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 comment PQ

CONTENTS June 2017 Pass rate heaven and hell

News 31CIMA’s image Transformation It’s exam results time. In this issue we have the ACCA, CIMA
08Mental health Survey of young is key to success, says institute
accountants makes grim reading and ICAEW providing their pass rates. We also highlight the
32AAT exams An update on how
10AAT probe Tutors demand to pass the MDCL assessment trouble AAT has been having with the MDCL assessment.
more action over MDCL 33Apprenticeships Why learning That one is being totally remarked, going back to September last year!
12CIMA exams First-time sitters should be a lifelong habit Comparisons between sittings and bodies pass rates are difficult, but
are doing better than ever some pass rates still shock me. A 28% pass rate at the final stages of a
34Big data Could your future be
Features, etc in data science? professional qualification should cause alarm bells. When two-thirds of
06Mind your Ps&Qs Why teach 35Careers #1 Top tips for making students are paying over £100 to fail a test then there is a problem, a
ethics when it’s lacking in the yourself stand out from the crowd disconnect between what is required, what is being taught and the
workplace? And why can’t we see
our exam papers when we fail? 36Careers #2 Life at BDO; and amount of work students think is enough to pass. Remember, the
our social media round-up ACCA pass mark is 50% and still 72% of March sitters failed P5 this
14ACCA conference CBEs are
here to stay, delegates told 34Fun stuff – and our giveaways time around. But there’s no time rest on your laurels – there’s always
16Back to basics Read the The columnists another exam around the corner to pass! Resilience is the key here.
papers if you want to understand Robert Bruce US standard setters
ethics in the business world fly in the face of the obvious 8 Win one…
18ACCA exam tips Tops tips for Prem Sikka Rigged economy will At the recent CIPFA Innovation awards I sat next to the institute’s CFO
the forthcoming exams impact on the general election 10 Peter Woodman. He smiled when I said who I was and explained he
22Dividend Valuation Model Subscribe to PQ magazine was about to make me a very happy man. For years PQ magazine has
This is a model not an It’s FREE – go to
equation – just spot the clue! been campaigning for CIPFA to put the CEO’s salary in full in the
www.pqmagazine.com annual accounts, just like everyone else does. In the past, Rob
24Let’s get technical We
explain fixed investment ABC July 2015 – June 2016 Whiteman was paid in a salary ‘bracket’. Well, from this year we will
appraisal 32,238 know exactly how much members pay him, and rightly so. You can’t
26Profile Meet Amnesty’s Nicki preach the need for openness and transparency if you don’t live by
Deeson; plus auto enrolment those rules. Thanks for listening, CIPFA.
and what you need to do
27ICAEW spotlight Focus on Lose one…
the accounting and assurance Publisher’s statement: We send a I also have to apologise for misleading you last month. Yes, we got
exams at Certificate level digital issue of the magazine to an something wrong! The new CIMA logo doesn’t have a CA in front of it.
28ACCA resources Make the additional 9,647 requested readers Rather, that’s an ‘A’. That doesn’t mean the confusion among members
most of what’s on offer has diminished. Many believe that there is still a lot of ‘brand confusion’
Free to subscribers who fulfil our
30Leases Some top tips on terms of control out there. Take a look at our piece on page 31 to see if that helps.
dealing with tax exam questions
involving leases Annual subscription: £35 (£50 overseas) Graham Hambly, PQ magazine editor – graham@pqaccountant.com

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PQ have your say

email graham@pqaccountant.com

Let’s see our papers

Ethics? What ethics? While it’s great that the Having sat the P2 and P7 exam in
I for one am glad that ACCA accountancy bodies seem to be March, and failed, I’m disheartened
seems to be talking the issue of taking this seriously, the real and finding it difficult to get back
workplace ethics very seriously problem is with enforcement by into my books. I am very confused
with their new ethics module. OK, the likes of the Financial as to why we students are not
it costs £60 and takes 20 hours to Reporting Council. Too often allowed to see our exam papers
complete, but really, we must take companies get away scott free, or when we have failed. Is it not true
this issue seriously. I think it was having to pay a fine. But these that at school and university you go
in the May edition of PQ that you multinational organisations are so through your papers to establish
carried a story saying 20% of swimming in cash that a fine is no where you went wrong, so that the
young accountants witness punishment at all. next time you don’t make the same
unethical behaviour in their We’ve all seen what’s happened mistakes? I include a letter I have
workplace either frequently or in the audit industry in recent sent to ACCA in the hope of a
every day (it was headlined ‘Do years, and frankly the behaviour response, and I thought that maybe
you behave ethically’, PQ, April of some firms disgraces the whole you would like to include it in PQ
2017 page 10 – Ed.) profession of accountancy. We magazine to see how many other
This is an alarming statistic – if need more accountability, and PQs feel the same.
you multiple the number of young accountants by the number of more severe punishment for those Dina Rushton, by email
‘incidents’ then that is a whole lot found responsible. The editor says: Here is Dina’s
of unethical behaviour! Name and address supplied letter – we’ve had to edit it for
reasons of space:
Our star letter writer wins a fantastic PQ memory stick! “I have been a registered with the
ACCA since 2010, I joined very
Thanks for the tips enthusiastically, looking forward to
I was interested to read your short become an accountant as a mature
article on business basics in the student. I have now reached the
May issue of PQ magazine (‘How to professional levels after six years of
get your small business off the hard work, it has been really tough,
ground’, page 24). Great timing you studying, working and running a
guys – my partner is just about to household with boysterous boys.
start his own business so the more The last three months I have
advice we can get the better (I’ve spent most of my time at class or
just started my accountancy at home locked away studying, I
studies).
Anyway, keep the advice Sorted, thanks felt like I have never worked so
hard in my life. I registered for the
coming – it all helps, especially as
lots of people who want to give you
to pqjobs.co.uk P2 and P7 exams and went into
the exam feeling confident that I
advice assume you already know would pass both exams.
about the ‘simple’ things, like I am now sitting here, feeling like
company formation. Thanks! my whole soul has been ripped
Jayne Evans, by email from my body. I have failed both
The editor says: We’re glad you exams, and I don't know where I
found it useful Jayne – this month went wrong. I feel like giving up. Is
we are focusing on auto enrolment, this the sort of encouragement that
so turn to page 26. the ACCA gives its students? We
are not allowed to see our papers
Are we that boring? to see where we went wrong, we
It’s always interesting to discover just start all over again. What if I
what the ‘great British public’ think make the same mistake in the next
of us accountants (‘What do Brits exam? It will cost me £256 to resit.
really think about accountants?’, I am starting to feel that this is all
PQ, May 2017, page 26). But it’s Are we that bad? Personally, I Read Dickens instead a big conspiracy. Exactly why am I
sad that we can’t seem to shake off love my job – it’s varied, with no I enjoyed your fun page story last not allowed to see my paper? And
the ‘boring tag’ – according to the two days being the same (I know month about the Finance Bill why is it necessary to pay another
Kaplan survey 44% of respondents it’s a cliché but it’s true) and the having more words than two of £50 to have somebody look at it
chose accountancy as the most fact I’m always meeting new people Charles Dickens’ novels. No again. What I am paying my yearly
boring profession. The next ‘most is great, too. But I do despair that wonder tax dodging firms can get registration fee for (plus exam
boring’ was HR, with just 11.5% of we will never lose our ‘grey’ image. away with it – it’s just too compex! registration)? What value am I
the votes! Name and address supplied Paul Jacobs, by email getting?”

