In the fourth of our series of guides, tutors share their insights on the Professional Level Business Strategy and Technology, Financial Accounting and Reporting, and Business Planning exams.
Business strategy and technology
The facts
Sittings: March, June, September and December
Duration: 2.5 hours
Pass mark: 55%
Format: 3 questions
Syllabus breakdown:
- Strategic analysis (30-40%)
- Strategic choice (30-40%)
- Implementation and monitoring of strategy (25-35%)
The inside track
From Nick Ryan, BPP
The pass mark tends to be high for Business Strategy and Technology, but that doesn’t mean it’s an easy exam. Elements of the syllabus is covered in Business, Technology and Finance as well as Management Information at ICAEW CFAB/Certificate Level – so the emphasis is more on application. But we do tend to go into topics in a lot more detail at this level.
One of the most common mistakes students make is not going back over topics they learned at ICAEW CFAB/Certificate Level thoroughly enough. For example, there was a question recently about price elasticity of demand, which is covered in a lot of detail in Business, Technology and Finance. Things you’ve forgotten about or think you don’t need to know anymore may well come up, so all the techniques you’ve learned will be relevant here.
There are some questions that will always appear in this exam – namely ethics and data analysis – so you need to be prepared for those. Assimilating and analysing data are becoming increasingly important, and one of the biggest changes made recently to Business Strategy and Technology has been the introduction of spreadsheet functionality. Make sure you practise with the online software in advance and get familiar with it, because you’ll be doing a lot of spreadsheet work in the exam.
I always advise students to read the first couple of sentences of the scenario to find out what the business does, then go down and read the requirements before you plough through all the information. There’s always a temptation to rush, but reading the question carefully and understanding what you have to do is really important. You will often be asked to do two or three things within one requirement – it might say evaluate the performance and make a recommendation, for example – and a lot of students focus on the first part and forget about the others.
It’s important to go into enough depth, too, particularly in the data analysis questions. It’s not enough to say, “Sales went up by 20%.” Why did sales go up? And what does that mean for the business? Try to discuss it in more depth, and make it more understandable. Keep focused and try not to waffle, though – the best way to avoid that is to plan your answers. With a 150-minute exam you should be spending 1.5 minutes per mark – but I say use about 20% of that to plan. A well-planned answer really stands out from the crowd, so it’s time well spent. And don’t waste time explaining the models you’re using, because you won’t get marks for that.
The other thing that sets apart those students who score the highest is the ability to see the big picture. It’s not just about answering the requirements, it’s about thinking how it all relates to the issues the organisation is having. It’s good to have a solid general knowledge of the business environment too, because a lot of the exam questions are based on real life. So read a newspaper, listen to a podcast, watch a business programme. Or just look around you to see what businesses that are out there and what they’re all doing. It’s all relevant.
Financial accounting and reporting
The facts
Sittings: March, June, September and December
Duration: 3 hours
Pass mark: 55%
Format: 4 questions
Permitted texts or open book? Permitted texts – find out more here
Syllabus breakdown:
- Accounting and reporting concepts and ethics (10%)
- Single entity financial statements (60%)
- Consolidated financial statements (30%)
The inside track
From Amy Moon, First Intuition
Financial Accounting and Reporting has a big syllabus, and is the longest exam at three hours – but it’s still incredibly time-pressured. The other reason it can seem challenging is that students tend to think of exams as being either calculations-based or words-based – and this is both. That can make it intimidating, but I like to think of it as having something for everyone!
Financial Accounting and Reporting builds on what students have already learned in the Certificate Level Accounting exam – preparing financial statements from a trial balance, for example – but there are plenty of new and complex areas to get to grips with, such as leases, financial instruments and group accounts. As well as ‘doing the numbers’, students need to develop their written skills and be able to explain the appropriate accounting treatment for a given transaction. That’s something they can struggle with – they will often either put down everything they know about an accounting standard and go off on a tangent, or just do the calculations and don’t write enough explanation to gain the marks.
Along with that ‘explain’ question, there will usually be one on preparing single entity accounts, and another on group accounts. The area of the syllabus that tends to get overlooked is accounting and reporting concepts – these will often be examined as shorter, later parts of the longer questions, so students will have either run out of time, or focused on the more technical areas in their revision. It’s often the same problem with the IFRS versus UK GAAP style questions.
