PQ magazine, July 2015

PQmagazineJuly 2015 www.pqmagazine.co.uk

www.pqjobs.co.uk

The accountancy professionhas a long way to go if it isgoing ensure Bame (black,Asian and minority ethnic)have the same opportunitiesas their white colleagues,says a new report due outthis summer from researchcompany Pearn Kandola.

PQ magazine got a sneak previewof the report Ethinic Diversity in theAccounting Profession, written byProfessor Binna Kandola andresearched by colleague NehaIsaac. Quoting separate researchthat revealed a worrying 52% ofethnic minority accountants feeldiscriminated against in theircurrent role, Kandola said manyBame employees feel they areexcluded from various networkswithin their organisation. Sometimesstaff members are not even surewhether they are part of the incrowd, said Kandola. But you sureknow if you are not!

The research showed that Bameemployees were more likely to beasked to do tasks at the lower endof their job description. Meanwhile,their white colleagues get more

testing assignments. That leads toBame accountants having fewerachievements on their workrecord. They are, said Kandola,effectively being denied the chanceto shine.

Bame accountants describedfeeling that they cant be themselvesat work. The worry for many is thatthey are being stereotyped andconsequently become reluctant toput themselves forward.

Kandola explained that so-calledpolitical correctness can also createproblems. During staff assessmentswhite managers often hesitate to be

critical of black, Asian and ethnicminority staff out of fear of beingaccused of being racist. This hasthe unintended consequence thatBame employees sometimes do notget the honest, constructivecriticism they need to help themimprove their weak areas andimprove their performance at work.

The professor is calling onaccountancy departments andfirms to scrutinise their recruitmentand talent management processes.They also have to be careful of thelanguage they use, especially at therecruitment stage.

Bombshellfrom CIMACIMA shocked PQs, tutors andemployers by announcing it would re-assess all P3 and F3 OT examresults. The new results were thenreleased on 11 June.

The institute said a recent reviewconfirmed that the OTs in these twoassessments were harder than theyneeded to be for students todemonstrate their competence. Italso told PQ it is committed to doingthe right thing by all its students.

There were many j and k inevidence on 11 June. Some PQswere Grrrr that they still had a fail.Another said he had passed bothpapers at his first attempt but given afail. He paid for three exams in bothP3 and F3, but was just happy topass. CIMA said it would berefunding the cost of any exams thatwere attempted after a new pass. Soif, for example, you passed on yourfirst attempt and then took anothertry, and both were deemed a fail, youwill be refunded one attempt. CIMAhas also told PQ that it will creditthese PQs accounts with a freesitting of the Strategic Case Study(first attempt only). See page 30 for more CIMA stuff

PQmagazineEXCLUSIVE

Kandola:shining a

light on theaccountancy

profession

IS IT A QUESTION OFBLACK AND WHITE?

Win a fantastic five-day CIMA course courtesy of Reed Business School. This giveaway isworth over 1,000! See page 25 for details

TIME TO GETETHICALACCAs Alan Hatfieldexplains the value of theProfessional Ethics Module

INSIDE THIS ISSUEICAEWTIPS Top tips for the forthcoming setof examinations

ANNUALREPORTSWe marked the annualreports out of 10 sohow did your body do?

150thISSUE

150thISSUE

pq jul 15 p1V3_pq nov 11 p01,10 11/06/2015 12:59 Page 1

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comment PQ

News08ACCA June exams PQsdespair at tough papers10CIMA marking The instituteexplains new marking scheme 12MSc joint venture Universityof London and ACCA join forces

Features, etc06Mind your Ps&Qs CIMA haslet PQs down; the ACCA speaks;and the best of social media 14Annual reports We mark theaccountancy bodies reports outof 10 so whos the top dog?16Business and ethics Why it isimperative that organisations takean ethical approach18CIMA P2 Top advice on how topass this mixed bag of a paper19IASB round-up Latest newsfrom the leading standards body20Spotlight on Swansea PQ tooka trip to the Welsh city to catchup with an old friend 23Self assessment Changes tothe system could be good news;and the AAT awards winners24CIMA case study Why earlypreparation is the key to success25CIPFA focus ACOA conferencedemands better standards; andour revision course giveaway26Study credits How to utilisebrought forward knowledge27International standards The new IFRS15 explained

28ICAEW exam guidance Toptips from leading colleges30CIMA exam marking PeterStewart explains the rationalebehind the new scheme31Lets get technical Answeringquestions on cashflow forecasts32Accounting masters A uniquenew course on offer in London34Careers Life at CambridgeJunction; and our Book Club38Fun time More great giveaways and all the usual

The columnistsRobert Bruce Profession makingprogress, one small step at a time 8Prem Sikka Is the standard-settingIASB actually fit for purpose? 10Carl Lygo Hollywood A listersshine a light on accountants 12

Subscribe to PQ magazineIts FREE see page 35 or go to

www.pqmagazine.co.uk

ABC July 2013June 2014

32,361

Publishers statement: We have adigital issue of the magazine which

is sent to 9,119 requested readers

Reaching a milestoneWell, here we are the 150th issue of PQ magazine. The firstthing I have to say is a big thank-you to all the people who

helped get us here you know who you are! The need for anindependent magazine championing PQ accountants everywhere hasnever been more apparent. I recently had a big meeting with two CIMAdirectors, Noel Tagoe and Peter Stewart, after the institute announcedthat it was remarking all P3 and F3 assessments (see our front coverstory and what we said online). Students will now have received theirnew results and we will be monitoring the situation and CIMA knowsthat. I stressed to them that what their PQs now really want to know iswhat the new pass mark is for these tests. In general terms, studentsunderstood they needed to get around 70% of OTs right. I have beentold, on more than one occasion, that 70% is still an appropriateguideline while students are preparing for exams. Some students havesuggested the new pass mark is 60%! Peter Stewart has written anarticle explaining the new marking regime see page 30.

The ACCA exam feedback also floodedin. We will be looking for clear advice forstudents who can now opt for aSeptember sitting. Do students who failedthis summer simply enter in September orshould they wait until December and givethemselves more time to revise?

Finally, I have to personally thank BPPUniversity for the conferment of anHonorary Degree of Doctor of BusinessAdministration, in recognition for my 30years as a guardian of the rights ofstudents (see picture). Dont worry, youwont have to call, me Dr. Hambly!

Graham Hambly, PQ magazine editor [email protected]

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PQ Magazine Fourth floor, Central House, 142 Central Street, London EC1V 8AR | Phone: 020 7216 6444 | Email: [email protected]: www.pqmagazine.co.uk | Editor/publisher: Graham Hambly [email protected] | Advertising manager: Polly Thrasivoulou [email protected]

Associate editor: Adam Riches | Art editor: Tim Parker | Subscriptions: [email protected] | Contributors: Robert Bruce, Prem Sikka, Carl Lygo, Tony Kelly, Phil Gammon, Jo Daley | Origination and print services by Classified Central Media

If you have any problems with delivery, or if you want to change your delivery address, please email [email protected]

Published by PQ Publishing PQ Publishing 2015

Ive lost faith in CIMAIve taken CIMAs P3 exam threetimes and failed each time. I clearlyhave no divine right to pass thisexam but I do feel that I haveworked extremely hard and felt wellprepared for each sitting.

On 30 April, my tuition providertold me CIMA had acknowledgedthat there were problems with P3and F3. The advice was to not sitthe exam until a review was carriedout by CIMA in mid May.

As I was studying F3 at the timethis put me in a difficultposition. I had to finishmy F3 course and not sitthe F3 exam while

waiting to see if I could re-sit P3.Due to problems securing suitabledates for re-sits at Pearson Vue Idecided to book my fourth resit for8 June. I assumed this would be inline with the May review.

Then on 28 May I was told thatall my previous exam fails at P3were going to be reassessed, withthe results made public on 11June. This means I have paid for afourth exam sitting for an exam Imay have passed first time!

This throws up lots of issues. Iclearly will be foolish to re-sit on 8 June if I have already passed,but will I be refunded for thisdefunct re-sit and earlier re-sits? I

have wasted my F3 course by notsitting F3 as I tried to pass P3 willI be recompensed for this?

The irony of all of this is that myemails directly to CIMA have beenmet with responses that there wasnothing wrong with the exams! Iknow for a fact that this wasdisingenuous. CIMA knew veryearly on that there was problemswith P3 and F3.

