governance to look at are agency, stakeholders and directors remuneration. Dont neglect internal control reporting. Ethical theories get tested regularly, and professional codes of ethics are an important part of the syllabus. The examiner did not touch environmental issues in the June exam you should ensure you brush up on these too. P4 Advanced Financial Management Role and responsibility towards stakeholders: Ethical issues continue to appear regularly as an optional discussion question, normally with practical financial issues from elsewhere in the syllabus. The discussion question is normally one of the easier optional questions. Economic value added and ratio analysis can also be used to appraise the performance of a company. Advanced investment appraisal: The compulsory question often features an NPV question with an analysis of risk and/or financing; it could easily be set in the context of an overseas investment. Cost of capital calculations are regularly tested, make sure that you are comfortable adjusting betas for differences in gearing. Real options are also a

popular theme. Acquisitions and mergers: This exam normally contains a question involving valuations which the examiner sees as a crucial part of the syllabus; valuations questions are also likely to cover strategic and financing issues. Corporate reconstruction: A question could also ask you to evaluate a management buy out i.e. whether a business will be worth more if it splits itself up. Advanced risk management: We would expect to see a numerical risk management question featuring either interest rate orexchange rate hedging; currency hedging was tested in June 2011. P5 Advanced Performance Management Performance analysis: The new examiner has indicated that his questions will require more skill in interpreting data and discussing strategies to improve performance rather than performing calculations. You may be asked to analysis performance vs budget to identify underlying problems that a company needs to address. This analysis could include the use of activity-based approaches, learning curves or non-financial performance measures. Beyond budgeting is an important area that can be tested either as a discussion or a numerical question. Performance appraisal requires effective information systems, expect to be asked to identify the key strategic, tactical and operational information requirements of a business. Risk analysis: Analysis of the risk of a new proposal could include numerical techniques such as expected values and probabilities; but strategic frameworks such as PEST analysis could feature here. Strategic performance measures in the private sector: Divisional performance measurement is another key area; ROI, RI , EVA, NPV or even cost of quality could feature here and transfer pricing could feature as an aspect of these questions. EVA is especially likely given the recent articles published in this area make sure you have read them. Modified IRR is new to the syllabus so make sure that you are comfortable with this area. Reward systems: HR issues are new to the syllabus from June 2011; the examiner is interested in the impact of reward systems on performance management.

Alternative views of performance measurement: Questions are commonly set that require a good understanding of the balanced scorecard, the building blocks model and the performance pyramid. Questions will often require you to analyse data that has been collected using one of these models. The balanced scorecard and performance pyramid were tested heavily in June 2011. Performance hierarchy: Linking strategic decisions to mission statements or suggesting strategic options using models such as Ansoffs matrix or the BCG matrix lend themselves to questions containing a mixture of financial and discursive elements that could easily include a simple NPV or profit analysis.