Good exam technique is absolutely essential. I always advise students to play to their strengths and start with the question they feel most confident with. Get the easy marks done first: make sure you get all the initial figures from the questions into your workings and proforma statements as early on as possible. The idea of working marks can be a relief after ICAEW CFAB/Certificate Level, but in order to achieve them you must reference your workings, particularly when taking a number from one working to another. Even if you calculate a figure wrong early on, you can still gain marks for using it in the correct place later in your answer as long as you reference it well. And get familiar with the exam software, so that you’re used to copying from the spreadsheet into the word processing area – it sounds obvious, but if you cut bits off then they can’t be marked.
Be strict with time – stick to the 1.8 minutes per mark rule. You’ll get more marks starting the next question than you will trying to finish the one you’re on. If a question has multiple parts, try to view it as separate, smaller questions and ensure you allocate time to attempt all of them. And, as always, practise, practise, practise. If you’ve worked through the question bank and attempted the mock exams, you’re going to be as prepared as you can be. If you’re not sure where to start on that tricky ‘explain’ question, try approaching it the other way around: think about the calculations you would do, then work your way back to the standard it came from and explain why you’re doing those calculations.
Business planning: Taxation
The facts
Sittings: March, June, September and December
Duration: 2.5 hours
Pass mark: 55%
Format: 3 questions
Permitted texts or open book? Open book
Syllabus breakdown:
- Ethics and law (5-10%)
- Taxation of corporate entities (35-45%)
- Taxation of owner-managed businesses (20-30%)
- Personal taxation (15-25%)
The inside track
From Darren Hodgson, First Intuition
The biggest challenges with this exam are the size of the syllabus, and the fact that the questions can be asked in an almost indefinite number of ways.
While a lot of the knowledge is no different from that which students have already learned for Principles of Taxation and Tax Compliance, with Business Planning: Taxation, application is crucial. You need knowledge of the same tax rules, but you need to apply them more. For example, if I receive a bonus of £10,000, how much will actually be in my pocket after tax and National Insurance have been paid? These are the questions clients want answers to.
As a tax advisor, you’re a bit like a GP. You can’t just be really good at measles and hope that when somebody comes in, they’ve got measles. You need to be a general practitioner. You need to learn the seven taxes, but then have an open mind about how you deploy them in a particular scenario. Clients aren’t really interested in how taxes work, they just want you to tell them how to legitimately reduce their tax burden. There’s no rote learning here – you have to think.
The key to this exam is being able to hold the seven taxes in your hands and decide which (often several) of them are applicable to a given scenario. Evaluation of the key data and information using your knowledge of the seven taxes is the bedrock of the exam. These tricky technical areas then need to be communicated in plain English in a tone that clients can understand. Make sure you plan your answers: start with outline headings taken directly from the requirements, then add subheadings specific to the points you’re going to evaluate and explain.
Most importantly, stick to time. This is a time-pressured exam, but you should see that as a positive thing: if you’re running out of time on every question, it means you’ve got lots to say. When it comes to preparing your open-book resource, make your own summary of each tax: when it applies; how it’s calculated; when it’s payable; whether it can be mitigated or delayed; and what elections or options there are to achieve that.
The best change in passing is to make sure you attempt every part of every question. Leave nothing unanswered, however weak you feel your knowledge is. And the easiest way to fail is to forget that this exam tests seven possible taxes. You can get potentials marks by remembering (and commenting on, obviously) the fact that VAT and Stamp Duty exist! The complete absence of these taxes from an entire script leads to marks being missed.
Business planning: Insurance
The facts
Sittings: June, September and December
Duration: 2.5 hours
Pass mark: 55%
Format: 3 questions
Permitted texts or open book? Open book
Syllabus breakdown:
- Insurance products and risk management (20-25%)
- Financial and regulatory reporting for insurance companies (35-40%)
- Audit and assurance of insurance companies (30-35%)
- Ethics (5-10%)
The inside track
From Emma Lant, BPP
Business Planning: Insurance enhances elements from Audit and Assurance, Financial Accounting and Reporting, and Financial Management by reframing them in an insurance context, as well as introducing new industry-specific knowledge. Professional scepticism plays a big role here: the examiners will expect you to be able to identify where information in the exhibits is not reliable, or where not enough information has been provided to be able to draw sensible conclusions. Evaluation is important, too – often the answer is not clear cut, so you need to be able to consider the pros and cons of different situations and be measured in your analysis.