I have spent a lot of timestudying courses about ethics, riskand getting it right first time. Itappears that CIMA has let down alot of students and I personallyhave lost faith in them.Name and address supplied

The writer of the star letter each month wins a fantastic I PQ mug!Hot & Tweet

email [email protected]

The ACCA writesFollowing your article on the ACCAswebsite design (PQ, June 2015), wehad one clear objective in the re-structuring of the student section to make it easier for students toaccess the exam resources that weprovide. Since the new structurewent live, students have been tellingus how much they like the new,clearer navigation. We know thetiming was right, letting studentspreparing for exams in June benefitfrom the improvements.

Many of our most valuableresources, examiners reports andother guidance from the examiningteam, were previously under used.They are easily found using thefilters in the new resource finder,and we have added quickexplanations about the variousresources to help students selectexactly what they need.

As well as wanting to signpost theuseful resources, we also took theopportunity to remove resourcesthat were no longer useful, removingpast papers that were more thanfive years old. If exams havechanged in structure (such as theFundamentals Skills exams, or theProfessional Options exams) orwhere the content is subject totechnical changes, such as examsin tax, financial reporting or audit,past exam papers can bemisleading. The best source ofquestion practice is to be found in

Keeping you up-to-date with all thegoings-on at CIMA,feedback on the ACCA Juneexams and our reveal aboutAQ2016 for AAT meant wemanaged to zoom past the 2,000followers this month. ACCA PQswere quick to respond to ourtweets about the June exams.F7, F9 and P4 were the paperswith most moans! The MCQs forF9 were again thought to be toohard. As one PQ tweeted us:Pathetic MCQs. Two in a rownow very disheartening. P4was described as a very veryfrustrating exam, with the time-consuming Q1 that seemed theproblem. One CIPFA PQ tweetedus about the PSFR exam, whichshe said was really tough. Follow us @PQmagazine

the revision question bankspublished by ACCAs ApprovedContent Providers. These contain atleast eight exams worth ofquestions that are technically up todate, and re-written to reflect thecurrent exam structures andquestion types.Thanks to ACCA for this response

Exams just not fairI sat the P7 and P4 exams in Juneand would like the ACCA to know

what students really go through. P4was a disaster. I believe the examinerdoesnt give students a fair chance topass or display their knowledge Iactually felt suicidal for the first timein my life after doing it. Section Bwas badly set. I had done more than80 past P4 exam questions but thisone was impossible. The exam is sotime pressured.

P7 was also very time pressuredand tested some fringe accountingrules in Q1. We are always being

told to study the whole syllabus, butit seems that the P4 and P7examiners are not interested intesting the majority of the syllabus,instead focusing on fringe details.

I am very disappointed with theACCA qualification. Its a devil. Whyput students in such demandingconditions that are not representativeof the real world? The ACCA shouldreally think about reworking theoption papers.Name and address supplied

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8 PQ Magazine July 2015

PQ news

With this being the 150th edition ofPQ we need to take a long view. Weneed to look at change. That is whatjournalists do when faced withcommemorating a milestone. So Ilooked back to the days when I waseditor of Accountancy Age. In 1984,the magazine was celebrating 15years of exuberant life. Weinterviewed people about the changesthey had seen during their career.Most talked about computers. I spoketo one of the most thoughtful people Iknew in the profession, a partner atwhat was then Peat Marwick (nowKPMG). The most visible change maysurprise you, he said, but it is astriking change, and a human one. Itis the substantial number of womenoccupying every range of position inthe large firms.

That was how he saw it in 1984,over 30 years ago. It is a reminder ofhow issues that are of enormousimportance in 2015 are not new. Thesteady progress toward genderequality in the profession has beengoing on for years, and it is a gradual,accumulative and accelerating one.The most recent figures show thatacross the accounting professionaround half of students and 40% ofqualified accountants are women. It isnot perfect, but the trend has beenmoving inexorably in the rightdirection. The news that this year, forthe first time, women took a completesweep of the top places in the ICAEWfinal exams simply makes the changeeven more emphatic.

Change always takes longer thanyou hope. But it is there, and it isunstoppable.

ROBERTBRUCESlowly butsurely, theprofession ischanging forthe better

Robert Bruce is an award-winning writer onaccountancy for The Times

More tough MCQs at F9, animpossible Q1 in the P4 paper,and an F7 exam that madeyour eyes water. These werejust some of thecomments from ACCAPQs sitting the June test.

While it seemed all quiet onthe F5, F6 and F8 front, this wasnot the case in many of theother papers. As one F9 sitter putit: Pathetic MCQs. Two in a row

now very disheartening. It all leftsome students hoping for a

miracle. The MCQs for F7were also deemed tricky by

many PQs. I thoughtthey were really hard and

unfair, one told us. What alsoupset students was theappearance of ratios again.

Thats the third time in a row,said one. We loved the suggestionon one noticeboard that the PQ

would have scored higher marks forQ2 if they had sketched theircalculator in the answer booklet.

P4 sitters got bogged down onQ1, with one PQ admitting tospending two hours on it. Timepressure was a real bugbear here.Others wondered if the examinerhimself could finish the exam in theallotted three hours. See www.pqmagazine.co.uk formore feedback

Testing exams for many June sitters

Whats shaping your future role?

Great CIMA giveawayThere is still plenty of time to

enter our fantastic CIMA StrategicCase Study giveaway. Brought toyou by Reed Business School, onelucky reader will be able to attendthe five-day intensive course worthover 1,000. The course runs from12 to 16 August. For full details goto page 25.

Interactive conferenceThe ACCA has announced

that Tuesday 4 August is the datefor Access ACCA, an interactive

online student conference. Theaim is to help PQs understand thechanges ACCA is making to theexams. PQs were asked to shapethe agenda they had to choosethree topics from a list that theyare most interested in. ACCA saidit is also open to suggestions.

Volunteers neededCIPFAs South West Regional

Council is launching a new studentsub-committee. This committeewill support PQs in all areas,running a variety of events across

the region. The first stage is to findvolunteers if you are interestedemail [email protected]

Shared services ventureCIMA and the Hackett Group

have joined forces to relaunchCIMAs existing Certificate inShared Services as a co-brandedGlobal Business Services (GBS)qualification. They are seeking torespond to the clear need for GBSand shared services organisationsto invest in programmes to hire,develop and retain staff.

In brief

CIPFA is moving full steam aheadwith its Governance Review, andwill be putting full proposals to theAGM in early July.

In response to consultation,CIPFAs Governance Review

Working Party has suggested anew-look Council comprisingelected members based on globalregions rather than employmentsectors. This will reflect CIPFAsincreasing internationalmembership, which is expected toreach 2,000 by the end of 2015.

A new role of Junior VicePresident (JVP) is being planned,with the role of Honorary Treasurerbeing abolished. And while themaximum size of Council willremain at 41, the review party hasalso suggested that 35 would be abetter number.

All voting will be done online,with the promise that all officialnotices to be sent via email fromthe beginning of 2016.

Governance Review for CIPFA

The ICAEWs CEO Michael Izza hadanother good year when it came toremuneration. He was paid545,000 in 2014, up a cool19,000 on a year ago.

Despite working for one of thesmallest accountancy bodies ICASsAnton Colella has a very healthysalary package worth 354,000.This is 1,000 up on a year ago.

CIMAs Charles Tilley received apackage worth 347,000, which isa rise year-on-year of just 1%; AATchief Mark Farrar was paid170,000, a fall of 1,000.

Although CIPFAs annual reporthas hit the streets it still insists onnot naming the top-paid employees.It doesnt even say exactly whatthey earn, hiding the figures behindbands. So we know one employeeat CIPFA Business earns between220,000229,999 and one atCIPFA earns between 170,000and 179,999. But we cant tell youwith any certainty who these peopleare! Which is a shame. Annual reports reviews, page 14

There are five things you will need to get ahandle on if you want to make it to the topand become a CFO, says a new study fromthe ACCA.

The key influences shaping the futureroles of finance leaders of tomorrow areeconomic volatility, risk, data, technologyand talent. The ACCA said these fiveinfluences show how the CFO role and thedemands that come with the job are shiftingas activities that drive business valuechange, adding: It is vital that these are

understood and acted upon if financechiefs are to succeed in the job in thefuture.

The ACCAs head of corporate sector,Jamie Lyon, explained: The assetsneeded to be an effective CFO havechanged. In a customer-centric economyintangibles such as data, brand, talentand innovation are central to helpingbusinesses succeed. How CFOs embraceand adapt to these is going to be reallyimportant in the future.

What does yourCEO get paid?

Lyon: intangibles matter

Anton Colella Michael Izza

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PQ news

UK and European legislators havebeen critical of the role of accountingstandards in the banking crash of2007-2008. The first response of theIASB was to reintroduce the concept ofprudence through IFRS 9 for financialinstruments. This requires banks to setaside profits to meet expected losses.

