BPP ACCA p2 advance financial reporting 2017

Free access to our Exam Success site Look inside This ACCA Study Text for Paper P2 Corporate Reporting International and United Kingdom has been comprehensively reviewed by the ACCA exam

Free access

to our Exam Success site Look inside

This ACCA Study Text for Paper P2 Corporate

Reporting (International and United Kingdom)

has been comprehensively reviewed by the ACCA

examining team This review guarantees appropriate

depth and breadth of content and comprehensive

syllabus coverage

In addition to ACCA examining team reviewed material you get:

• A user-friendly format for easy navigation

• Exam focus points describing what the examining team will want you to do

• Regular Fast Forward summaries emphasising the key points in each chapter

• Questions and quick quizzes to test your understanding

• A practice question bank containing exam- standard questions with answers

• A full index

• All you need in one book

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Paper P2 Corporate Reporting

(International and United Kingdom) For exams in September 2016, December

2016, March 2017 and June 2017

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FOR EXAMS IN SEPTEMBER 2016, DECEMBER 2016, MARCH

2017 AND JUNE 2017

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Part A Regulatory and ethical framework

Part B Accounting standards

Part C Group financial statements

Part D Developments in reporting

Review form

Helping you to pass

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The PER alert

Before you can qualify as an ACCA member, you not only have to pass all your exams but also fulfil a three year practical experience requirement (PER) To help you to recognise areas of the syllabus that you might be able to apply in the workplace to achieve different performance objectives, we have introduced the ‘PER alert’ feature You will find this feature throughout the Study Text to remind you that what you are learning to pass your ACCA exams is equally useful to the fulfilment of the PER requirement

Your achievement of the PER should now be recorded in your on-line My Experience record

Tackling studying

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Developing exam awareness

Our Texts are completely focused on helping you pass your exam

Our advice on Studying P2 outlines the content of the paper, the necessary skills you are expected to be able to demonstrate and any brought forward knowledge you are expected to have

Exam focus points are included within the chapters to highlight when and how specific topics were

examined, or how they might be examined in the future

Using the Syllabus and Study Guide

You can find the syllabus and study guide on pages ix – xxxii of this Study Text

Testing what you can do

Testing yourself helps you develop the skills you need to pass the exam and also confirms that you can recall what you have learnt

We include Questions – lots of them – both within chapters and in the Practice Question Bank, as well as

Quick Quizzes at the end of each chapter to test your knowledge of the chapter content

Chapter features

Each chapter contains a number of helpful features to guide you through each topic

Topic list

Topic list Syllabus reference What you will be studying in this chapter and the relevant

section numbers, together with ACCA syllabus references

Introduction Puts the chapter content in the context of the syllabus as a whole Study Guide Links the chapter content with ACCA guidance

Exam Guide Highlights how examinable the chapter content is likely to be and the ways in which it could be examined

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studies/exams

Summarises the content of main chapter headings, allowing you to preview and review each section easily

Examples Demonstrate how to apply key knowledge and techniques

Key terms Definitions of important concepts that can often earn you easy marks in exams Exam focus points When and how specific topics were examined, or how they may be examined in the future Formula to learn Formulae that are not given in the exam but which have to be learnt

Gives you a useful indication of syllabus areas that closely relate to performance objectives in your Practical Experience Requirement (PER)

Question Gives you essential practice of techniques covered in the chapter Case Study Real world examples of theories and techniques

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providing an easy source of review

Quick Quiz A quick test of your knowledge of the main topics in the

chapter

Exam Question Bank Found at the back of the Study Text with more comprehensive chapter questions Cross referenced for

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FAST FORWARD

Studying P2

Paper P2 Corporate Reporting is a tough paper, reflecting the demands that will be made upon the

professional accountant in his or her working life At the Fundamentals level, you will have studied the

essentials of financial statement preparation and analysis, including those of group accounts At the

Professional level, these essentials will be assumed knowledge You will be required to apply them,

assuming the role of a professional adviser and analyst to the management as well as the shareholders

and other stakeholders

1 What P2 is about

The P2 syllabus comprises eight main areas:

A The professional and ethical duty of the accountant

B The financial reporting framework

C Reporting the financial performance of entities

D Financial statements of groups of entities

E Specialised entities

F Implications of changes in accounting regulation on financial reporting

G The appraisal of financial performance and position of entities

H Current developments

There is, of course, some overlap between these areas For example, if you are discussing current

developments (H), you might be talking about the proposed changes to accounting for business

combinations (D) and considering the implications of changes in accounting regulation (F) and perhaps

even the ethical duty of the accountant to report those changes fairly and accurately (A)

2 Skills you have to demonstrate

At the Fundamentals level, the questions would be more easily categorised into syllabus areas However,

at this level you may need to demonstrate knowledge, skills and thinking from outside the syllabus area

that the question seems to be about on the surface The examination team has stated:

Students should be capable of relating professional issues to relevant concepts and practical

situations The evaluation of alternative accounting practices and the identification and

prioritisation of issues will be a key element of the 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

So the paper is not predictable That said, clear guidance has been given The compulsory Section A

question, worth 50 marks, will always be on group accounts It will also deal with issues in financial

reporting and will be case study based In Section B, questions could be on any area of the syllabus, but

we have been told that two questions will be scenario based and one question will be an essay You have a choice of two from three

Increasingly, questions are discursive rather than numerical, so it is vital that you get practice at

answering this type of question

Important note for UK students

If you are sitting the UK P2 paper you will be studying under International standards and up to 20 marks will be for comparisons between International and UK GAAP The ACCA UK Syllabus and Study Guide gives the following advice:

International Financial Reporting Standards (IFRS) are the main accounting standards examined in the preparation of financial information The key differences between UK GAAP and International Financial Reporting Standards are looked at on a subject by subject basis The comparison between IFRS and

UK GAAP will be based on the new UK GAAP as set out in FRSs 100-102, so the standard by standard comparisons that appeared in previous editions of this study guide are now combined in outcome C11

(d): Discuss the key differences between the IFRS for SMEs and UK GAAP

This Study Text covers all the topics you need to know under International Financial Reporting Standards

An online supplement will be available at www.bpp.com/learning-media, covering the additional UK issues

Exam technique for P2

Do not be needlessly intimidated There is no shortcut to passing this exam It looks very difficult indeed, and many students wonder if they will ever pass But many do How do they do this?

