ACCA 3.1 Exam Tips

ACCA Paper 3.1
Audit and Assurance Services
June 2006 Exam Tips

Suggested practice questions from the BPP Practice and Revision Kit (2006 edition) are shown after the relevant area. We recommend you tackle all of them to get broad syllabus coverage.

Section A

Questions 1 and 2

Scenario questions in the context of audit risk/business risk/financial statement risk.

May also include:

• Control suggestion and/or evaluation
• Audit evidence on Paper 2.5 accounting areas (see also Q3 suggestions)
• Group audit issues (including audit work on fair values)
• Planning/practice management/quality control issues
• Assurance services, e.g. performance measurement or prospective financial information

2006 P&R Kit Questions: 10 Azure, 17 Signet, 22 Alakazam, 26 Hydasports, 47 Ferry, 55 Imperiol, Mock Exam 1 Q2 (Plaza)

Question 3

Audit evidence. Comment on the matters you would consider and the audit evidence you would expect to find as audit manager conducting a review of audit files.

Likely to be several scenarios covering various Paper 2.5 level accounting standards, e.g:

• Events after the balance sheet date
• Provisions
• Impairments
• Earnings per share
• Segment information
• Related party disclosures
• Deferred tax
• Discontinued operations
• Standard costing
• Intangible assets
• Revenue recognition
• Borrowing costs

2006 P&R Kit Questions: 33 Phoenix, 34 Aspersion, 35 Visean, 40 Verdi, 42 Data

Section B

Question 4

Part (a): Any syllabus area. Part (b): A related question on reporting.

2006 P&R Kit Questions: 59 Delphinius, 60 Avid, 61 Cinnabar Group, 65 Kite Associates

Question 5

Ethics, professional and quality control issues scenario question.

2006 P&R Kit Questions: 3 Aventura International, 4 Corundum, 5 Isthmus, 9 Ebony

Question 6

Discussion question on current issues, e.g:

• Fraud and auditor liability
• International convergence
• Audit exemption for small companies
• Risk-based auditing
• Related parties
• Corporate governance
• Laws and regulations

The discussion question often covers a scenario on a topic where the examiner has written an article in your Student Accountant magazine in the months prior to the exam. You should check the magazine/ACCA website for new articles in the months leading up to your exam.

2006 P&R Kit Questions: 1 Assurance provision, 15 Fraud and error, 18 Audit failures, 19 Convergence, 50 E-commerce, 58 Environmental issues

Relevant Articles

The examiner, Kim Smith, has written many articles and expects you to have read them and know them. (See www.accaglobal.com/students) She often comments that students fail for not having read the articles explaining how to tackle questions.

Read as many as you can, particularly the following which are of ongoing relevance:

• 'Post-balance sheet events', 20 January 2006
• 'Reading the question', 6 June 2005
• 'Technique in auditing questions', 4 September 2001
• 'Technique in auditing questions – part 2', 17 October 2001
• 'Tackling the 'Discussion' question', 1 November 2001
• 'Professional ethics – a kloser look', 30 April 2003
• 'Divided opinion' (auditors' reports), 5 November 2002
• 'Rest assured' (assurance), 1 June 2001
• 'Audit and assurance services', 27 July 2001

Health Warning! The examiners deliberately try to avoid question spotting. Just because a question featured last time, doesn’t mean it won’t feature this time. Use the tips as areas to have a good look at, 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.

ACCA 3.2 Exam Tips

ACCA Paper 3.2
Advanced Taxation
June 2006 Exam Tips

Suggested practice questions from the BPP Practice and Revision Kit are shown next to the relevant area.

Section A

The first question or scenario historically is the main IHT question, usually incorporating another tax (more commonly income tax) along with it although the examiner split IHT between the first two questions in December 2005.
The income tax comps are usually fairly straightforward and for the IHT expect to see a death estate along with lifetime gifts including discretionary trusts and interest in possession trusts. Overseas aspects could easily be tested with both these taxes.

Q11 Ming Wong
Q12 Jane Macbeth

As a second scenario, CGT very often comes up; reliefs being a hot topic such as PPR relief or Rollover relief.

Taxation of trusts may well be brought into one of these scenarios for a few marks.