Now the IASB has said it will reviseits Conceptual Framework for FinancialReporting. A key feature will be toreintroduce an explicit reference tothe notion of prudence. The IASBexposure draft states that neutrality issupported by the exercise of prudence.Prudence is the exercise of cautionwhen making judgements underconditions of uncertainty. The exerciseof prudence means that assets andincome are not overstated andliabilities and expenses are notunderstated. Equally, the exercise ofprudence does not allow for theunderstatement of assets and incomeor the overstatement of liabilities andexpenses, because such mis-statements can lead to theoverstatement of income or theunderstatement of expenses in futureperiods.

The IASBs gymnastics pose seriousquestions about its intellectual rigourand failure to listen to its critics. Didwe really need a banking crash andthe ensuing economic mayhem topersuade the IASB to rethink itsposition? By reintroducing prudencethe IASB may have appeasedlegislators and bought some time, butserious questions remain about itsfitness to remain a standard-setter.

PREMSIKKAIASB all atsea over theconcept ofprudence

Prem Sikka is professor of accountancy at theUniversity of Essex

EXAM MARKING FIASCO:CIMA EXPLAINS ALL

CIMAs Steve Flatman and PeterStewart have joined forces to helpexplain how the new CIMA examresults work on You Tube. Theyhave posted two videos: onecovering the case study, the otherthe OT exams.

In both, Flatman (pictured)acknowledges that the institute hasnot communicated these changesin a coherent and consistentmanner. It is hoping these YouTube16 minutes will help explain exactlyhow the new scaled scores andcompetencies work.

Flatman explained that, originally,CIMA had indicated a 60% passrate would be needed for the CaseStudy exams. However, in the first10-minute video the pair explainedthat the institute will not beproviding percentages as it is using

the equating system to ensure theresults are fair.

Stewart emphasised theimportance of reading theexaminers report. He felt it wasalso good practice to look at theother four variants, too. He went onto explain that the aim of the examsis to test competence rather thanknowledge, saying: Our exams arecompetency-led, scenario-based,role playing exams where you haveto play a character.

The second video, on objectivetests is just six minutes long. Itexplains that you will receive anoverall grade of pass or fail. You willalso be provided with an indicativegrade of proficient or not proficient.

It all gets a bit technical here,with talk of the Angoff Method. Itbasically means that CIMA cantissue raw scores (numbers ofquestions answered correctly) butpromises to release the scaledscores in future once morestudents have sat the test.

Find the videos at: Case Study: https://www.youtube.com/watch?v=s3D8ZTS2nK4 Objective Tests: https://www.youtube.com/watch?v=mxgD1lkIHHU For a fuller explanation on theAngoff Method, or equating, to gowww.cimaglobal.com/results

Ambition is great, but it can be lonelygetting to the top. New research hasfound that loneliness is most acuteamong younger people because theyare prioritising their career oversocialising with family and friends.

Some 83% of 18 to 34 year olds toldBolton University researchers that theyhave experienced loneliness. The research also found that UKadults interact with only six friends, family members or neighboursin a typical week. Psychologist Rebecca Harris said youngerpeople relied too heavily on social media for interaction becausethey felt too busy to make time for friends after work.

For many in the 18-34 group you can add long commutes tolong working hours, so theres not a lot of spare time. Harris feltthis age groups loneliness experience can be seen as very BridgetJones. They get home feeling unhappy and change into their PJsafter a long day and eat ice cream out of the tub! Interaction atwork isnt always the right kind of interaction, she said.

Are you lonely?The ACCA has unveiled plans to relocate itsLondon HQ. It is moving out of its LincolnInn Fields home in Holborn to newlyrefurbished offices within the historicAdelphi building in John Adam Street.

CEO Helen Brand said: Since 1996, ourLondon operations have been spread acrossa number of locations in Holborn. Thisarrangement has become increasingly unfitfor purpose.

The ACCA has signed a lease for twofloors at the Adelphi, with the staff due tomove in in January 2016.

PQ magazine understands the ACCA hasyet to decide whether it is going to sell itswonderful Lincolns Inn Field building in theheart of the capital.

The announcement follows hot on theheels of moves from CIPFA and CIMA. Bothhave relocated to more appropriate offices.

ACCA on move

Summer Budget announcedChancellor GeorgeOsborne hasannounced the datefor an emergencysummer Budget,

which will take place on 8 July. Itwill focus on reforming welfare,Whitehall savings and a crackdown on tax avoidance. Osbornehas promised not to raise incometax, national insurance and VAT.There might, however, be changesto inheritance tax and personalallowances.

Peppa Pig rolling in it Peppa Pig has gone global,bringing home the bacon forEntertainment One. Thecompany, which ownshalf of the rights tothe much-lovedfamily of pigs,recently announcedprofits doubling to44m. The cartoonracked up $1bn (643.2m) ofUS sales. Peppa is also big inLatin America and the Far East,with 600 licence deals in place.

Next loses avoidance caseNext has been found guilty oftrying to circumvent 32m worth

of tax. The clothing retailertried to take advantage of

complex laws offering reliefon dividend payments tohelp it shelter 106m onoverseas profits. Next

accountants were said tohave created large dividend

payments between subsidiarieswithout transferring profits. HMRClawyers said these transactionswere designed to inflate and

entitled tax relief through artificialand implausible means.

McDonalds goes quarterlyMcDonalds has said it is droppingits reporting of monthly same-store sales. From July, it will reportonly quarterly comparable sales,which it believes will be a bettermeasure of sales at the worldsbiggest restaurant chain. CEOSteve Easterbrook felt the movewill provide a better understandingof the companys overall financialperformance.

Business digest Business digest Business digest

10 PQ july 15 p10_pq sept 12 p08 09/06/2015 11:51 Page 10

011_PQ 0715.qxp_PQ 1209 000 08/06/2015 12:00 Page 7


PQ news

Hollywood has announced the releasedate for the movie The Accountant,starring Ben Affleck. It follows thestory of man who is an accountantmost of the time and an assassin forthe rest. Its due to be released on 22 January 2016 with a glamorouscast of stars it promises to be a majorhit. Afflecks starring role led me tothink about the way Hollywood hasportrayed accountants. First, thephilanderers: in the 2011 film Crazy,Stupid, Love Kevin Bacon played anaccountant who seduced marriedmother of two, Julianne Moore.Second, the crucial business mind,such as Ben Kingsleys portrayal ofItzhak Stern in Schindlers List,helping to rescue many Jews from theNazi death camps. Third, the nerdyaccountant who gets the girls; thereare lots of films in this category but(showing my age) my favourite is RickMoranis, the accountant Louis Tullyin Ghostbusters. Fourth, the femaleaccountant. Perhaps the best is Chersportrayal of Loretta Castorini in the1987 film Moonstruck, alongsideNicholas Cage. A close contender inis Kirstie Alley, who plays anaccountant and single mum in the1989 film Look Whos Talking. Butfor me the best portrayal of theshrewd book-keeper is not thegangster accountants but Tim Robbinsplaying Andy Dufresne in TheShawshank Redemption. Surely BenAffleck, Kevin Bacon, Ben Kingsley,Cher, Kirstie Alley and Tim Robbinsare pretty good stars to represent theaccounting profession?

CARLLYGOReaching for the stars:Hollywoodand us

Professor Carl Lygo ischief executive of BPP

Self-help best for AATs

The ACCA and University ofLondon have joined forces to createa ground-breaking integratedmasters degree programme.

Accountancy students can nowsign up to a course that allowsthem to study towards an MScprogramme with the University ofLondon at the same time as takingtheir professional ACCAqualification.

The masters degree in

Professional Accountancy has beencustomised with two pathways forboth ACCA students and itsmembers/affiliates.

For current students the firstthree essential papers will becreated by the University of Londonfor its masters degree. It is at thispoint you will be able to register forthe degree. In order to pass thedegree students will need tocomplete two professional modules,

as well as completing a strategicfinancial project.

Members/affiliates will berequired to complete two modules,namely global issues for the financeprofessional and a strategicfinancial project, to complete theaward.

CEO Helen Brand (pictured)said: This historic new partnershipbetween ACCA and the Universityof London means that both ourmembers and the thousands ofnew students embarking on ourqualification now have the option toextend their learning journey byobtaining a masters degree fromone of the most prestigiousuniversities in the world.