Easy marks All the questions are demanding, but there are many easy marks to be gained Suppose, for example, you had a consolidated statement of cash flows with a disposal, some foreign exchange complications and an impairment calculation There will be easy marks available simply for the basic cash flow aspects, setting out the proforma, setting up your workings, presenting your work neatly If you recognise, as you should, that the disposal needs to be taken into account, of course you will get marks for that, even if you make a mistake in the arithmetic If you get the foreign exchange right, so much the better, but you could pass the question comfortably omitting this altogether If you’re short of time, this is what you should do

Be ruthless in ignoring the complications Look at the question Within reason, if there are complications – often only worth a few marks – that you know you will not have time or knowledge to do, cross them out It will make you feel better Than tackle the bits you can do This is how people pass a seemingly impossible paper

Answer all questions and all parts of questions The examination team frequently comments that students don't do this, so they miss easy opportunities to gain marks

Be ruthless in allocating your time

At BPP, we have seen how very intelligent students do one almost perfect question, one averagely good and one sketchy For a fifty mark question, the first twenty marks are the easiest to get Then you have to push it up to what you think is thirty to get yourself a clear pass For a twenty-five mark question, the first eight to ten marks are the easiest to get, and then you must try to push it up to fifteen

Do your best question either first or second, and the compulsory question either first or second The compulsory question, being on groups, will always have some easy marks available for consolidation techniques

Syllabus and Study Guide

The P2 syllabus and study guide can be found below

International

United Kingdom

The exam paper

The paper will comprise two sections

Number of marks

Section B will normally include:

 Two scenario or case study-based questions (covering a range of standards and syllabus topics, one usually in the context of a particular industry)

 An essay-style discussion question, often encompassing current developments in corporate reporting, which may also include some short calculations

Analysis of past papers – by sitting

December 2015 Sample Exam

Note This was not the actual exam sat in December 2015, but ACCA’s selection of questions from the

September and December 2015 exams

Section A

1 Consolidated statement of financial position with foreign subsidiary; IAS 21 explanation; ethics

Section B

2 Scenario question covering IAS 38, IAS 1 and IAS 12

3 Specialised industry question set in the natural gas industry, covering IFRS 9, IFRS 11 and IAS 10

4 IFRS 15: discussion and application June 2015

Section A

1 Consolidated statement of financial position with two acquisitions and a disposal; debt/equity distinction; ethics

Section B

2 Fair value measurement in the context of various scenarios

3 Specialised industry question set in the pharmaceutical industry, covering segment reporting, purchase of intangible in exchange for shares and research and development

4 Recognition in profit or loss versus other comprehensive income (discussion and application); integrated reporting

2 Related parties; financial guarantee contracts; interest rate swap; credit risk

3 IFRS 3 and control; IAS 16 application to a scenario

4 Impairment: factors to consider and application to a scenario

June 2014

Section A

1 Consolidated statement of profit or loss and other comprehensive income with two disposals and

various adjustments; fair value in IFRS; ethical issue

Section B

2 Foreign transactions (functional currency, goodwill, deferred tax and a loan)

3 Specialised industry question set in the property industry, covering revenue, interim reporting, asset

held for sale, provisions and intangibles

4 Distinction between debt and equity: discussion and scenario

2 Revenue recognition; impairment loss; sale and leaseback

3 Specialised industry question set in a bank, covering debt versus equity, hedging and the application

of IFRS 10 in determining which party is the acquirer

4 IAS 8: use of judgement in selecting accounting policies; prior period errors (three scenarios)

June 2013

Section A

1 Consolidated statement of financial position with a ‘D’-shaped group; comparison of methods for

valuing non-controlling interest; ethics

Section B

2 Segment reporting, revenue recognition, provisions and property-related matters

3 In-depth analysis of whether a lease was a finance lease, a discontinued operation and fair value of an investment property

4 Importance of and barriers to disclosures in annual reports and application to a scenario

3 Investment property; leasing (substance of transaction); provision; impairment

4 IFRS 13 Fair value measurement: principles, three-level hierarchy; IFRS 13 fair valuing of asset and

liability with computations June 2012

Analysis of past papers – by syllabus topic

The table below provides details of when each element of the syllabus has been examined and the

question number and section in which each element appeared Further details can be found in the Exam

Focus Points in the relevant chapters

2015

A THE PROFESSIONAL AND ETHICAL

DUTY OF THE ACCOUNTANT

2

Professional behaviour and

compliance with accounting

B THE FINANCIAL REPORTING FRAMEWORK

C REPORTING THE FINANCIAL PERFORMANCE OF ENTITIES

Provisions, contingencies and

Covered

in Text chapter

2015

D FINANCIAL STATEMENTS OF GROUPS OF ENTITIES Group accounting including

12-17

interests

Changes in group structure

14

– Group reorganisations Foreign transactions and entities – Foreign currency transactions Q2 Q2 Q1(a)

G

THE APPRAISAL OF FINANCIAL PERFORMANCE AND POSITION ENTITIES

measurement of performance

Q4

H CURRENT DEVELOPMENTS