Exam Approach Interview: P2 Corporate Reporting Interviewer: Welcome to the P2 Examiner s Approach interview. The following is an Examination Approach interview for Paper P2, Corporate Reporting. The content of this interview has been prepared by the examiner, working with the Qualifications team at ACCA, and is presented by actors representing an interviewer and the examiner in discussion. For more detail on the examiner s approach, please see the article produced by the examiner in the February 2007 archive edition of student accountant and refer to the September 2010 article on the amendments to P2 effective from June 2011. The examiner is Graham Holt. Graham has many years experience in financial reporting lecturing at a leading UK university. He qualified as an accountant with Price Waterhouse and his main higher educational and academic background is in corporate reporting and audit. He has been an ACCA examiner for several years. Interviewer: I suppose it would be most appropriate to start off by asking where P2 fits within the overall structure of the ACCA Qualification. 1
The Professional Level of the ACCA qualification syllabus is divided into two modules Essentials and Options, with Essentials coming before Options. Both these modules have been set at an intellectual level equivalent to that expected of a student taking a Masters degree. The focus of the syllabus at the Professional level is to build upon the technical skills already acquired, and to explore more advanced professional techniques, skills and values which are required by the expert accountant acting in an advisory or consultancy role at a senior level. P2 is included as an Essentials paper as it is essential that all professional accountants have mastery of this subject before they can qualify as ACCA members. Interviewer: From what you have just said, P2 is connected to other papers within the ACCA Qualification. What are the links with other papers, or with other components? The fundamentals of financial accounting are first introduced in F3 Financial Accounting. F7, Financial Reporting, develops this basic knowledge; introducing areas such as business combinations and interpretation of accounts. P2 takes the subject into greater depth 2
and contextualises the role of the accountant as a professional steward and adviser or analyst. All the knowledge and capabilities acquired in P2 will be applied, in context, within the Practical Experience Requirements. The performance objectives which are particularly relevant to this paper are optional objectives 10 and 11 and essential objective 1. Interviewer: What is the overall concept or theme for P2 as a paper? P2 is a paper which is primarily based on the practical application and impact of accounting standards and exploring key issues and concepts affecting the modern day financial accountant. There is a strong technical focus. Knowledge of current issues and developments in corporate reporting are also examined. The following quote sums up the practical application aspects of P2: Tell me and I will forget; show me and I will remember; involve me and I will understand. The involvement in scenario based application is designed to achieve better learning. Interviewer: The syllabus for P2 is structured into eight main sections. Can you briefly explain the main content of these syllabus sections please? 3
Section A deals with the professional and ethical duties of the accountant. Students need to understand how a professional accountant should react in certain situations from an ethical and social perspective. Section B looks at the financial reporting framework and requires students to have the capacity to critically evaluate principles and practices. Section C looks at the standards which underpin the reporting of financial performance, with section D taking this a step further by requiring students to understand these standards in the group accounts setting. Section E contextualises the standards by looking at financial reporting within specialised entities. Section F deals with the implications of changes in accounting standards and their impact on financial statements, whilst Section G requires students to interpret financial statements and recommend to clients suitable accounting policies. And finally, Section H looks at current developments in the corporate reporting area. 4
Interviewer: Thank you for explaining the main content of the syllabus for us. What can you tell us about how the exam itself is structured? First of all it is worth noting that as P2 is a Professional Essentials paper, all students must sit this exam. As with all papers at the Professional level, the writing time for this exam is three hours. All ACCA three hour papers have been allocated an additional 15 minutes reading and planning time, within which students can read the paper, understand the requirements and choose which questions to answer. An article explaining how this time should be productively used has been published in the student accountant magazine in the August 2007 edition which can be seen on the website. Interviewer: What exactly can students do in reading and planning time? They can make notes and plan answers. This may only be done on the question paper and not on the answer booklet. The answer booklet cannot be used until the exam begins. Interviewer: What kind of questions will appear in the exam? 5
As the P2 paper is a computational and discursive paper, there will be different kinds of questions. Students must be prepared to provide numerical answers supported by calculations and referenced workings. There will also be a requirement for written explanations to support computational answers. Discursive questions will require written answers involving analysis and interpretation; perhaps commenting on views expressed in the question and how principles and concepts are applied to specific accounting issues. Interviewer: Can you tell us how many questions there are in the exam and what choice, if any, exists? Yes, of course. As can be seen here, the exam is divided into two sections, A and B. Section A contains one 50 mark case study question in a number of parts. This case study can potentially assess any area across the syllabus, and may typically assess capabilities from several sections. It will deal with the preparation of consolidated financial statements, including group s statements of cash flows, and with issues in financial reporting. Students will be required to answer two out of three questions in Section B. The three 25 mark questions will normally comprise 6
two questions which are scenario or case-study based and one essay question. Each Section B question will normally assess one discrete section of the P2 syllabus, but could in some situations draw from several sections. For more information about the exam itself and how it is structured there are past papers available on the ACCA website. Interviewer: Thanks for explaining that. What would you say are the key features of the P2 examination paper? First, students will be examined on the application of concepts and principles, and on their ability to question and comment on proposed accounting treatments. Students should be capable of relating professional issues to relevant concepts and practical situations. The evaluation of alternative accounting practices and the identification of and prioritisation of issues will be a key element of this paper. Professional and ethical judgement will need to be exercised, together with the integration of technical knowledge when addressing corporate reporting issues in a business context. The paper also deals with specific technical knowledge relating to the preparation and presentation of consolidated and other 7