Get an MScwith ACCA

The key drivers in deciding on loss relief areusually the amount of tax saved and cash flow.So be clear about the decision making process: Technical rigour: At the tip of your tax fingersmust be certainty that a current year and thena carry back claim sets a trading loss againstprofits before qualifying charitable donations.The carry forward sets a trading loss againstfuture trading profits of the same trade. Grouprelief revises taxable total profits within a 75%group. Group definitions: Be clear about differentshareholdings for group purposes, especiallyeffective ownership requirements. Remember,

when looking at associates an effectiveshareholding is not calculated through a chainof companies. The associate of your associateis your associate, without the need to multiplythe percentages down the group structure. Respect client wishes: In a given scenarioyou may be instructed how to utilise losses, forexample relieve losses as soon as possible orgive priority to group relief surrenders tocompanies without minority interests. In thepast, the marginal rates of corporation tax havetaken priority in many loss relief decisions, butas the small profits rate and the main rate haveconverged, this could be less important, so do

not fixate upon it, especially where thenumbers involved are relatively small. Other losses: Watch out for property businesslosses and deficits on non-trading loanrelationships which will interact with thetrading loss decision. Be clear of the rulesregarding their offset for both the current year,carry back, carry forward and group reliefoptions as they are different. Dont juggle toomuch though; maximise your basic knowledgeand conclude on your choices. Cath Hall is an AIA Achieve e-tutor. Morearticles can be found on the AIA website:www.aiaworldwide.com/a-quick-look-at

A QUICK LOOK AT... corporation tax loss relief

A lack of relevant work experience tomatch exam success is one of theregular issues aired on the hugelysuccessful AAT distance learningFacebook group.

One of the original founders,Joanne Parry, told PQ in an exclusiveinterview that it is the communitythat helps provide the answers tomembers problems. This self-helpapproach is proving popular, as thegroup recently broke through the3,000-member barrier.

One way of gaining more relevantwork experience is throughvolunteering, and the group hascompiled a helpful list of websitesthat provide such opportunities. AsParry said, volunteering is a great wayto put into practice what you arelearning. A couple of sites to start atare www.do-it.org.uk andwww.volunteering.org.uk.

The group is now planning a seriesof Q&A sessions, including one on CVwriting and interview techniques.

Parry: thecommunityis key

Tune in to ICAEW webinarsDust off your diary, grab your redpen and set aside time to tune intothree webinars aimed at supportingACA students through their trainingand professional development. Theyare: 23 June: Projecting confidenceand credibility. Learn how to projectconfidence and credibility inmeetings with internal and externalstakeholders. 28 July: Building your resilience inthe workplace. Join communication

skills expert Jennifer MacKay, whowill be discussing the importance ofbeing resilient in the workplace andways in which you can build yours. 25 August: Managing challengingsituations. This professionaldevelopment webinar will share toptips on how best to manage andpositively engage with difficultsituations.

All webinars start at 10am (UKtime). To reserve your place go toicaew.com/acawebinars

Guilty pairTwo provisional members haveappeared before the ICAEWdisciplinary committee. DanielBowes was declared unfit to be amember after he was convicted ofGBH. He was ordered to pay costsof 2,599. Mary Taiye Adeyelaceased to be a provisionalmember and became ineligible forre-registration for a one-yearperiod. She had been found guiltyof stealing vouchers worth 6,826from an employer.

PQ July 15 p12_pq sept 12 p08 10/06/2015 12:06 Page 8

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PQ annual reports

AATAAT says that membership continued togrow in 2014 it was up 2.6% to133,600. That said, the association is stillreally benefitting from the continued highlevels of income generated by CBAs.These brought in 11,105,000 during theyear, thats a rise of 50k on 2013.

Total incoming resources was25,702,000 and AAT achieved a netgain before other recognised gains andlosses of 515,000. There was, however,a big hit from the valuation of the definedbenefit scheme, which blew a 2.3mhole in the accounts.

The report reveals that there was a1.5% decline in new student recruitmentin 2014, from 26,782 to 26,359. TheAAT says it will be looking closely at thisarea for 2015. There was also a marginaldecline in the number of new MAATsrecruited in 2014, down from 3,389 in2013 to 3,170 in 2014.

On the positive side, there was a verysmall increase in the number of studentscompleting the final level 4 of thequalification 6,674 (6,642 in 2013).The number of affiliates also increased by4.5%.

AAT CEO Mark Farrar was paid170,000, a year-on-year fall of 1,000.Members: 133,600 (2013 120,169)Students: 54,736 (51,078) Staff: 218 (213)PQ SAYS: Always a strong annual reportand this year is no different. A good useof real people 8/10

CIMAEach member and student generated258 to CIMAs coffers in 2014,according to the latest annual report.

Total income for the year was up by

13% to 61.9m, as 5,548 new memberscame on board. This led to a financialsurplus of 1.8m for the year.

Income from students rose to 32.4m,a hike of 12%. This reflects a rise in thestudent population, more exam papersittings and an increase in prices for subsand exam fees.

For 2015, CIMA is aiming to increaseincome by a mere 1% to 62.6m.

The number of students joining theinstitute in 2014 was 35,512, a year-on-year rise of 6%. North Asia and SouthAsia saw the highest increases, of 54%and 68% respectively.

We are told that CIMA significantlyincreased its presence in Nigeria; it alsorestructured its operations in India, withthe aim of getting closer to its corecustomer markets in both countries.

In South East Asia, CIMA strengthenedlocal delivery in Indonesia, seekingpartnerships with universities to attractnew students. Two such relationshipsduring the year added 500 students.

Elsewhere, strong competition and thestrength of sterling caused a short fall intargets.

The report reveals the cost of the newCIMA syllabus and move to the newassessment platform. It said: Investmentin this game-changing project has totalled2.4m in 2014.

Interestingly, CEO Charles Tilleys paypacket rose just 1%to 347,000.

A big concern forCIMA will be its ownresearch that foundmember satisfactionis at a five-year highof 81%, but studentsatisfaction fell to afive-year low of 71%.The instituteunderstands it needsto improve itscustomer service.Members: 99,943(2013 95,925)Students: 127,813(122,134)Staff: UK 254 (250),overseas 200 (170)PQ SAYS: A good report, straight-forwardand honest 8/10

CIPFAPresident Mike Owen reveals that CIPFAhas seen a large increase in the numberof students training with it (an impressive32% jump). There are now 3,362students studying CIPFA, and it believes

this growth reflects the increasedemphasis it has place on improving itsstudent offering and its global reach.CIPFAs voice and reach has definitelygone global in 2014.

Income was up for the second year in

a row to 27,472,000. That said,however, CIPFA ran up an operating lossof 481,000. Going global costs money!

Selling three London properties andpurchasing new offices resulted in asurplus of 8m. A pension credit of 1mwas also achieved.

Now for our annual moan. Yet again,CIPFA has not provided clear andtransparent information when it comes tothe salaries of its executive staff. Weknow that one employee at CIPFABusiness earns 220,000 to 229,999,and someone at CIPFA earns 170,000to 179,999, but we arent told whothese people are. Every otheraccountancy body provides at least thename that goes with the top-paidemployee. The ICAEW provides thesalaries of its whole executive team.Members: 13,525 (2013 13,533)Students: 3,362 (2,550)Staff: 256 (237)PQ SAYS: It always surprises us thataccountants dont want to know moreabout the money and who is paid what.We arent accusing CIPFA of taking theFIFA approach to this but surely itshould be benchmarking itself against theother accountancy bodies 6/10

ICAEWThe big news is the 10,441 new studentsstudying for the ACA and CFABqualifications. Thats a record, and nowthe aim for 2015 is to maintain thisgrowth with a target of 6,645 new

READ EM AND WEYes, its that time of year, folks annual report time. Weve ploughed through them and heres the highlights

10 pq july 15 p14-15_Layout 1 09/06/2015 11:16 Page 2

PQ Magazine July 2015 15

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Female membership also increasedduring the year up from 25% to 27% oftotal membership. The 2014 studentfemale intake was 42%, also up.

Revenue for the year was 91.5m(87.6m in 2013), which helped toproduce a surplus of 2.4m.

Other highlights in theannual report includedthe opening of new officesin Vietnam and Indonesia.The ICAEW also becamethe first non-legal body tobe granted the right toauthorise some legalservices in the UK,starting with probate.

CEO Michael Izza hadanother good year with a19,000 rise in his paypacket. He is now paid545,000 a year(526,000 in 2013).

The ICAEW follows bestpractice when it comes tothe executive group andprovides the details of all

their remuneration and rightly so.Members: 144,167 (2013 142,234)Students: 22,001 (20,121)Staff: 685 (665)PQ SAYS: There is nothing wrong withthe report; in fact the ICAEW leads theway in reporting. But we cant helpcringing at the over use of top of themountain-type shots 7.5/10

ICASICAS also makes the most of the fact thatits student numbers are moving back up.Some 902 were signed up in 2014. Thiscompares with just 767 students in

2013, but is still well below the 963figure of 2012.