PQ Magazine Unit 3a, Kingfisher Heights, 2 Bramwell Way, Royal Docks, London E16 2GQ | Phone: 020 7216 6444 | Email: graham@pqaccountant.com
Website: www.pqmagazine.co.uk | Editor/publisher: Graham Hambly graham@pqaccountant.com | Advertising manager: Polly Thrasivoulou polly@pqaccountant.com
Associate editor: Adam Riches | Art editor: Tim Parker | Subscriptions: dom@pqaccountant.com | Contributors: Robert Bruce, Prem Sikka, Carl Lygo,
Tony Kelly, Phil Gammon | 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 dom@pqaccountant.com
Published by PQ Publishing © PQ Publishing 2017
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PQ news

ROBERT
BRUCE
Mental health issues are on the rise
Physical and mental health issues with many PQs complaining of a between 43 and 60 hours a week.
are affecting nearly half of all lack of sleep, tiredness and a loss CABA’s CEO Kath Haines said:
Flying in ICAEW PQs, according to a new of energy. All were impacting on “This research highlights that
the face of CABA survey on student wellbeing their workplace productivity. unhealthy lifestyles are having an
the obvious trends. It is hardly surprising then that affect on student accountants, and
The research found, worryingly, almost two in five employers would be wise to take
that 42% of ACA students say they ICAEW PQs (38%) note.”
don’t feel physically or mentally are unhappy about She felt that striking a work-
healthy. And it would appear that their work-life life balance is hard, but
There are some things that appear so
PQs are feeling more stressed this balance. A major working too much is a
obvious that one cannot imagine why
year. Some 44% of respondents to concern of PQs is vicious circle – not getting
they do not happen. Take the
the survey said they felt less the sheer amount enough sleep or exercise is
introduction of IFRS in the US. The US
healthy than a year ago. The lack of of time work takes detrimental to workplace
is the only large economic area on
the planet that does not use them. time to do physical activity (30%), up in their personal performance.
Look at a recent report about the diet (23%) and stress (22%) were lives, with 28% saying they are Haines revealed that CABA is
effects of their introduction a decade all cited as reasons for feeling expected to work extended hours. partnering with the ICAEW to form
ago in Australia. The significant unhealthy. This is evidenced by the fact that a joint working group to help tackle
sentence is this: “One of the key The effects on students are stark, 25% of respondents worked the issues raised by its students.
benefits of adoption across all sectors
is that it has enabled users and THE AAT WINNERS ARE… row, while the Best Use of E-
preparers to move between sectors, AAT unveiled its Training Provider learning went to First Intuition
and between countries, with Award winners at the recent Distance Learning, and Large
transferable knowledge and skills.” Birmingham conference this Training Provider went to BPP.
Why would any country not wish for month. The coveted AAT Champion Kaplan picked up the Apprentice
the same result and effect? award was presented to Devon- Training Provider award for the
And there are other areas where third year in a row. Preston
based Accountancy Learning.
the obvious just doesn’t seem to be College and Southend Adult
Premier Training walked off with
happening. Take the NHS. Of all the Community College were also
the Distance Learning Provider of
institutions in the country it probably among the winners on the night.
has the strongest culture of having
the year for the second year in a
women in command. Generations of
nurses and strong-minded matrons
have effectively run the system. And
now a report from the University of
ICAEW Professional results look good
Exeter Business School shows that The first-ever ICAEW Professional as its pass rate slipped to 71.3%. based exams.
some 77% of NHS staff are women, level CBE results are out and they The ICAEW’s Mark Protherough PwC’s Heather Brown and
with the percentage of female chief are looking good! The March Audit said: “Results from the first Deutsche Bank’s Harriet Baker
executives at 42.6%. However, in & Assurance paper professional level dominated the prize-winners,
other key roles within the 245 NHS pass rate was 87.3%, computer-based exams picking up four out of the six paper
trusts and related arms-length bodies and the Tax are directly comparable prizes up for grabs.
women are still underrepresented: Compliance exam had to students who have
MARCH 2017 PROFESSIONAL
just 26.3% of finance directors and a healthy 81.3% previously taken the
LEVEL RESULTS
24.6% of medical directors are success rate. Both CBE same exam on paper.
women. Audit & Assurance 87.3%;
pass rates are well up We will of course
If ever there was an organisation Financial Accounting &
on the paper-based continue to closely
that ought to achieve gender parity Reporting – UK GAAP 83.1%;
December 2016 exams. monitor feedback from
with ease it is the NHS. And that Financial Accounting &
The top pass rate ACA students and
really ought to run through to the Reporting – IFRS 81.6%; Tax
honour this time went employers.”
finance end of the business. Compliance 81.3%; Business
again to Business A total of 2,720
Planning: Taxation 71.3%;
Robert Bruce is an Strategy, with 92.5%. students sat the session,
award-winning writer on Business Strategy 92.5%;
There was, however, a dip on the with 4,136 exams attempted. Some
accountancy for The Times Financial Management 81.3%
Business Planning: Taxation paper, 1,425 students sat the computer-

IASB set to ‘improve’ IFRS 8 TOP CAT: Ekaterina

Christova – known at Kati –
has been unveiled as the
The International Accounting set to: winner of the ACCA’s
Standards Board is proposing changes • Clarify and emphasise the criteria prestigious undergraduate
to the IFRS for operating segments. that must be met before two operating of the year Future CFO
IFRS 8 Operating Segments was segments may be aggregated. competition. The economics
issued in 2006 and sets out the • Require companies to disclose the student from the University
disclosure requirements for information title and role of the person or group of Cambridge wins a one-
about a company’s operating that performs the function of the chief week trip to New York to
segments, products and services, as operating decision maker. gain insight into the role of
well as the geographical areas in which • Require companies to provide a financial professional in
it operates and its major customers. information in the notes to the financial the US. She will also get a
The proposed amendments follow on statements if segments in the financial tour of the ACCA’s US
from a Post-implementation Review statements differ from segments office! The competition is
(PIR) of IFRS 8. reported elsewhere in the annual run in association with
The exposure draft amendments are report and in accompanying material. TARGETjobs

8 PQ Magazine June 2017

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PQ news

PREM
SIKKA
AAT ‘uplifting’ MDCL synoptic assessment containing
human marked tasks. Level 4
exams will also have examiner

Rigged marks after protests marked questions.