Q15 Mr Rowe
Q9 Arthur Rich

Section B

These questions are likely to comprise of:

Corporation Tax - Corporation tax will not appear in the compulsory section of the exam and is a significant tax within the syllabus. Therefore I would expect to see at least one corporation tax question in this section of the exam. Groups / CT losses may come up especially as they were not very well answered in the December 2.3 exam. You should look out for loss relief questions including consortiums and overseas tax issues. This is particularly important as the new examiner Rory Fish wrote an article on CT in January 2006.
Q30 Ongoing Ltd
Q28 Target Ltd

One mixed tax question, usually based around a fairly straightforward scenario. Maybe a company compared to a sole trader, which will further test corporation tax along with business income tax. VAT and NICs are commonly examined.

A letter or report tends to be expected for one of the questions.

Another question is very often based on basic 2.3 knowledge, which can often throw students as they are expecting to do a lot more at this level.
Q2 Landscape

The financial planning question is usually fairly basic. Pension rules are changing for exams in 2007 hence the examiner may take this opportunity to examine them. Only a good basic level of understanding of financial planning areas and general business awareness has been expected at the last five sittings.
Q 60 Ming Lee

Please note the examiners deliberately try to avoid question spotting. Just because a question featured last time, doesn’t mean it won’t feature this time. Use the tips as areas to have a good look at, 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 this in the exam.

Relevant Articles (updated March 06)

ARTICLE NAME AUTHOR DATE

Corporation Tax Rory Fish Jan 06

Share Reorgs Ray Abercrombie Nov 05

Trusts Rory Fish Oct 05

FA Update Various Oct 05

ACCA 3.3 Exam Tips

ACCA Paper 3.3
Performance Management
June 2006 Exam Tips

Suggested practice questions from the BPP Practice and Revision Kit (2006 edition) are shown after the relevant area. Remember also that questions drawn from the 2003 and 2004 exam sittings, which are not contained in the 2006 P&R Kit but can be taken off www.accaglobal.com, are also an excellent source of preparation.

General: The exam is often time pressured and careful planning is required to ensure marks are maximised in time allowed. The examiner has examined some of the key topic areas in a very practical way but this has often looked unusually challenging on first read through.

There will be new areas in the syllabus for June 2006;

Ansoff's growth vector matrix
BCG matrix
Porter's five forces model

Section A

To date the large question in this section has contained some elements of budgeting (short term planning). This will be heavily numerical with a small written element.

2006 P&R Kit Questions: 66 Privmed, 65 Motor Breakdown Services

The shorter question has often tackled some element of performance measurement with the majority of the marks being for numerical analysis.

2006 P&R Kit Questions: 43 Eatwell Restaurant, 37 Management Accounting and the Public Sector

Section B

There is usually a high discursive element in this section with 2 questions being wholly or almost wholly discursive. If it has not made an appearance in Section A performance measurement will make an appearance here.

Many of the modern management and management accounting techniques have been examined here;

2006 P&R Kit Questions: 11 Costs and Quality, 50 Activity Based Budgeting

Numerical topics do still appear in this area, topics that have not appeared for a little while include transfer pricing (which can also include qualitative issues) and uncertainty in decision-making.

2006 P&R Kit Questions: 60 Tannadens Division, 30 UKCOM

Relevant Articles

The examiner has often used his most recent article to set a question. He is bringing in some new areas to the syllabus this time around – make sure that you read his article regarding these elements

Health Warning! The examiners deliberately try to avoid question spotting. Just because a question featured last time, doesn’t mean it won’t feature this time. Use the tips as areas to have a good look at, 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.

ACCA 3.4 Exam Tips

Change Management – this topic has not appeared in a high level of detail yet, and there are key theories, which have never been examined – e.g. Lewin’s approaches to change. An article appearing in Student Accountant in November 2005 may be a useful indicator here.

Global business strategies – only examined once to date

Systems Development – the examiner may look at alternative approaches to soft systems methodology, or perhaps look for a comparison or evaluation of different methods

E-commerce – this always creeps into questions, but a big question looking at the benefits and risks is possibly overdue

The relationship between business and information strategy

Useful Articles
Strategic Choices and Change Management – Nov 05
E-commerce – June 05
Soft Systems Methodology – June 04