Last year the institute ran a class forDeloitte in London for the first time.This is in addition to the work it doeswith EY, KPMG, BP and RBS, amongothers in England.

The annual report reveals that ICASnow has 20,401 members. Just overhalf of these (51%) are based inScotland. Of the rest, 34% are basedin other parts of the UK, and 15% arescattered across the globe.

ICAS reported a profit before tax of489,000 on income of 15,120,000.Income fell by 268,000 in 2014,largely due to a fall in commercialincome of nearly 500k.

We discover that ICAS is nowsupporting 39 foundation students.

These are young people fromdisadvantaged communities wanting topursue a career in accountancy.

Chief executive Anton Colellas paypacket rose just 1,000 in 2014, to354,000.Members: 20,401 (2013 20,108)Students: 3,140 (2,988)Staff: 137.8 (137.4)PQ SAYS: Sound enough, but didnt blowus away like last year. Perhaps everyoneis catching up with ICAS 7.5/10

NOTE: The ACCAs Annual Report is notdue to be published until September we will review it then

PQ

10 pq july 15 p14-15_Layout 1 09/06/2015 11:17 Page 3

Alan Hatfield explains whythe ACCA puts a premium ontaking an ethical approach and argues all organisationsshould do likewise Ethics is, or at least should be, atthe heart of any profession, be itaccountancy or finance,medicine or retail. It is crucial that we allact ethically in our day-to-day lives, too.Being accountable and having integritymeans that people can trust you,because they know you will hold yourhands up if something goes wrong whenits your fault. Thats what we do at ACCA its about being transparent.

Banks, supermarkets and other multi-nationals have all come under scrutiny inrecent years because they have not beentransparent about their actions, and sowhen trouble erupts and the news gets tothe media, the general public lose theirtrust in these organisations.

ACCA knows how important ethics is,so our Professional Ethics module has tobe completed as part of taking the ACCAqualification, as well as it being a part ofour exams, continuing professionaldevelopment training and practicalexperience requirements. Manyorganisations now have whistle-blowingpolicies to protect those who report anywrongdoing that takes place, whichshows how important it is to be ethical inbusiness.

The Professional Ethics module givesstudents exposure to a range of ethicalperspectives and includes several self-tests that require them to reflect on theirown ethical behaviour and values. Theythen apply what they have learnt to acase study, where they experience anaudit situation from two points of view,that of the auditor and corporate financialaccountant.

Everyone has their own moral codeand every organisation should have ashared values or a professional code ofethics that employees know about andare expected to abide by, because itshould not be up to the individual todecide what is and isnt ethically correctfor its organisation there should beguidelines.

At ACCA we have five core values thatwe tell our students about from day one(and our staff). They are opportunity,accountability, integrity, diversity andinnovation. Since ACCAs inception therehas been a belief that our qualificationshould be open to anyone with thecapability and talent to enter the


PQ business ethics

ETHICS = TRUST

accountancy profession it should not bedown to who can afford it, who has theright material/tools to do it or even thetuition provider to help.

The Professional Ethics moduleincludes exercises to help studentsexplore how personal values can fit withtheir organisations ethics. Then, whenthey are faced with a difficult decisionand find themselves applying thefundamental principles of theirprofession, they will be better prepared toapply their professional judgment ratherthan their personal beliefs.

I think most peoples own values tendto resonate with those of the organisationthey work for, that is one of the reasonswhy people are drawn to professions theyaspire to get in to. But it is not just up toyou as the student or employee of anorganisation to abide by ethics, theboardroom of an organisation plays a keypart in an organisations culture, theyneed to lead by example.

We recently produced a report with theEconomic and Social Research Council(ESRC) about this. The findings assertthat boards are critical in defining theircompanys culture, which can help toavoid the sort of dysfunctional behaviourthat causes accidents, destroys valuesand creates financial and reputationalloss.

Again, this leads back to the need fororganisations to have a set of valueseveryone abides by, or a professionalcode of ethics. With this, an organisationcan thrive in the knowledge that it isworking in the interest of its clients andthe public, as well as its own.

Alan Hatfield is ACCAsexecutive director ofstrategy and development

PQ

Asking for trouble: someof the worlds largestcompanies have sufferedreputational damage dueto losing their moralcompass in recent times

10 PQ july 15 p16_Layout 1 09/06/2015 11:52 Page 23

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Pass rate: N/A Technical difficulty: 8/10 Weighting of calculations: 40-60% Weighting of discursive elements:

40-60% Exam technique: 9/10

The syllabus .The P2 (Advanced Management Accounting)exam builds on the knowledge learnt in P1(Management Accounting) to develop yourdecision-making ability for both short-term andlong-term decisions. If you studied P1 in 2014you will find an unusually heavy level of repetitionbetween the two papers. This is because some ofthe topics were switched between them at thestart of 2015 (investment appraisal anduncertainty and risk). In other syllabus areas P2advances on what was learned in P1 in areassuch as ABC, and introduces new topics such aspricing and learning curves.

The syllabus is broken down into four areas:ACost planning and analysis for competitiveadvantage (25%) This area of the syllabusdevelops the understanding of activity basedcosting and its use in actively managing areassuch as product and customer profitability. Italso goes into more detail than P1 with regardsto techniques for more modern environmentsincluding those such as JIT, TQM, throughputaccounting and target costing. Its important foryou to understand why changes to traditionalcosting methods have been needed and whatthe benefits of the new methods are. A topic newto P1 PQs is learning curves which has alwaysbeen a very popular exam area in P2,particularly for calculations involving finding alearning rate or determining the time/cost forindividual units or batches to be produced.BControl and performance management ofresponsibility centres (30%) This is a wide-ranging syllabus area, covering relevant costs,performance measurement and reporting,behavioural issues in performance management,financial and non-financial performanceindicators and transfer pricing. As managementaccountants you need to understand whichinformation is best used to evaluateperformance, whether on a company ordivisional level, how to determine and applytargets in a way that is motivational to thosebeing evaluated and how to preventdysfunctional decision making from setting ofinappropriate targets/transfer prices.CLong-term decision making (30%) Theinvestment appraisal section of this syllabusarea was tested in 2014 as part of P1 but dolook out for the extra bits that have been addedto P2 on MIRR and real options for capitalinvestment. For those who didnt see investmentappraisal at P1, this is an important topic area asappraisals are used to make decisions withregard to large items of expenditure withbusiness repercussions lasting for years. It is anarea later built upon in F3 and P3. Pricingdecisions are also included in this area and can

be tested as calculations (algebraic method, costplus, tabular method) as well as writtenquestions (choice of pricing method, itssuitability and consequences).DManagement control and risk (15%) Whilethis is an area already seen at P1 level, theP2 focus is more on risk management and moredifficult calculations such as those involvingBayes theorem. It links back to syllabus area Cwith the use of sensitivity analysis to assess theimpact of changes to the decisions made.Understanding of, for instance, the TARAframework for managing risks helps you developa more strategic approach to decision makingwhen risk is involved rather than simplycrunching probability numbers.

Sitting the P2 exam .The P2 exam, as with all of the objective testexams, is a mixture of multiple choice, multipleresponse, drag and drop style questions andselecting from drop down menus. You will alsobe required to type in numerical answers.

The exam is time pressured. Whilst theaverage time per question is a minute and a halfthere will be questions that take much longerthan this and other questions that are muchquicker to answer, so its important to rememberthat although time management is crucial youshouldnt panic when you realise a question isgoing to take more than 90 seconds.

Key tips .Practice: Practising questions before the exam iseven more crucial than it used to be. There areno follow through marks any more everyanswer is either right or wrong so there is nocredit given for partially correct answers. This

means that the more familiar you are with thetypes of questions that will come up, the lesslikely you are to make a mistake that will loseyou the marks. Also, with the time pressureinvolved in P2, the more question practiseyouve done the speedier you will be and beingable to quickly recognise a question type meansless time wasted on interpretation and more timespent on picking up marks.Read the question: You cant afford to answerthe question you think is being asked instead ofthe question thats actually being asked. Lookout in particular for requirements to specifyanswers to a certain number of decimal placesor to the nearest thousand dollars. If asked tocalculate a cost to be charged to a product orservice, make sure you know whether tocalculate the total cost for the period or the unitcost. Also, a question may ask you for a changein a value rather than the new value itself.Answer everything: With a 70% pass mark youcant afford to leave questions unanswered. Ifyou know that youre going to struggle with aquestion, pop an answer in and use the flaggingfunction so that if you get time later on you cancome back to it. You can use this technique forthe longer questions too so that you can (if youwant to) focus initially on answering the shorterquestions and picking up marks as quickly aspossible.Revise the whole syllabus: The nature of thenew exam style means that all syllabus areascan be tested and with the 70% pass mark ifyou choose to selectively revise only the areasyou feel confident with you are limiting yourability to pass even if you get all the questionson your strong areas correct. Josie Kelly is a tutor at Kaplan Financial

PQ

18

PQ CIMA P2 paper

PQ Magazine July 2015

Josie Kelly explains how you can beat the examiner in this tough paper

Time to make a decision

So soup? Or no soup?