There are also concerns over
how the refunds work for students
economy AAT needs to provide more competent”. The association says who are deemed competent at the
will rock the assurances about the marking that it has now made adjustments MDCL after the remarking process,
election process following the problems with to all assessment results that have announced in early April. PQ
the Management Accounting: been released from 1 September magazine has been told that the
Decision & Control (MDCL) 2016 until 23 March 2017. refund will be credited to the exam
As we head into another election assessment, say leading tutors. To provide more faith in the centre, not the student. So students
politicians are talking about how the An internal AAT investigation led marking process leading tutors said will need to liaise with their exam
economy has been rigged to to the recent surprise ‘uplifting’ of the AAT should allow some training centre to get that money back. The
disadvantage consumers. Here are the percentage marks for each providers to take part in a AAT have said that students will
some examples. student who has completed the standardisation exercise, so all also receive a £50 goodwill gesture
• Banks have admitted to rigging MDCL assessment. Many students training providers can have and it will contact students directly
interest rates. Some have been fined. and tutors have felt for some time confidence that the written tasks about this.
This means that banks have made the Level 4 assessment was just too are being marked fairly. AQ2016 • See next month’s issue for our
illegal profits from loans, overdrafts,
difficult, with high numbers of sees the AAT taking on a more report from the Training Providers
mortgages, government debt and
private finance initiative (PFI) projects. students stuck at “not yet manual marking, with each conference.
How long before they face hefty
compensation bills?
• Privatised train companies receive
£4-5bn public subsidy each year. UK
Don’t take gel pens into the exam!
trains fares are among the most ACCA students take note – you told PQ: “Gel pens tape. “These items are not
expensive in the world. Subsidies are must not use gel pens or Tippex in don’t come through included on the list of
financing executive pay and dividends. the exam hall! clearly enough in the permitted items which can
• The Competition and Market
An F7 student confessed on one scanning process, be taken to candidates’
Authority reported that a drug company
noticeboard that they had used a hence answers may desks,” explained Machado.
overcharged the NHS by raising the
price of hydrocortisone tablets by black gel pen and correction tape. not be captured correctly if written All information relating to
more than 12,000%. The price of a Both are big no-no’s, and one in gel pens.” Candidates are advised permitted stationery is contained
10mg tablets increased from 79p in breaches exam rules and could lead to use a black ballpoint pen. within the exam attendance dockets,
April 2008 to £88 per pack by March to an invigilator reporting the The ACCA has also told PQs not which students can access weeks in
2016. Profiteering is a cause of the student. ACCA’s Sharon Machado to use either Tippex or correction advance of the exam session.
crisis facing hospitals.

Conference news
• Energy companies have long
excelled at providing confusing tariffs.
They are quick to raise prices even
when the global wholesale price of oil
and gas declines.
• Demand for gluten free food is ACCA has unveiled its timetable for Hungary, Slovakia, UEA and Sri
rising. Sainsbury’s own-brand can of the withdrawal of paper exams for Lanka. The news comes despite the
tomato and basil soup sells for 50p. the F5-F9 sessions. Delegates to the fact some countries haven’t even
Its tomato and basil soup in the ‘free- ACCA Global Learning Providers’ started to offer CBEs. For countries
from’ range costs £1.50 a carton and Conference were told that with the offering CBEs for the first time this
weighs 100g less. Neither has any exception of India, countries that June (such as Poland and Trinidad)
gluten. launched CBE sessions in their last paper-based exams will be
These examples draw attention to
September and December 2016 will March 2018.
poor business ethics and regulation.
have their final paper exams in ACCA has promised that it will
Tougher regulation is likely to be an
election battleground. December this year. replicate the paper exam centre
That means, as of March 2018, network, and is working with the
Prem Sikka is Emeritus there will be full F5-F9 CBE centre British Council to ensure students
Professor of Accounting at coverage across the UK, Ireland, ‘get the same experience’.
the University of Essex Pakistan, China, Czech Republic, • More conference news, page 14.

KPMG sacks six The leak only came to light via a whistleblower, Record revenues for top clubs
KPMG has fired six staff and was referred to the oversight board and Premier League clubs’ combined revenues for
members, including the head the Securities and Exchange Commission in the 2015/16 rose to a record £3.6bn,
of its US audit practice, after late February. KPMG’s Lynne Doughtie said the up 9% in just one season, says
the firm discovered they firm has ‘zero tolerance’ for such unethical research from Deloitte.
improperly received advanced behaviour. She stressed that quality and However, after two seasons in
warnings that the US watchdog was planning integrity “are the cornerstones of all we do and the black clubs recorded pre-
an inspection of one of their audits. that includes operating with the utmost respect tax losses of £110m. Wage
The Public Company Accounting Oversight and regard for the regulatory process”. costs rose by 12% to £2.3bn,
Board revealed one of its employees had ‘left’ PQ columnist Professor Prem Sikka said the resulting in combined operating
the organisation over the leak. It has now leak was a consequence of the close links profits (excluding player trading, net
promised that it has taken steps to “reinforce between regulators and the big accountancy interest charges and the amortisation of player
the integrity of its inspection process”. firms. He said: “It is not just the revolving door contracts) of £0.5bn. Manchester United’s
It appears a KPMG employee, who joined but the revolving carousel. There are revenue grew to £515m, which meant they
the firm from the regulator, had passed on constantly people from regulators going to topped the Deloitte Football Money League for
information from someone who still worked accountancy firms and vice versa. All kinds of the first time since 2003/2004, as the world’s
there about which audits would be inspected. lines, all kinds of boundaries, are blurred.” highest revenue-generating club.

10 PQ Magazine June 2017

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PQ news

CIMA first-timers
CIMA OT pass rates 1/4/16 – 31/3/17
Overall First time Total
E1 88% 77% 73%

doing even better

P1 69% 50% 45%
F1 84% 72% 68%
E2 94% 86% 84%
P2 73% 51% 45%
CIMA has released the latest batch to 53%. The E2 first-time pass rate F2 77% 53% 49%
of pass rates and for the first-time is a healthy 86%, and for E1 it’s E3 82% 67% 64%
all the first-time pass rates for its 77%. P3 79% 57% 52%
OT examinations are above 50%. Steve Flatman, the exams chief, F3 78% 57% 52%

New fraud The pass rate for those

attempting P1 for the first-time has
now risen to 50%. For P2 the pass
was pleased that all the pass rates
continue to move in the right
direction. However, there was one
above 60%, but for February the
pass rate dropped to just 45%.

hotline rate is 51% and for F2 it has risen hiccup this time – the operational
CIMA CASE STUDY FEBRUARY 2017 EXAM PASS RATE case study, where
CIMA has looked into the drop and
is happy that the marking was fair

from HMRC May 16 there was a big

Feb 17 Nov 16 Aug 16 and consistent.
Operational 45% 67% 64% 67% dip in the pass Finally, Flatman revealed that the
Management 62% 71% 71% 63% rate. Recent pass rates for the 2017 Cert BA
HMRC has launched a new hotline Strategic 64% 65% 63% 45% sittings have seen exams will be released this summer,
for the public to report fraud and pass rates well in July.
evasion in the fight against tax
fraud. The service will replace the New kid on the block: Lee Hamill picks up
two separate tax evasion and the Newcomer of the Year Award at CIPFA’s
customs hotlines with one, inaugural Innovation Awards 2017. Among
streamlining HMRC’s intelligence Lee’s many achievements are a plan that
gathering on tax fraud. You can underpins the university’s ability to address
report all kinds of tax fraud and and avoid the risk of financial fraud, and a
evasion on the new hotline, programme that is strengthening the
including PAYE and national organisation’s financial procurement
insurance fraud, undisclosed controls
offshore investments, non-payment
of the National Minimum Wage, tax
credit fraud, failure to pay UK duty,
tax evasion and VAT fraud. The
March exam results ACCA MARCH
EXAM RESULTS
HMRC Fraud Hotline can be found
at 0800 788 887 and is open 8am
to 8pm seven days a week, 365
pass rates ‘mixed’ F5
March 2017 March 2016
38% 39%
days a year. ACCA sitters may have voted P4 as 113,301 exams taken. That means F6 41% 44%
the hardest paper in March, but it the paper-average-per-candidate F7 47% 51%