financial statements, taking into consideration all relevant accounting standards. Interviewer: There are professional marks available in this paper. What are professional marks? Professional and ethical judgement will need to be exercised in this paper. Between 4 and 6 professional marks will be awarded across the paper for the form and tone of an answer, for its structure, and for the strength and persuasiveness of arguments put forward. In P2, it is possible that there may be two or three marks available for each question in Section B, rather than any professional marks in Section A. There is an article which was published in the October 2007 edition of student accountant explaining what professional marks are awarded for. This article will give more information on the awarding of these marks. Interviewer: And are Ethics examined in this paper? Ethics may be examined somewhere in this paper within a business or accounting context. A good example can be seen in Q1 of the pilot paper. There is also an article on how this is assessed in the September 2007 edition of student accountant. 8
Interviewer: There has been a syllabus change to the P2 UK paper. How will this affect the content of the paper? The UK paper will be based upon International Financial Reporting Standards using the same currency and international terminology as the International P2 paper. This UK paper will include UK legislation governing the preparation of financial statements for individual and group entities. UK GAAP differences will be tested on selected standards and the main differences will be listed within exam paper syllabus guides and examinable documents. The reason for the amendment to the UK paper is that ACCA see the importance of IFRS and need to balance this with requirements for those wishing to practice as auditors within the UK. Candidates wishing to practice as auditors within the UK will need to sit both P2 UK and P7 UK from 2011. The P2 UK exam format will not stipulate exactly where differences will be tested and does not need to be tested within every examination session. It will be at the discretion of the examiners and panel to decide when differences should appear as part of the UK paper in any given examination session. Further illustrative guidance is available within a student accountant article written by the F7 and P2 examiners. 9
Interviewer: What advice would you give about revising effectively for, and passing, P2? I would recommend the best strategies to adopt in the revision phase and in the exam itself are to focus on the key standards and current issues. The world of corporate reporting is a fast changing one, with new or amended accounting standards being issued regularly. It is important that the correct documents are studied, as they soon become out of date. ACCA publishes a list of examinable documents for each examination sitting, which is available on the website. Key areas to focus upon are group accounts, financial instruments, employee benefits, leases and ethical issues. Interviewer: What would your main exam tips be? Read the question carefully and answer the question set, not the one you hoped would be set. Marks can only be awarded for points that are relevant to the question. Answer every part of every question. 10
Understand the main principles of standards and don t simply rote learn them. As previously mentioned, the P2 examination will test application, not just repetition of knowledge. And show workings for calculations. If a number presented as an answer is incorrect, it cannot attract any marks unless the marker knows the process behind its calculation. Method marks are available and can mean the difference between a pass and a fail. Interviewer: What do you believe to be the main potential pitfalls in preparing for and taking the P2 exam? The main pitfalls I have seen students fall into are the following: Students who are not adequately prepared for the exam. It is important that students have a thorough grasp of the practical implications of the accounting standards and read widely. Time management. Students often do not finish the paper; spending too much time on question one the 50 mark question. This results in the remaining questions not being given sufficient allocation. Remember, the first marks achieved in a question are often easier to attain than the last ones. 11
The discursive parts of the paper are really important as they can constitute up to 40 marks if question 4 is attempted by students (question 4 is a written question normally). Students often concentrate on the computational and technical parts of the paper and do not give due regard to the discursive parts. Candidates need to develop skills in answering discursive questions. Interviewer: It is clearly important to follow the above tips and avoid any common pitfalls in exam revision and performance. What further information about student performance would you give which might help students prepare for exams? After each examination session, all ACCA examiners are required to produce an exam report. These reports highlight key issues arising in the last exam and focus on where students performed particularly well or badly. These are published in February and August and can be found under paper resources for each paper which can be accessed through the website. In addition, after each exam session has been completed, the exam review board meets. This is a board consisting of ACCA internal Education staff and six representative members of the approved learning partner community. Minutes from this board summarise the comments made by tuition provider representatives, report survey results about the exams from student questionnaires and 12
detail the responses. Again, the minutes from the exam review board are available on the website. Interviewer: And finally, what would be your concluding advice about the P2 examination paper? First, students must always read the question scenario and requirements as carefully as they can, identifying and understanding the instructional verbs contained within each requirement. Second, it is important to properly think about the scenario, looking at the dates, locations, business activities and people which make up the scenario. Take a minute or two to digest and comprehend the situation before starting to write an answer. Doing this will help the answer to make sense in the context of the scenario. Finally, don t forget that answers given should relate to the question actually asked, not the one that a candidate would have liked to answer. Interviewer: Thank you very much for sharing your insight into this exam paper. I m sure it has given students and tutors lots of useful information. 13
Thank you. 14