10 PQ july 15 p18_Layout 1 09/06/2015 11:18 Page 14

19PQ Magazine July 2015

IASB round-up PQ

IASB completes review ofIFRS for smaller UK firms

The IFRS Foundation has published the2015 edition of IFRS as global standards:a pocket guide.

The guide providescondensed versions of the fulljurisdiction profiles the UK ison page 159. It alsosummarises what IFRS are, thebenefits of global accountingstandards, the history of thedevelopment of IFRS, thestandard-setting process, therequirements of current IFRSs,and links to further informationresources.

Once you have read the guide you cantake a test. An online educational quiz isa free-of-charge resource for students,

educators and other interestedparties to assess their knowledgeof the use of IFRS, the IASB andthe standards themselves. Thequiz has been developed byformer IASB member PaulPacter, the author of the latestpocket guide. You can access itat: http://go.ifrs.org/IFRS-Quiz.

PQ has five copies of thisinvaluable guide to give away see page 38.

Win a copy of the new IFRS pocket guide

The International AccountingStandards Board has unveiled anew mission statement.

Chairman Hans Hoogervorstexplained that until recently we didnot really have one! He said theIASBs constitution merelyformulates objectives, the first ofwhich is to develop, in the publicinterest, a single set of high quality,understandable, enforceable andglobally accepted financial reportingstandards based upon clearlyarticulated principles. This,Hoogervorst felt, deals with thewhat, but not the why. Why is ourwork important, and how do weserve the public interest? hewondered. He went on the askwhether standards are only ofinterest to investors and accountants or has the work broaderrelevance?

After a series of meetings a missionstatement has been developed:

Our mission is to develop IFRSthat brings transparency,accountability and efficiency tofinancial markets around the world.Our work serves the public interest

by fostering trust, growth and long-term financial stability within theglobal economy. IFRS brings transparency byenhancing the internationalcomparability and quality of financialinformation, enabling investors andother market participants to makeinformed economic decisions. IFRS strengthens accountability byreducing the information gapbetween the providers of capital andthe people to whom they have

entrusted their money. Ourstandards provide

information that is

needed to hold management toaccount. As a source of globallycomparable information, IFRS isalso of vital importance to regulatorsaround the world. IFRS contributes to economicefficiency by helping investors toidentify opportunities and risksacross the world, thus improvingcapital allocation. For businesses,the use of a single, trustedaccounting language lowers the costof capital and reduces internationalreporting costs.

We are a not-for-profit, publicinterest organisation with oversightby a Monitoring Board of publicauthorities. Our governance and dueprocess are designed to keep ourstandard-setting independent fromspecial interests while ensuringaccountability to our stakeholdersaround the world.

IFRS in numbers 94% 130 out of 138 jurisdictions have made apublic commitment to IFRS as the single set of globalaccounting standards. 83% 114/138 jurisdictions already require the useof IFRS by all or most public companies, with most ofthe remaining jurisdictions permitting their use. $41 trillion is the combined GDP of IFRS jurisdictions,representing more than half of the worldwide GDP. $24 trillion non-EU while the European Union is thesingle biggest IFRS jurisdiction, the combined GDP ofIFRS jurisdictions outside the EU (US$24 trillion) is nowgreater than that of the EU itself (US$17 trillion). 50% In less than six years since its publication theIFRS for SMEs has been adopted by 50% (69 out of138) of jurisdictions while a further 15 jurisdictions areconsidering doing so.

IASB breaks ground with mission statement

The International Accounting StandardsBoard (IASB) has issued limitedamendments to the IFRS for SMEsfollowing a comprehensive review. TheStandard, which was specifically developed forsmall and medium-sized entities, has seenremarkable uptake, with millions of companiesusing it worldwide. The International FinancialReporting Standard for Small and Medium-sizedEntities (IFRS for SMEs) was developed inresponse to international demand for the IASB todevelop global standards for SMEs.

After consulting widely with constituents, theIASB concluded that the IFRS for SMEs requiredlittle change. However, some areas were identifiedwhere improvements could be made. The most

significant changes, which relate totransactions commonly encountered bySMEs, are: Permitting SMEs to revalueproperty, plant and equipment. Aligning the main recognition andmeasurement requirements fordeferred income tax with IFRS.

Most of the amendments clarifyexisting requirements or add supportingguidance, rather than change the underlyingrequirements in the IFRS for SMEs. Consequently,for most SMEs and users of their financialstatements, the amendments are expected toimprove understanding of the existingrequirements, without having a significant effect

on an SMEs financial reporting practices.IAB chairman Hans Hoogervorst, pictured,said: The IFRS for SMEs has been aremarkable success and is now used bymillions of companies worldwide. Theamendments are expected to improve theStandard for companies and users of their

financial statements. As a result, we expectthe adoption to spread further, improving

reporting and consistency among companieswithout public accountability around the world.

Entities reporting using the IFRS for SMEs arerequired to apply the amendments for annualperiods beginning on or after 1 January 2017.Earlier application is permitted provided allamendments are applied at the same time. PQ

The IASBsHQ, situatedin LondonsCannonStreet

10 pq july 15 p-19 CCM.qxp_Layout 1 09/06/2015 13:27 Page 26

Here at PQ Towers weve got a soft spotfor the first-ever winner of our PQ ofthe Year award. That went to EmmaJames in 2004, an AAT student from Swansea.

So, what has happened to our Emma? Wellshe is all grown up and is now a senior lecturerat Swansea University. From September she willbecome theundergraduateprogrammedirector foraccountancy. Ourgirl has come along way. Werecently caughtup with Emma asshe asked us tocome and talk toher second yearundergraduatesabout careers inaccountancy.

She has done

brilliantly at Swansea. She was promotedto senior lecturer after just 12 monthsand students seem to really warm to her.What has helped is her passion foraccountancy. She also brings a bit ofrealism to the role. Remember she hasbeen on the coal face her last role wasworking as a finance manager for a localdistribution company. In fact she wasrecently summonsed to court about workshe did six years ago, and was able to answerany queries with confidence. It was a two-hourgrilling but as she says with accountancy you

dont study forexams you arestudying forlife.

It was duringthe financialcrisis that thedirection ofEmmas careerreally changed.The companyshe was

working forwas struggling.

But they stillneeded her

expertise. She convinced them that they couldntafford her and she went part-time. She took outa loan and went back to school to get herteaching qualification (PGCE). Emma admits itwas a bit of a risk, but she took out a loan and ithas all paid off.

She has given up a lot. A company car andhigh flying job, but one suspects she wouldntchange it for the world. She explains is all verypoetically: I used to use just my head. Now Iuse my head and my heart. The hours are justas long, and can seem endless at time, but shefeels she is really making a difference tostudents lives.`

She is both AAT and ACCA qualified, but sheisnt stopping there. Next on her list is amasters. I thought I am not jumping straightinto a Phd. That obviously will come next, thereis no holding this girl back! PQ

20

PQ Wales focus


We caught up with Emma James,PQ magazines first-ever PQ of theYear. So whats she been up to?

USE YOUR HEAD AND HEART

PQ college visit

One cannot help but be impressed bythe unique setting for Gower CollegeSwanseas accountancy courses. Yousweep along the Swansea Bay, up past theuniversity and hospital and turn into Sketty Hall.

It is easy to see why students love theiraccountancy home and we had Paul Sizer, thecurriculum leader, as our guide. Now anyonewho knows Gower will associate it with Paul they have become almost the same thing. It isalso easy to forget that Gower College Swansea isan FE college, but it has been offering ACCAcourses for almost 20 years. It is the only FEcollege in the UK to have ACCA Platinum statusand Sizer and the small, dedicated team haveworked incredible hard for that recognition.

The accountancy courses are growing year-on-year. Currently, there are around 300 AATs and120-plus ACCAs studying at the college. Wethink that makes it one of the biggest publicsector colleges in Wales.

When PQ magazine visited Pauls team waslooking at how the faculty plans for the ACCAsmove to four sittings a year. On hearing the newsthe team immediately asked employers andstudents about what they needed. A survey ofstudents found that 50% didnt want to changehow they approached the exams. Although theyseem confused about the big changes aheadtutors are there to hold hands and show themthe way. That is very indicative of the Gower way you feel the tutors really care.