New EW texts was P5 that had the lowest pass

rate this time around, at just 28%.
was 1.25, which is very similar to
the March 2016 figures.
F8
F9
38%
40%
41%
41%

for ACCA PQs The pass rate for P7 continues to

hover around the 32% mark,
The ACCA revealed 3,864
students completed their final
P1
P2
45%
52%
50%
47%
Emile Woolf International’s new meaning over two-third of sitters are exams and now have just the ethics P3 51% 48%
ACCA study texts for 2017-2018 are still failing this test, too. and experience to do before P4 35% 38%
now available to buy as e-books F8 and F5 have the dubious becoming ACCA members. P5 28% 33%
from its website. PQ likes the fact honour of being the Fundamental ACCA education chief Alan P6 38% 44%
that it says its texts “fully cover the papers with the lowest pass rates – Hatfield said the latest results are P7 32% 30%
syllabus without going into too 38%. Even the tax paper pass rate comparable to the March 2016
much detail”. You can download by slumped to 41%. pass rates. However, if you do The March 2017 exam pass rates
the chapter, saving you from having In all, some 90,752 ACCA compare the results all the pass for the first four papers: F1 83%;
to buy the entire text if you want to students entered the second-ever rates are down, apart from P2, P3 F2 64%; F3 78%; F4 86%.
concentrate on a problem area. March sitting, which saw a total of and P7.

In brief
Search on for world’s top CAs Recruitment bugbears U-turn over students’ status? calculated to save the Higher
The ICAS competition to find The lack of response from The UK government looks set Education & Research Bill.
the 35 most promising and recruiters is the biggest bugbear for to exempt overseas students from
inspiring young CAs is up and accountants looking to change migration targets. PM Theresa May MTD delayed
running again. The ICAS One jobs, says research by CV-Library. is offering to change the way that ACCA has welcomed the
Young CA competition celebrates Nearly half (46.9%) of accountants student numbers are calculated, government’s decision to drop
innovation, leadership and also felt that the whole job-hunting with the promise of concessions. Making Tax Digital legislation from
entrepreneurial spirit among ICAS process was just too long. Being Some 134,000 international the finance bill. Head of tax Chas
young members. The overall hassled by the recruitment students started their studies here Roy-Chowdhury said the ACCA was
winner will represent ICAS at the consultants and vague updates in 2015-16, considerably down on pleased the government is delaying
global youth summit One Young were also on the list of pet hates. the 175,000 from the previous other ‘controversial’ measures –
World, in Bogota, Colombia. The This all combined to mean some year. Due to the snap election the such as interest reduction, loss
winners will be announced on 15 two-thirds (64%) of accountants government is likely to offer a relief carry forward, an end to
September. Last year’s winner was just don’t like looking for a new compromise over how the number permanent ‘non-dom’ status and
Rimla Akhtar. role. of overseas students in Britain are the dividend allowance reduction.

12 PQ Magazine June 2017

 news PQ

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Accountancy bodies have no plans cheating. Monorean even advertises Over at the AAT there was more up with top lecturers and Rogo, the
to beef up their exam invigilation itself as an online store to buy concern about plagiarism of other eAssessment experts, to provide a
following reports of a surge in invisible earpieces for ‘cheating in students’ assessments and free test for PQs.
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discovered there has been a 42% 200 units a year in the UK. The change security at assessment struggling with your tax
rise since 2012 in cheating cases devices cost anything from £50 to centres at this time. assessments, or perhaps the
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Among the worst offenders when MPs and university leaders have However, because many of its Our top-class tutors include
it comes to cheating were students called for students to be frisked for exams are ‘open book’ students can Accountancy Learning’s Neil
at Queen Mary University, London, these tiny devices before an exam. bring in their own materials. As a Montgomery and First Intuition’s
Newcastle University and the PQ magazine asked all the result, it believes there are fewer Gareth John and Nick Craggs. We
University of Surrey. accountancy bodies if they had ways to cheat effectively in these also have the fantastic Philip Dunn’s
There are numerous websites plans to increase security at exam exams, which are heavily focused MCQs for the ACCA F3 exam.
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PQ Magazine June 2017 13

PQ ACCA conference

CBEs are here to stay

Editor Graham Hambly reports from the global learning conference transforming the exam process for the better.
Students really are loving them, and the

A
CCA’s Global Learning Providers’ complaints about hand-writing fatigue are gone
Conference took place recently in forever. Markers and examiners love them, too.
London’s Shaw Theatre. Executive They can finally read what candidates are trying
director Alan Hatfield told the audience that he to say!
wasn’t expecting any drama over the next two The CBEs are the future and a better, more
days but admitted he has always wanted to be convenient way to take exams, as one PQ said.
on the stage! He then turned the words of the There is a problem, however. CBE sitters don’t
bard on their head: “To be or not to be, or appear to be using the masses of ACCA
should I say CBE or not CBE, but there’s not a resources to get themselves familiar with the way
question about that!” the actual exams work. It was suggested as
The CBEs are definitely here to stay, and many as one in four CBE sitters have not looked
anyone who attended the conference could not at specimen papers before sitting the real thing.
fail to be impressed by how F5–F9 CBEs are Even we have to agree that students aren’t
helping themselves here.
FAREWELL TO STEVE SKIDMORE The first CBE F5-F9 sessions were launched in
Walsall FC supporting Steve Skidmore was September 2016 in eight markets, and will be
honoured at the conference after it was available in 18 countries in June 2017. However,
announced he will be retiring as we have reported in this issue, the paper
as examiner of the P3 exams will start to be withdrawn on a market-by-
Business Analysis paper market basis starting next March (see page 10).
when it turns into the
Wherever you are in the world, from June
Strategic Business Leader
2019 a paper exam will not be available
case study in September
anywhere on the globe. PQ
2018. PQ always had a great
relationship with Steve – • In next month’s issue of PQ magazine we will
thanks and good luck! take you through what the examiners said about
their papers.

Win a
fantastic
Apple
Watch!
To be entered into our FREE prize draw simply
email cheryl.ramsden@howett-thorpe.co.uk *
* Remember to include your name, contact details and qualification. Head up your email ‘PQ Apple Watch’

14 PQ Magazine June 2017

Computer-based exams: guidance
and support for ACA students

Online support

The ACA Professional Level Audit and • Sample exams using the new software
Assurance and Tax Compliance exams • Question banks within the new software
moved to computer in March 2017. From September 2017, Financial Accounting and
Reporting and Financial Management will be the
Here’s an overview of the guidance and support
next two exams to move to computer.
available to help you prepare for these exams at the
June Professional Level exam session. Find these resources and more information on
key dates, how to book your exams and access
• Exam guide arrangements at icaew.com/cbe
• Series of short webinars

icaew.com/cbe
PQ back to basics

If it’s in the news, then you employees. We can also rule option D as
it would simply not be practical to
include all law and regulations that the

need to know all about it

company will comply with.
The remaining option B must be
correct and indeed codes of ethics do
often include consequences for
employees of code violations.
There are three key learning points
here – firstly, that applying the real world
to our learning helps to reinforce our
understanding; secondly, that ruling out
incorrect answers is vital exam technique
to help you choose the right answer; and,
thirdly, that you should use questions to
build knowledge and understanding. I’m
totally convinced that we learn effectively
when we get a question wrong and then
work out and understand why we got it
wrong.
Have a look at this second question
relating to corporate codes of ethics:
Q2. Which of the following is the
most effective way of ensuring that
minimum standards of behaviour set
down in a corporate code of ethics are
This month AVADO’s Paul Kirkwood focuses However, my thoughts were immediately implemented?
drawn to Corporate Codes of Ethics. A) Issuing a statement from the board of
on the ACCA F1 topic of Corporate Codes of Surely United has such a code in place directors stating that the organisation will
(a Google search can confirm this) and, if expect compliance with the code by all
Ethics, using real news stories to help build so, is it being implemented effectively staff.
knowledge and understanding across the business? B) Introducing appropriate control
This leads me to a couple of questions systems and communicating the serious

