In the last of our series of guides, tutors share their insights on the Advanced Level Corporate Reporting, Strategic Business Management and Case Study exams.
Corporate Reporting
The facts
Sittings: July and November
Advance information: six weeks before
Duration: 3.5 hours
Pass mark: 50%
Format: 3 questions
Permitted texts or open book? Open book
Syllabus breakdown:
- Corporate Reporting – Compliance/Financial statement analysis (55-65%)
- Audit and Assurance (30-40%)
- Ethics (5-10%)
The inside track
From Kieran Doe, ACA Masters
When it comes to Corporate Reporting, the good news is that around 60% of the marks are on topics already tested at Professional Level, and the style of some of the questions will be familiar too. The technical content you have learned from Financial Accounting and Reporting, and the auditing process from Audit and Assurance, in particular audit risks and procedures, will help you understand and apply Corporate Reporting content much more easily.
At least 80% of the marks in the exam are allocated to financial reporting and audit. Generally, the first question covers both areas (using the advance information and data analytics software), the second financial reporting only (including adjustments to draft financial statements) and the third both areas again. Financial statement analysis and ethics can be examined in any question. Each question will have several requirements, and it’s important to appreciate the differences between each type.
By nature, financial reporting requirements are technical and require you to explain the correct accounting treatment and then adjust the financial statement extracts. A good approach is to briefly mention the relevant parts of the relevant IFRS, apply it to the transaction in the scenario, explain why the current or proposed treatment is incorrect, and state the impact on the financial statements.
The audit requirements are skills-based and require you to interpret the scenario to identify auditing issues (not always just risks and procedures). A good approach for audit risk requirements is to state whether there is a risk of overstatement or understatement, and justify why by using the specific facts in the scenario. For audit procedures, you should state the action to be taken (observation is weaker than inspection/recalculation), the source to be used (an independent source is better than the client) and the purpose (it can be useful to think about the financial statement assertions here).
Open book exams present both a golden opportunity and a dangerous time trap. Corporate Reporting is incredibly time pressured, so any time spent looking something up in your notes is time that could have been spent typing a mark-scoring point. You should aim to build your financial reporting knowledge and audit exam technique skills to the level where you use your open book notes sparingly. Should you need them, your notes need to be concise and structured in a way that you can look up information quickly.
Most questions have a mix of easy, medium and harder marks, so completing every question in full increases your chances of passing. The most common pitfall with this exam is not applying your knowledge to the scenario. Too many students regurgitate content from the learning materials and add generic audit risks and procedures. The best candidates are technically strong and apply their knowledge to the specific scenario in order to answer the exact question the examiner has asked – not the question they hoped would come up.
Strategic Business Management
The facts
Sittings: July and November
Duration: 3.5 hours
Pass mark: 50%
Format: 2 questions
Permitted texts or open book? Open book
Syllabus breakdown:
- Business Strategy and Management (30-40%)
- Financial Strategy, Financial Structure and Financial Reconstruction, Financial Instruments and Financial Markets (25-35%)
- Corporate Reporting (15-20%)
- Assurance (10%)
- Ethics (5-10%)
The inside track
From Charlotte Ballantine, First Intuition
Strategic Business Management can be daunting because it draws on elements from almost every previous Certificate and Professional Level exam, with the exception of the tax subjects. There are two weapons at your disposal, though: first, you will (hopefully!) already know the majority of the content; and second, the exam is open book, so you have a safety net should your memory fail you on any theoretical details.
There is a particular overlap between Strategic Business Management and Financial Management at Professional Level in that calculations such as net present values, business valuations and hedging are commonplace. However, at Advanced Level the focus shifts away from being purely about the numbers, and there will be a significant amount of marks available for discussing the benefits and risks of a proposed strategy, and some of the practical issues that would need to be overcome to undertake it. You also need to be able to assimilate data provided in the exam, using various spreadsheet functions, in order to make sense of it and provide a meaningful analysis.