Sizer explained that the team looked at thebest combinations and modules that worked welltogether (for example F7 and P2). It hasnt beeneasy, but he is really happy with what the collegecan now offer ACCA PQs.

Gower is one of the few colleges that offersAAT level 4 as a full-time option. Taking thisroute can save students a year of a degreecourse and means they leave with a professionalqualification.

The college is also famed for its mentoringapproach to students. A lot of this success canbe put down to one woman Jayne Walker. She

is available to all students and is there to help,be it to revamp a CV or just to talk through somepersonal issues. She brought up a young familywhile she got ACCA qualified and knows allabout the pressure and struggles of balancingwork, life and study.

Students obviously like what Gower isproviding. One PQ travels one-and-a-half hoursjust to get there. What Sizer thinks also makesthe college stand out is the accountancy teamsreal-life experiences. Many tutors are stillworking outside college, and they bring that tothe classroom. PQ

Then and now:Emma withdaughterShannon (left),and how wereported onher becomingour first PQ ofthe Year

All go at Gower College SwanseaPQ editor Graham Hambly is given a guided tour of beautiful Sketty Hall,the home of Gower College Swanseas ever-popular accountancy courses

COLLEGE

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self assessment PQ

A FRESH OPPORTUNITY

Meet the winners of the AAT Training Provider Awards

Palmer: changewill be a liberatingexperience

George Osbornes Budgetannouncement that in less thanfive years time the tax return formost will be a thing of the past might inreality be a bit of triumph of substanceover form, but what will it mean for theaccountant of the future?

Call me a misguided optimist, but Ibelieve that the promised automation ofthe existing self assessment taxcompliance process will be the bestopportunity to come the professions wayin a generation and certainly not thethreat to the anticipated livelihood thatthose of you in training might think.

The move to personal digital taxaccounts which, if HMRC gets it right, willsuck in great streams of tax related datafrom all sorts of disparate sources will bea liberating experience that will leaveaccountants of the future free toconcentrate on potentially morerewarding and lucrative added-valueprojects, rather than merely dealing withthe dry process of ensuring taxpayerscompliance as part of the preparationand submission of self assessment taxreturns.

It is my guess that while there may nolonger be a requirement to file the currentself assessment tax return, introducedalmost 20 years ago, for many, if notalmost all taxpayers, there will still be aneed to reconcile their gross income andtax per HMRC to that per client.

While I am convinced that HMRC is

getting much better at hoovering up thirdparty data and ascribing it accurately toindividuals, I am equally convinced thatthe complexities of the UK tax systemand the subjective nature of accountspreparation will mean that for a long timeinto the future the next generation ofaccountants/tax advisers will still play animportant part in making the UK taxcompliance process work.

It is anticipated that in the future somewill have to submit an end-of-year taxreturn and others may opt to continue tovoluntarily file a return, but it isanticipated the numbers actually makingsubmission will be significantly lower.Surely from an administrative burdenperspective this can only be a good thing.

All of us who do tax compliance knowwhat a challenge the start to the calendaryear can be, especially as our clients stirfrom their festive period lethargy andsupply those vital pieces of informationthat weve been waiting for since June.

Who knows: in the brave new worldaccountants of the future will no longerdread the moment the clock strikesmidnight on New Years Eve, signallingthe beginning of what, for many, will be agrueling month, with an ever-increasingnumber of sleepless nights before thesanctuary of 1 February. Brian Palmer is the Association ofAccounting Technicians Tax PolicyAdviser and the MD of accountancyand tax practice Palmer & Co

PQ

Brian Palmer believes changesto the self assessment taxprocess will be good for PQs

There were some real stand-out winners this year at therecent Training ProviderAwards 2015. Among them was thedistance learner prizewinner AshrafAli a mere 85 years old! Weunderstand that he plans to tacklethe ACCA exams next.

Rachael Johnstone was on PQmagazines tablefor the eveningevent. She was,shall we say, verypleased that hercollege, SouthDevon, won thelarge TrainingProvider of theYear. Johnstonehas had a variedcareer. A hugely

successful AAT lecturer, she told usshe has also been a magiciansassistant. PQ has always wanted tosaw a tutor in half and now wehave found one we can do it to!

THE WINNERS Training provider of the year small: The Training Place of

Excellence Training Provider ofthe year medium: TheSheffield College Training Provider ofthe year large: SouthDevon College Pauline SparkesAward for best newtraining provider: ICSLearn Distance learning

provider of the year: Kaplan LiveOnline International training provider ofthe year: Africa ManagementDevelopment Institute (AMADI) Apprenticeship training providerof the year: Kaplan Best use of e-learning: PremierTraining Best progression to fullmembership: BPP Tutor of the year: RichardAboayge Kensington and ChelseaCollege Apprentice of the year: DanielAmoakoh The Training Place ofExcellence Distance learner of the year:Ashraf Ali, BPP Student of the year: HelenWoods, Thorpe Adult Education

Never too old: BPP studentAshraf Ali pictured with histutor Mark Hines

Celebration time: South DevonColleges Rachael Johnstone

10 PQ July 15 p23_Layout 1 09/06/2015 12:08 Page 23

24

PQ CIMA case study


PREPARE TO SUCCEEDWell done to those who have clearedE2, F2 and P2 hurdles; Im sureyour thoughts are turning towardsthe September case study window. There arethose who think it is impossible to startpreparing now for the September case as wedo not have sight of the pre-seen or know theindustry. However, I would advise verydifferently. If you look at the CIMA competencyframework you will note straight away thatactually 39 of the original (pre-standardisation)marks on this case are Technical skills.Knowledge from F2 and P2 is going to be

re-tested but in a completely different style. Note that E2 comes into playmassively for the other 61%, but pre-release of the case I suggest youneed to first of all concentrate on the 39% that is technical.

Students are saying that one of the big issues they have is feeling theyshould have spent longer on technical skills. Starting now will leave youvery well placed when the case study comes out.

CIMA COMPETENCY FRAMEWORK

Criterion Competences Syllabus area

Technical skills Financial accounting and reporting F2Cost accounting and management P2Planning and control P2Management reporting and analysis P2Risk management and internal control P2Taxation P2 & F2Accounting information systems P2 & F2

If you passed P2 and F2 under the OT paper regime, you need to do somesoul searching about your depth of knowledge on these syllabuses. In yourF2 paper you may have correctly answered an OT question on the area ofinter-segment comparisons, such as this: Which THREE of the followingstatements are considered to be benefits to users of segmental analysisdisclosures prepared in accordance with IFRS 8 Operating Segmentswhen analysing performance and position of an entity?

A. The disclosures reflect the information used by the chief operatingdecision maker when making economic decisions about the entity,therefore users get an inside view of management accountinginformation.B. Users can see how each separate major component of the business iscontributing to the overall performance of the entity.C. Entities (in particular) directors have a certain amount of flexibility inhow they define the reportable segments.D. Users will be able to better assess the level of risk facing the entity aseach segment will be exposed to different risks.E. Users may be able to better assess the level of risk facing the entity aseach segment will be exposed to differentrisks.

If you have passed F2 recently, I am sure youwill know the answer was A, B and E. But letsbe honest, the answer was on the computerscreen in front of you you had to be able toidentify the correct answer, but this is aDIFFERENT skill to being able to recall thecorrect answer for a blank box exam and thenstructure and write in an appropriate manner.

For the MICS the same syllabus area ofinter-segment comparison will be presented asa Trigger and a Task. A Trigger could be: youhave received an e-mail from the FinanceDirector:

From: Mark Harris, [email protected]: 27th July 2015 Subject: FW: Inter segment comparison

Please see below We have a new member of the board, can we geta diary date next week please.

From: Nigel Lowe, [email protected]: 27th July 2015 Subject: Inter segment comparison

I do not understand why we prepare the operating segmentinformation in our set of financial statements its just lots and lotsof numbers, which I dont understand. It must cost us a significantamount of money to produce the information, which must outweighthe benefits it provides.

A Task could be: you have received another e-mail from the FinanceDirector:

From: Mark Harris, [email protected]: 27th July 2015 Subject: Re: Inter segment comparison

Thanks for the meeting today. It was really useful. Could you preparea briefing note that covers what we discussed today, suitable to besent directly to Nigel please. Can you make sure you emphasis thebenefits that could be gained by investors from reviewing theoperating segment disclosures when making future decisions oninvestment, but also cover the limitations of using operating segmentinformation when making investment decisions. Please include asection that shows how the requirements of IFRS 8 OperatingSegments assist entities in minimising the costs of producing thesedisclosures.