I
n the words of the ACCA F1 highlighted by the F1 examiner in recent consequences of breaches of expected
examiner “success in the F1/FAB exam reports that were not answered well standards.
paper is dependent on by candidates. C) Ensuring that the code is
accumulating a reasonable knowledge of Q1. Which of the following should be communicated across the whole
a range of diverse subjects. As each of included in a corporate code of ethics? organisation, and reminding staff of its
these subjects are disciplines in their own A) A detailed description of all of the provisions in ongoing training.
right, there is a vast array of material and commercial objectives of the company. D) Emphasising the benefits to the
no prospective candidate can possibly B) The consequences for employees of organisation of compliance with the code,
know every fact or understand every violating the standards of behaviour including a higher level of trust by
concept fully.” expected of them. stakeholders.
With such a huge amount of material C) A summary of the responsibilities of I think that this is a tough question as
to work through anything that helps to the individual directors of the company. all answers are plausible. However, try to
understand more efficiently and D) A list of laws and regulations with focus on the question requirement –
effectively will be of great benefit to us which the company will comply. what is the most effective way to ensure
and it will also help us apply our Thinking about the United case, a implementation of the code behaviour
knowledge in the exam room. One tip I code of ethics should provide an standards. To find the answer to this
give my AVADO ACCA F1 students is to overview of the business’s mission, question have a look at the December
keep up-to-date with the news and, more values, objectives and core ethical 2016 ACCA F1 examiner’s report and
importantly, to align news stories to your principles that all employees would while you’re there please read through
studies. understand and be able to apply to their other reports as they are fantastic
For example, take the recent forced work lives. Applying this basic knowledge documents that give you an insight into
removal of passenger David Dao from a to Question 1 we can rule out option A as the F1 exam paper, as well as giving
United (Airlines) flight. This incident can it would simply be too detailed for an study tips and question practice. PQ
be linked to many F1 syllabus areas, ethical code of conduct. We can rule out • Paul Kirkwood is AVADO’s ACCA Lead
such as stakeholders or internal controls. option C as the code will apply to all Tutor and a PQ award winner

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16 PQ Magazine June 2017
 W K
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PQ ACCA exam tips

The exams are coming • Substantive procedures on

thick and fast, so here are revenue, tangible non-current
assets, payroll, inventory.
our tips for June’s papers • Computer assisted audit
techniques.
First Intuition. • Auditor relying on the work of
P1 others.
• 50-mark scenario question to • Subsequent events.
include ethics, governance and risk • Audit report.
management, integrated reporting • Internal auditor.
and directors’ remuneration. F9
• Optional questions to include • Section A – various questions
evaluation of risks and their from across the syllabus.
mitigation, Tucker’s five question • Section B – valuations and risk
model on ethics and the role of management.
NEDs in the management of risk. • Section C – investment appraisal,
P2 including an NPV and business
• Q1 – Group question on disposals finance.
or step acquisitions. P1
• Ethics. • Roles of NEDs and chairman.
• Revenue recognition. • Board performance evaluation.
• Provisions. • Rules v principles governance.
• Deferred tax share-based • Public v private sector
payments. governance.
• Pensions. • Stakeholder prioritisation (e.g.
P3 Mendelow).
• Three strategic lenses. periods/losses). years, with taper relief, and looking • External IC reporting.
• Industry lifecycle. • VAT – option to tax and partial at advantages of lifetime gifts over • Objective v subjective risk.
• Pricing strategy. exemption. death gifts. • Correlated risks.
• Value chain. • EIS, SEIS and VCTs. • VAT – calculation of VAT payable, • ERM.
• Critical success factors. P7 overseas aspects of VAT and VAT • Bribery and corruption.
• Organigram. • Business or audit risks in a groups. • Kohlberg.
• Globalisation. scenario. • Watch out for some sort of tax • Gray, Owen and Adams.
• Porter’s generic strategies. • Identifying ethical and other planning question, for example, • Corporate codes of ethics.
• Change Kaleidoscope. professional issues in a scenario. how profits from a company should • Integrated reporting and
• Harmon’s process strategy mix. • Matters to be considered and be extracted or looking at the tax social/environmental footprints.
• 6 I’s. audit evidence for a couple of core planning opportunities available to P2
• Business case. accounting issues. married couples. • Q1 – balance sheet or CFS or
• Leadership. • Forensic auditing. F7 Sploci, in that order.
P4 • Insolvency issues (UK stream). • For the 60 marks of MCQs in • Q2 and Q3 – usual suspects of FI
• International investment appraisal • Discussion on current issues. Section A and B, the entire syllabus and NCA and impairment and
techniques focusing on risk must be covered, including the revenue and leases groups, and so
management tools such as value at LSBF. more obscure standards (recent on.
risk. F5 questions have covered R&D, • Q4 – investors needs or provisions
• Option valuation. • Sections A and B: Costing government grants, borrowing or groups current issues.
• Capital structure: traditional debt methods (ABC, throughput and costs, investment properties, etc). P3
finance and Islamic finance – lifecycle) and decision making • Depreciation and revaluation, • Strategic analysis.
Sukuk bonds. (relevant costing, linear deferred tax, associates, effect of • Evaluation of options.
• Financing strategy. programming and uncertainty). company payment policies, etc, on • Scenario planning.
• Business valuation. Section C: Transfer pricing, working capital ratios. Watch out • Suitability of and Implementation
P5 budgeting and advanced variances. also for objective test questions, of BPR.
• Critique an existing performance F6 that is where no alternative answers • Improving website effectiveness.
management system and the • Income tax – looking at a sole are given to guide you, usually in • Decision trees.
performance hierarchy. trader or partnership business and numerical questions. P4
• Quality as a critical success factor. calculating the tax adjusted profit. • Section C: Ratios & interpretation, • International NPV.
• Benchmarking. Calculating the income tax liability, including adjustments to be made • Foreign exchange risk.
• Effective use of information with the savings income and before comparison to last year or a • Mergers & acquisitions.
systems. dividend income nil rate bands different company; published P5
• Reward systems linked to being examined. accounts with standards, including • Suitabilty of metrics.
performance measures. • Corporation tax – looking at a cash flow aspects; consolidations. • Financial approaches to decision
• Performance model (balanced company with a long period of F8 making.
scorecard or performance pyramid). account, requiring two corporation • Corporate governance • Value based approaches to
• Risk management techniques. tax computations. Corporation tax recommendations. decision making.
• Transfer pricing. implications of companies • Audit committee roles/benefits. • Link between new processes and
P6 belonging to a 75% loss group. • Audit risk and response. new information requirements.
• Incorporation relief/ • Chargeable gains – calculating • External auditor’s responsibility for • Improving quality.
disincorporation relief. gains made by an individual on fraud/laws and regulations, P6
• Remittance basis. disposals of residential property affecting the client. • IHT with the death estate
• Pensions consortia. versus disposals of non-residential • Internal controls: deficiencies in including BPR and APR and
• Patent box. assets. the client’s systems (purchasing/ lifetime gifts, gifts with reservation
• Takeovers. • Inheritance tax – calculating IHT payroll), recommendations for and relief for a fall in value.
• Commencement of trade (basis on lifetime gifts made within seven improvement and tests of control. Domicile including deemed