The total marks available will usually be split approximately 60/40 between the two questions, though this may vary slightly from sitting to sitting. Each question will contain a lot of background information and several exhibits including, for example, the client’s recent financial statements, details of a planned expansion, discussion of an ethical dilemma and a summary of hedging strategies to be used. Your first job will be to sift through all this information and pick out your requirements – these may be summarised in one exhibit, or scattered throughout the question. It will probably take around 30 minutes in total to read both questions, identify the requirements and plan your calculations and areas for discussion, leaving around three hours to write your answers.
When it comes to preparing your open book resource, I recommend spending time making a detailed contents page that works for you, and putting tabs into pages that you commonly find yourself using while practising questions. It also helps to have a comprehensive formula sheet bringing together key formulae from all chapters. For those who enjoy calculations, it can be frustrating that there is often no single correct answer to a given task. But the good news is that any relevant calculation or sensible point will score marks, as long as it is well explained and justified.
Strategic Business Management is all about exam technique. In order to maximise your marks, ensure you write in complete sentences – but be concise and to the point. Rather than writing a mini-essay on each point you want to make, you are much better off writing one or two sentences and then moving on. This can be a time-pressured exam, but the key is to ensure you have written at least a few points for every requirement. It’s always heart-breaking to see students fail because they spent too long answering the first task and didn’t leave enough time for those that followed.
Case study
The facts
Sittings: July and November
Advance information: available six weeks before
Duration: 4 hours
Pass mark: 50%
Format: 1 question: (3 requirements and 1 executive summary)
Permitted texts or open book? Open book
The inside track
From Martin Johnson, Paradigm Shift Financial Training.
For most students, the Case Study will be the final ACA exam they sit. It’s different from those that have come before in that it’s not technical; it’s about being able to use all the knowledge and experience you’ve gained to give practical advice in everyday language. Students who are technically strong can find it challenging because the acceptable points on the mark scheme will not derive ‘automatically’ from IFRS or HMRC standards or pro-forma approaches, whereas those who are perhaps a bit more business-minded or entrepreneurial tend to quite like it. Only points on the finalised mark scheme will be given credit so the marker has no discretion.
One of the most important things you can do when preparing is to look at past mark schemes. Get an idea of what the examiners like to see and then try to stick to those points. Another thing that is unique to the Case Study is that the examiners will take one passing and one failing script from each session and produce detailed commentary on them. That resource is gold dust, so make sure you find those past exams on the ICAEW website and take time to read the examiner feedback.
The advance information will be available six weeks before exam day. Read through it a couple of times, then start ‘actively’ reading, meaning that you should think about the types of points seen on the past paper mark schemes and start creating notes organised around those themes (for example, strategic points, operational points, ethics points and so on). Once you’ve done this, try to discuss it with someone else, even if it’s just via an online student group, to identify points you may not have spotted. My other tip is to deliberately spend a bit of time working backwards through the exhibits – the examiners always point out that the first half of the advance information seems to be known much better. A few days before the exam, go through your notes and tidy them up – if they’re properly organised they will be a useful open book resource.
Right from the start you need to be writing quickly and, most importantly, succinctly. The thing that sets the best students apart is their writing style. Make sure you have identified lots of different ideas, then be concise: get to the point and move on. There’s no filler in the exam paper exhibits: everything should be used. It’s good practice to highlight each sentence as you use it in your answer to ensure you’ve covered everything.
Stay calm. Don’t panic if the real exam is not exactly like the mocks you’ve practised. The first requirement will be analysing accounts, which will be bread and butter to you by now, so let that give you confidence. Do plenty of practice – to time, and using the exam software – and respect the mark scheme. Spending time getting into the mindset of the examiner will help you stick to the right points and hopefully reduce the stress.
You can access resources for all the Advanced Level exams. Remember that marks feedback is available in the event of a failed exam – find it under the ‘Examinations’ tab of your online training file.