Focus on quality rather than quantity. This is a time-pressured exam, so concentrate on writing less, but writing better points. You’ll score more marks for making tailored points that relate to the insurer in the scenario rather than trying to write out everything you know. And avoid overexplaining – you should just be writing one or two sentences per point. Sometimes the easiest marks come from stating the obvious – the examiners put key phrases into the exhibits to help lead you to the points they want you to make.
It’s easy to overstate the value of this exam being open book. You’re not going to have a huge amount of time to go hunting through your resources, and this isn’t advisable anyway – marks are awarded for applying your knowledge to the scenario rather than outlining generic points that could apply to any insurer. My advice is to put together a small folder that contains the most important pieces of information you are most likely to use, such as proforma financial statements, calculations, key journals and key considerations when analysing the investment strategy of an insurer.
Take time at the start of each question to set yourself up for success. Read the requirements, set up your script with relevant subheadings and tables, assess the information you’ve been given and consider what might be helpful from the open book. The key is to achieve balance across the requirements and the questions, so be strict with your time management. And when it comes to some of the big IFRS 17 calculations – a core area of the syllabus – focus on the easier bits first then do what you can on the rest. Remember you’re aiming for 55%.
The students who do best in Business Planning: Insurance tend to be those who spend more time with the question bank earlier on. That doesn’t always have to mean doing full questions under exam conditions, especially when you’re still finding your feet with the knowledge, it can be reviewing questions and solutions and understanding how the examiner has written the scenario and exhibits to lead you to the points they want you to make. It’s about understanding what the examiner is looking for. And the sooner you can get into the habit of writing less but better, the better!
Business planning: Banking
The facts
Sittings: June, September and December
Duration: 2.5 hours
Pass mark: 55%
Format: 3 questions
Permitted texts or open book? Open book
Syllabus breakdown:
- Risk management and financial services products (20-25%)
- Financial and regulatory reporting for banks (35-40%)
- Audit and assurance of banks (30-35%)
- Ethics (5-10%)
The inside track
From Laura McLelland, BPP
The Business Planning exams bridge the gap between Professional and Advanced Levels, so they’re definitely the most challenging of the Professional Level exams. There’s some tricky technical content and there’s no marks allocated to the individual requirements within questions.
Because these exams are open book, students often come in with the wrong impression: that the answers will be in the resource and they just need to find the right bit. Copying and pasting from your notes is unlikely to score marks – that’s not what you’re being asked to do. The requirement isn’t to state lots of technical content, it’s to advise, explain or evaluate a situation for a particular client or bank. Your answers must be scenario-specific. Have you read and understood the information that’s presented to you, and can you use that information when answering the requirements? The open book is there for backup, not to answer the question for you.
The time pressure is part of the skill of this exam: being able to prioritise the requirements, understand which attract the highest marks and plan your time accordingly. Question practice can help you to work out how many marks are available for recurring requirements. There are no ‘easy’ marks, but there are areas that often come up – ethics, audit, analysis, regulation and financial instruments – so make sure you fully understand and practise those in advance. You also need to apply good exam technique, moving through and addressing all the requirements – it’s incredibly difficult to pass if you’ve only studied certain areas or you don’t answer everything.
Reading the requirements carefully is absolutely key. Use the software functionality like highlighting the little ‘hidden’ requirements. Look out for the word ‘and’ – a requirement might start off by asking you to explain something, but go on to say ‘and provide supporting calculations’ or ‘and evaluate the impact’. It’s really important to identify those sub-requirements. Make sure your answer has a clear link between and the sub-requirements and goes into a sufficient level of detail.
My other top tip is to do an answer plan. Students often think that’s a waste of time, but it’s the best way to ensure you’ve identified all the requirements and built your answer around them. And if you’re running out of time, do submit that answer plan – there might be something in there that you haven’t had the chance to develop more fully, and it could be that one mark that makes all the difference.
Finally, use the support and resources that are there for you. Read the guidance on the ICAEW website, watch the webinars, take the mock exams. Listen to your tutors and respond to their feedback. They know what they’re talking about, so if they advise you to do something, then take that advice!
Explore resources for all the Professional Level exams. And remember that marks feedback is available in the event of a failed exam – find it under the ‘Examinations’ tab of your online training file.