18 PQ Magazine June 2017

 ACCA exam tips PQ

domicile and election to be treated

as UK domiciled and deed of
• Property income.
• Relief for pension contributions. HEALTH assets (recognition and/or
impairment of tangible and
variation.
• Takeovers and mergers.
• Adjustments to profit to arrive at
trading income.
WARNING intangible assets), borrowing costs,
accounting treatments on earnings
• Group question, sale of shares • Capital allowance computations. per share or ratios.
versus sale of the trade and assets. • 10-marker on VAT, IHT or CGT. • Industry based question – testing
• Relief for trading losses made by F7 a range of standards such as
a sole trader/partnership at the Section A accounting policies and the
beginning or end of the trading • Several on consolidation and framework, leases, grants, IFRS for
cycle. interpretation of financial SMEs, reorganisations, provisions,
• Residency rules, remittance basis statements. events after the reporting
and overseas aspects of income tax. • Non-core areas – inflation, period and related parties.
• Investment in a VCT the theory specialized entities. These tips should • A discussion question looking at
versus investing in a registered Section C only be used in conjunction current developments in corporate
pension scheme. • One covering interpretations and with proper study. We cannot reporting – the definition and
• Overseas aspects of VAT. the other preparation of financial guarantee that these topics disclosure of capital, revision of the
• Share incentive plan versus EMI statements. will appear in the actual conceptual framework, classification
share option scheme. • One will be in the context of a exam as we have not seen in profit or loss vs OCI, leasing,
• Ethics – conflict of interest or single company and one in the the exam papers. Examiners improvements to disclosures,
duties of a senior accounting officer. context of a group – so you could are not predictable so it is regulatory issues over adoption and
P7 have a single company vital that all core syllabus consistent application of IFRSs,
• Audit risk. interpretation and a groups areas are revised fully. implementation issues, application
• Business risk. preparation or vice versa. of the definition of control and
• Audit of public sector • Accounts preparation questions • Fiscal & monetary policies. significant influence (equity
performance information, social and may include extracts or stand alone • The efficient markets hypotheses. accounting), improvements in
environmental info. calculations or full statements of Section B performance measurement,
• Accounting matters and audit profit or loss and other • Working Capital management – integrated reporting, revenue
evidence. comprehensive income and/or operating cycle, change in credit recognition.
• Ethics and professional issues statement of financial position. period or accepting a factor’s offer. P4
including money laundering, • Accounting for items from other • Business or security valuations – • Q1 – project appraisal (domestic
advertising, quality control. areas of the syllabus. methods of valuation. or overseas).
• Audit report scenarios including • Statement of changes in equity, • Financial risk management – • Business valuations.
KAM, MURGC. statement of cash flows extract, currency risk, interest rate risk. • Cost of capital calculations.
• For UK students, insolvency. earnings per share calculation or Section C • Risk management – VaR, real
linked written. • Working capital management. options, hedging, risk mapping.
BPP. • Consolidation question – fair Section D • Risk management (currency or
F5 values, deferred/contingent • Investment appraisal – NPV with interest rate).
• Planning & operation variances. consideration, PUP on inflation and tax. • Business re-organisation.
• Mix & yield variances. inventories/PPE, intragroup trading Section E • Real options.
• Evaluation of the company (either and balances, goods/cash in transit. • Business finance – evaluation of • Dividend policy.
as a whole or on a divisional basis). • Single entity – trail balance or financing options (interest coverage • Behavioural finance.
F6 restatement of given financial and gearing ratios) or cost of capital P5
Section A & B statements with the usual calculation. • Data analysis using numerical
• Due dates for payment of income adjustments for depreciation, P1 techniques – KPIs, EVA.
tax (payments on account). revaluation and current/deferred tax • You can expect to see the use of • Transfer pricing.
• Due dates for the payment of (revaluations). Plus a mixture of stakeholder, ethical and other CSR • Ratios.
corporation tax (installments for adjustments such as leases, theories applied to the scenario. • Analysis of quality related costs.
large companies). substance over form, financial • Use of risk. • ABC.
• Filing dates for the income tax instruments, share issues, • Control and governance – board • Performance management
and corporation tax returns. government grants, inventory directors, remuneration and frameworks – building blocks,
• Penalties and interest for late valuation, revenue recognition or reporting. performance pyramid, balanced
payments and returns. construction costs. • Dysfunctional behaviour – bribery scorecard.
• VAT rules on registration, F8 and corruption, environmental risk • Quality management.
impairment loss (bad debt) relief, • Audit planning. and poor ethical stance. • Information reporting – CSFs and
and SME schemes relating to cash • Audit risk – identify and explain P2 KPIs.
accounting, annual accounting and audit risk and explain the auditor’s • Preparation of a statement of • Application of strategic models –
flat-rate schemes. response to each risk. financial position and/or group PEST, Porter’s 5 forces, the value
• Inheritance tax due on lifetime • Internal audit. statement of profit or loss and other chain.
transfers both in the donor’s life and • Internal controls – deficiencies of comprehensive income or • HR frameworks – reward and
on death. internal controls and statement of cash flows, including appraisal systems.
• Statutory residence tests for recommendations of suitable foreign subsidiary, discounted • Risk management.
individuals. internal controls or description of activities, disposal and/or • Environmental management
• Identification of groups of tests of controls. acquisition. accounting. PQ
companies for corporate tax loss • Audit procedures – both • Discursive requirements on a
relief and gains. substantive procedures and tests of linked accounting adjustment and For BPP’s top tips
• Trading loss reliefs for both controls. social/ethical/moral aspects of
companies and sole traders. F9 corporate reporting.
for the P6 and P7
Section C Section A • Multi-part question testing – fair exams go to our
Focus on income tax and • Ratio analysis. value measurement, deferred tax,
corporation tax, including the • The concept of shareholder foreign currency transactions, website – see
following: wealth. financial instruments, pensions,
• Employment benefits. • Financial intermediation. share-based payment, non-current
pqmagazine.com

PQ Magazine June 2017 19

The support you need for AAT -
New Kaplan OnDemand Courses
We know it can be tough to juggle a hectic life with your AAT studies, and
when you do find time to study you want to get as much done as possible,
with the support of expert tutors if you get stuck.
That’s why Kaplan have created OnDemand – a brand new online study method, which gives
you all the support and structure of a tutor-led course, but with the flexibility to study wherever
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 To help design OnDemand, we asked AAT students like you what they wanted
most from their course to help them succeed. Take a look at some of the
responses below to show how our course was built with you in mind.