Drop me an e-mail to [email protected] if you want myrecording debriefing this task and trigger.

Your preparation for the OT paper may not leave you feeling prepared toanswer this and it is of course just a tiny aspect of one learning outcomeon the F2 syllabus. Your variant case could focus on deferred tax, raisingfinance or a business combination as a few examples. This is a bigsyllabus and you now need to re-prepare for long-form answers. Of course,your technical marks could be primarily from a P2 perspective. So if youare planning to sit the case in September start planning now. If you arebooking a course make sure it comes with Technical skill resourcesupfront. You should not wait until the pre seen to start this journey. Clare Finch is a partner at HTFT Partnership, leads the HTFT MICSteam and is the author of A Students Guide to IFRS

PQ

Preparing now for the September Management Integrated Case Study (MICS) is vital, argues Clare Finch

PQ July 15 p24_Layout 1 10/06/2015 14:07 Page 14


CIPFA focus PQ

CIPFA was one of many bodiesrepresented at the ThirdAfrican Congress ofAccountancy (ACOA), where therewere continuing pleas for better publicsector accountancy, from trainingthrough to financial monitoring andreporting.

In his speech at the ACOA openingceremony, Professor Mussa Assad,President of the Pan AfricanFederation of Accountants, singled outthe public sector as one of three areaswhere accountancy in Africa neededto be stronger. He said public sectorfinance in Africa faced quite a lot ofchallenges, including the number ofpeople employed in the sector andtheir skills and competencies. Thedepth of interaction between theaccountancy profession and thepublic sector was also weak, he said.

Olivia Kirtley, President of theInternational Federation of Accountants,highlighted the need for African countries toadopt International Public Sector AccountingStandards (IPSAS). Doing so would give publicsector managers the complete and reliable

information they need to manage resources andgive citizens and stakeholders the informationnecessary to hold governments to account.

She also said the accounting profession had acrucial role to play in enhancing the continents

growth, but she noted the weaknessof the profession in Africa. Of thecontinents 56 countries, only 40%have professional accountancyorganisations. And for those thatdo, the accountancy profession stillrequires substantial strengthening,Kirtley added.

A particular highlight of ACOA wasCIPFA winning the Best ExhibitionStand award and being announcedthe first official global media partner.

CIPFA chief executive RobWhiteman said: CIPFA is a worldleader in good public financialmanagement, so we are delightedthat are able to use this as aplatform to reach out to a largeinternational audience to championthat cause during a time ofenormous challenge and reform inAfrica and around the world.

CIPFA is at the forefront of IPSASadoption, offering dedicated training in the formof its Certificate in IPSAS. It is looking tocollaboratively work with institutes around theworld to strengthen public financialmanagement. PQ

Call to improve public sectoraccountancy across Africa

PQ magazine reports on theThird African Congress ofAccountancy, which tookplace recently in Mauritius

COMPETITION TERMS & CONDITIONSThe competition is open to all PQs. Deadline for entries is noon on Monday 29 June.No cash alternative will be offered. Not open to employees of PQ magazine or ReedBusiness School. One student will be offered a place on the course, which cannot bedeferred or transferred. Entry to the CIMA case study exam itself is NOT included.Other normal terms and conditions apply. The decision of the publisher is final.

Reed Business School is offering one lucky PQmagazine reader the chance to win a free CIMAStrategic level intensive course worth over 1,000.So what would you get? A place on the five-day course from 12-16 August2015, literally just days before the exam. Accommodation, all meals, refreshments andparking.Ex-CIMA examiner David Harris will be running thecourse. He will be able to tutor students on thetechnique CIMA look for and offer fantastic adviceon what students will be expected to do in order topass the exam.The course is aimed at Strategic case study studentssitting the August assessment.To enter simply email [email protected] your name and contact number by noon onMonday 29 June.

STRATEGIC CASESTUDY GIVEAWAY

ultimate giveaway PQ

PQ July 15 p-25_Layout 1 10/06/2015 15:55 Page 23

I t is amazing how many students find topicshard in the higher accountancy exams thatactually follow on from earlier papers. Whenstudying for any of the professional accountancyqualifications you need to appreciate that once apaper is passed that knowledge cannot simplybe forgotten.

Check whether its relevant for a later paperand, if so, the key elements of knowledge thatneed to be remembered going forward. If you areproactive at doing this then you can actuallyenjoy studying for the harder later papers as youhave a solid starting block to build on.

Some students are lucky enough to be givencredit for prior learning. This can have a negativeimpact for some as the knowledge you havepreviously learnt may have been a long time agoand/or may have been covered in a different wayto the qualification you are now trying to obtainrequires. So, ideally, if you have been given anexemption for a subject get a copy of the studymanual for that subject to help you refresh yourknowledge for the higher level subject you will bestudying towards. By doing this you will enjoystudying towards the next level subject so muchmore.

Here is a table for each higher accountancyqualification that shows the progression route ofkey syllabus subjects. PQ

26

PQ study guidance


Jenny Winstanley explains how you can best utilise brought forward knowledge and credit for prior learning

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ICAEWAccountancy Financial Accounting and Reporting Corporate ReportingAssurance Audit and Assurance Corporate ReportingPrinciples of Tax Tax Compliance Business Planning TaxBusiness & Finance Business Strategy Strategic Business Management (also need knowledgeof Corporate Reporting)Management Information Financial Management Strategic Business Management (also needknowledge of Corporate Reporting)

ACCA F3 Financial Accounting F7 Financial Reporting P2 Corporate ReportingF8 Audit and Assurance P1 Governance, Risk and Ethics option P7 Advanced Auditing andAssurance (also need knowledge of P2)F6 Taxation option P6 Advanced TaxationF2 Management Accounting F5 Performance Management P3 Business Analysis (also needknowledge of F1 Accountant in Business) and option P5 Advanced Performance ManagementF2 Management Accounting F9 Financial Management option P4 Advanced FinancialManagement

CIMAE1 Organisational Management E2 Project and Relationship Management E3 StrategicManagementP1 Management Accounting P2 Advanced Management Accounting P3 Risk Management(also need knowledge of E1 and E2)F1 Financial Reporting F2 Advanced Financial Reporting F3 Financial Strategy (also needknowledge of P2)

Jenny Winstanley, Reed Business School

Youll never guess what I heard...

Keep up with the latest industrynews follow on Twitter @pqmagazine

PQ July 15 p26 _Layout 1 10/06/2015 16:05 Page 14

So at last there is an IFRS onrevenue. IFRS 15 Revenue fromContracts with Customers wasissued with little fuss on 28 May 2014.Given the project started in June 2002and has gone through so many seismicchanges it is perhaps fitting that the finalproduct crept out of the InternationalAccounting Standards Board (IASB)exhausted and unheralded. So what doesit say and what are the effects?

Some of the early ideas on revenuewere revolutionary. They would haveturned financial reporting on its head. But,in the end, the final product feels like atidy up of the current guidance on revenuerecognition. So to get a feel for the newIFRS we should first look at the old one.Old IAS 18 Revenue has two models forrevenue recognition and little else: Sale of goods: At revenueRevenue on sale of goods is recognisedat the point that risks and rewards aretransferred. Sale of services: Over revenueRevenue on services is recognised overthe period the revenue is earned and inaccordance with completion in eachreporting period.

Widespread inconsistency .The two models were felt to work well inisolation but because there was so littleelse in IAS 18 by way of guidance therewas widespread inconsistency betweenthe revenue recognition of similar itemsin different players across an industry.

Retail had no problem; but anythingslightly more complex like film making orgym membership was hard to nail down.Even simple questions like is this sale ofgoods or sale of services? was hard toanswer consistently. Then sales that wereclearly part goods and part servicesneeded pulling apart into their componentparts in a process called unbundling, forwhich there was no guidance.

And then there was the measurementof fair value and the application ofdiscounting for which there was noguidance and much inconsistency. And,finally, there was construction revenuesitting on its own in IAS 11 for no obviousreason, making it hard to figure whetheran entity should use IAS 11 or IAS 18.Not good. So a new IFRS was needed tosmooth out the rough spots and achieveconsistency in revenue recognition.

The new IFRS 15 adopts a five-stepapproach to revenue recognition:C contract: Identify the contracts with acustomer.O obligations: Identify the performanceobligations (unbundling).P price: Determine the transaction price.A allocate: Allocate the transaction priceto the performance obligations.R revenue: Recognise revenue as entity


international standards PQ

IFRSs and revenuerecognition: a newfive-step approach

Martin Jones tells you

Documents

PQ magazine, July 2015