“I want to know there’s someone to “I want a subject expert to motivate

speak to when I need them” me and give me feedback”

When you’re working to your own busy schedule, you In order to get the most out of your course, you need
don’t want to have to put your studies on hold waiting full confidence in your tutor. Kaplan tutors are subject
for your tutor to respond. That’s why we’re keeping our specialists, and OnDemand gives you full access to their
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You can get an instant response from a qualified to complete and when - just like in a classroom.
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“I want flexibility, but to know there’s
still structure to keep me motivated.”
“I want high quality content that
OnDemand complements the ‘on-demand’ nature of makes it easier to learn”
many of the AAT exams, which can be taken any time.
You can start the course 365 days a year, meaning
waiting for course start dates or finding your way into a Students told us that the quality of learning resources
classroom becomes a thing of the past. was the most important factor for them in choosing a
flexible course. We believe that just because you decide
Some students told us that they find it difficult to
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keep on track with no fixed dates, which is why Kaplan
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OnDemand also provides structure to help you maintain
progress and go into the exam feeling confident. With Kaplan OnDemand you’ll benefit from a wide
range of high quality and engaging online content, all
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worked examples and interactive tests will help guide
“I want lots of question practice, in a you through every part of the syllabus. Plus, all the
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PQ Dividend Valuation Model

More than a simple sum

The Dividend Valuation Model (DVM) is
exactly what it says it is – a model not just
an equation! Sunil Bhandari explains all

T
he Dividend Valuation Model
(DVM) is a key part of both the
CIMA F3 and ACCA F9 exams. It
has also recently reappeared again in the
ACCA P4 paper after going missing for a
short while.
The DVM is one of the methods that
can be used to value equity shares,
which is how it was predominantly tested
in the exam papers mentioned above.
However, it is the unique technique to
find the price of preference share capital
and bonds as far as these exam papers
are concerned.
The DVM is founded upon this simple
statement: “The current value of a share
or bond is equal to the sum of the
present value of future cash flows exam kits particularly, for CIMA F3 and when there is either no dividend payable
received by the investor after being ACCA F9, contain practice material that for a short period of time or there is an
discounted at their minimum required simply allows the answer to be obtained erratic growth pattern for the next few
rate of return.” using the formula. years. In both cases, this is likely to be
It’s a mouthful for sure, but not really Unfortunately, this leads to some followed by a constant growth rate in the
that complicated. It is simply saying that students rote learning how to use this dividend. The equation provided on the
investors’ price their investments based method and not to understand the paper will not work in this situation.
on the cash returns they expect to foundation of the model. However, understanding the foundation
receive after accruing for the time value Why is this an issue, you may well ask? of the model, along with being able to
of money (discounting the cash flows). If the examiners provide the formula and compute a discount factor for a delayed
However, many exam candidates appear the exam preparation material allows a perpetuity with growth, will allow students
not to appreciate this point. candidate to see how this works there is to conquer this test.
The reason is that the exam papers no problem. Or is there? 3) Finally, when applying the DVM to
provide a formula that can be used to This equilibrium gets unbalanced ascertain the value of a redeemable bond
find the value of equity shares: when the exam questions vary from the the equation has no relevance at all. The
theme of providing the last dividend paid, lender will receive interest each year until
Po = Do(1+g) specifying the future annual growth rate maturity, followed by a repayment of the
(Ke – g) in this value and stating the Ke. Take the capital in the final year. To find the bond
Where: following three situations: value, discount the interest each year
Po = Equity share price 1) Instead of providing the current using an annuity discount factor and add
g = Expected constant annual growth dividend per share, the forecast dividend to this the present value of the capital
rate in dividends in one year’s time is given. Some repayment. The discount rate is the yield
Ke = Minimum required rate of return students incorrectly adjust this by of the bond, not the Ke.
of the shareholders (Ke maybe replaced multiplying by (1+g), leading to an Students who appreciate and
with the letters ‘re’) overstated share price. In the CIMA F3 understand basis of the DVM rather than
and ACCA F9 papers, which contain wrongly believing that its just an equation
The equation ONLY applies to compute multiple choice/objective test questions, that you plug figures into, will have a far
the value of an equity share providing the it is likely that this wrong answer will be better chance of passing their respective
future annual dividends will grow at a one of the options. It will be a distracter exam. PQ
constant rate. answer. • Sunil Bhandari is a freelance ACCA
It is true that the officially approved 2) The more interesting situation occurs and CIMA tutor and writer

22 PQ Magazine June 2017

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PQ AAT exams

LET’S GET TECHNICAL

I
nvestment appraisal is a key topic in the management accounting
papers at levels 3 and 4. It is important that AAT student have a good Gareth John explains fixed investment appraisal
grasp of the basics.
Let’s imagine that we are considering buying a machine for £130,000
(what we could call the initial outlay). The machine will be used to make
products that will be sold to generate positive cash flows of £50,000 per
annum for a total of four years.
There are two investment appraisal techniques that we will consider.

Payback period
The payback period technique is the simplest technique. It looks at how
long the investment takes to ‘pay back’ the initial outlay; in this case the
£130,000 cost of the machine.
If we take the four years that we will own the machine for one at a time,
we can consider the ‘cumulative cash flow’ at the end of each year. This
means adding up the various cash outflows and inflows as we go along to
keep a running total. Just remember to treat the initial outlay as a negative
cash flow.
At the end of the first year we need to combine the initial outlay with the
first positive cash flow of £50,000, meaning that the cumulative cash flow
is -£130,000 + £50,000 = -£80,000, so we are still £80,000 down. Clearly depending upon how long we have to wait for it. The longer we have to
the initial outlay has not yet been paid back after just one year. wait, the less a cash flow is actually worth.
At the end of the second year we will have generated another £50,000 To discount a cash flow we multiply it by a decimal which is known as a
of positive cash flow meaning that the cumulative cash flow is now discount factor. This gives us what are known as ‘present values’. A
-£80,000 + £50,000 = -£30,000, so still £30,000 down. present value gives a better reflection of what a cash flow is really worth.
At the end of the third year the cumulative cash flow will be -£30,000 + The discount factors for our example might be:
£50,000 = £20,000, so in total after three years we are £20,000 up. The Year Discount factor
initial outlay has now been paid back. In fact, it has been more than paid 1 0.9091
back. In an assessment you will be expected to ‘pro rata’ your calculation 2 0.8264
to work out how much of the third year would be taken to exactly pay back 3 0.7513
the initial outlay. You can imagine that if the £50,000 positive cash flow is 4 0.6830
made up of sales that are spread over the year then to pay back the These discount factors allow us to calculate the present value of each of
remaining -£30,000 cumulative cash flow from the end of the second year the positive cash flows that our machine will generate over the next four
will take more than half of the third year. In fact, it will take years.
£30,000/£50,000 x 12 = 7.2 months of the third year. Year Cash flow Present value
You might be told to round your answer up to a whole number of 1 £50,000 £50,000 x 0.9091 = £45,455
months which would give a payback period of two years and eight months. 2 £50,000 £50,000 x 0.8264 = £41,320
In order to make a decision about whether to buy the machine, the 3 £50,000 £50,000 x 0.7513 = £37,565
business will compare this result to whatever target that they have set as 4 £50,000 £50,000 x 0.6830 = £34,150
being acceptable. If the company demands a payback period of three What you should be able to see is that the present value of each £50,000
years then they would be happy to buy the machine as it pays back the falls the longer we have to wait for it. This shows the ‘time value of money’
initial outlay in less than this target. in action.
To work out the net present value of an investment we combine the
Net present value present value of each of the positive cash flows with the negative cash flow
One of the problems with the payback period technique is that although it of the initial outlay to see whether overall we are better off or worse off.
is a fairly easy approach to apply it ignores what is known as the ‘time The net present value of buying our machine is (£130,000) + £45,455 +
value of money’. In our calculations above the £50,000 positive cash flow £41,320 + £37,565 + £34,150 = +£28,490. The fact the overall the net
in the second year of the project is taken to have the same value as the present value is positive shows that the positive value of the benefits of the
£50,000 positive cash flow in the first year of the project. In reality this is project outweigh the costs. A positive net present value means that the
not true. business would be happy to buy the machine. PQ
The ‘time value of money’ means that the longer that we have to wait to • Gareth John is a tutor/director with First Intuition and helps to
receive a cash flow the less it is actually worth. In calculations we take manage their AAT distance learning programme. He was PQ Magazine
account of this by discounting, or reducing, the value of each cash flow Accountancy Lecturer of the Year in 2011

24 PQ Magazine June 2017

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PQ profile

The reluctant
and could be tracked to where it was
needed. But how could she possibly
expect people to prioritise forms and
spreadsheets when they had lived

accountant
through such terror? Yet, despite it all,
she found everyone warm, friendly and
positive.
Returning to the UK was a strange
experience. Her old colleagues thought
she had been on holiday for two years
and Deeson admitted it was all a bit of a
culture shock.
answers. Luckily someone else in the Her next role was as a project
Amnesty International’s Nicki
audit team had better calculator skills. manager, a largely non-accounting role,
Deeson was the star turn at Following the summer job she had real with a large international charity called
doubts about an accounting career, but Plan. The aim of her project was to
the recent ICAEW prize-giving despite considering other options she measure and maximise its impact on
ceremony. She explains how kept coming back to it. So on graduation communities where Plan worked.
she took a job at PwC and came down to Unfortunately, it ended with her firing the
auditing nearly put her off the bright lights of London. project team, writing some simple
accountancy for life! To her relief, although she still had to questionnaires herself and fiddling with
use her calculator, organisational skills, the new IT system so she could start

C
an you pinpoint the moment relationship-building and problem-solving producing reports. The second challenge
when you first thought about were even more essential. She came when Plan saw the initial reports
being an accountant? The actually started to enjoy from West Africa. Although the charity
International Financial Director at accountancy! had run programmes there for 20 years
Amnesty International, Nicki Deeson, But audit was still there and data showed that literacy and health
certainly can! She told the packed ICAEW she admits she never wanted indicators had actually got worse in the
prize-giving ceremony that it was a to work on the same audit villages where it had been working.
neighbour who made the suggestion twice. That meant as soon as This wasn’t what the organisation
when they found out she was good at she qualified in 1992 she got wanted to see and senior management
maths. They told her mum: “She should a role in Bangladesh as a started talking about exiting Burkina
be an accountant, then she can keep you volunteer accountant for an Faso due to its negative impact on the
in your old age.” She claims that, being a Irish charity. This was the start of country.
dutiful daughter, the suggestion lodged a hugely successful career in the However, Deeson decided to delve
itself in her mind. charity sector that has spanned 25 years. deeper, and she found that successful
She went to Nottingham University, Her biggest project while working in graduates of its vaccination and schools
where she won her only accounting prize Bangladesh was to develop and programmes had left the community for
– coming top in the first-year book- implement a new accounting system, and jobs in the city, reducing the indicators
keeping exam. This opened doors, and she was then asked to spend six months but increasing the wealth of the village
she was offered a summer job at KPMG. rolling it out in Ethiopia, Mozambique and through the money they sent home. So
Deeson (pictured right) admits she Burundi. Deeson admits flying into beware the dangers of the statistic.
never worried about the accountancy Burundi in 1994 was scary as the Deeson is now at Amnesty and content
exams. Her problem was she just didn’t country was in the middle of a civil war. to be back in an accounting role. She
find auditing exciting enough. Her first Although she was not directly saving lives stressed it is vital young accountants hold
task at KPMG was to use a calculator to she felt her role was essential. Her on to their dreams. She said: “Follow
add up a massive computer print out. finance system meant money spent on what you love, and you can change the
After 90 minutes she had three different the emergency services wasn’t wasted world… one spreadsheet at a time.” PQ

PQ company formation

How to get your small business off the ground

In this article we deal with the duties checker to find out if auto enrolment There are statutory minimum contributions
applies to your business, and from when. You that you, and the employee, will need to make.
issue of pensions auto enrolment will need your PAYE reference number for this, Currently, as an employer you will need to
and if you find auto enrolment doesn’t apply you contribute at least 1% of the employee’s salary
I’m a small business owner, and am worried will need to fill out an online form to this effect. into a pension, with a combination of employer
about my auto enrolment obligations. What do If it does apply to you and your current/future and employee needing to contribute at least 2%.
I need to do? employees you will be given a staging date, by Be mindful that these contributions are set to be
which point you must have a workplace pension raised to 2% and 5% respectively from 1
Auto enrolment requirements are coming into in place. You will also need at this point to October 2017.
force for around 800,000 small businesses communicate with your employees about how Employee’s workplace pension contributions
during 2017. If you employ just one person aged auto enrolment affects them. are deducted from their gross pay, prior to
between 22 and the state pension age, who is When choosing a workplace pension scheme income tax deductions. They must be supplied
earning more than £10,000 a year, then you are consider: with a paper or electronic copy of their record of
likely to have duties under pension law to put • What is the cost to my business? pay for each pay period, demonstrating how any
them into a workplace pension scheme, and to • Is the scheme compatible with our current pension contributions have affected their net
make regular contributions. payroll software? pay. PQ
The Pensions Regulator is responsible for • Is it suitable for our current and future staff? • Darren Nicholls is Product Manager for
enforcing the law on workplace pensions, and so • Will it carry out the administrative functions I Informi, powered by AAT. Visit informi.co.uk/
your first requirement will be to check its online require? to find more practical advice

26 PQ Magazine June 2017

 ICAEW spotlight PQ

Master the Certificate level

Next in our series on the ICAEW Certificate Level we focus on the Accounting not always black and white and therefore
a pause and a second thought is often
and Assurance exams. Here Philippa Hood and Charlotte Lewis explain all you required due to its subjective nature.
need to know to help you best prepare for success in the exam hall Compiled of 50 multiple-choice, multi-
part multiple-choice or multiple-response
questions, worth two marks each, there is
a strong focus on ‘gathering evidence on
an assurance engagement’, representing
35% of the parts. Regarding style of
exam question, sometimes a multi-part
multiple-choice question will be split into
parts, all sections need to be answered
correctly to pick up the full marks per
question.
Passing the the exam will require two
things: initial understanding of key
concepts, and the ability to retain
detailed knowledge of those concepts.
A particular key concept students find
tough is ‘internal controls’, representing
25% of the syllabus. This includes
identifying a business risk, a control
activity, then subsequently how that
control is monitored by management and
tested by the auditor. To make this
conceptually easier for students to digest
practical scenarios in business can be
used to illustrate how this operates. For
example, consider the business risk of a
local restaurant, dealing in a large
amount of cash transactions:
• Business risk – surplus cash on
premises.
• Control activity – frequent banking,
ACCOUNTING get too bogged down on one particular cash secured via physical locks with
For most students, accounting is likely to question/topic you are finding difficult. limited access to staff.
be one of the first exams you sit, and This module introduces you to three • Monitor control – log daily bank drops,
what a good place to start. By the end of types of business: sole traders, review access codes to secure area.
the qualification you will have learned a partnerships and companies. The • Audit risk – ‘cash at bank’ figure in the
whole lot more about the world of majority of accounting is the same for financial statement is materially incorrect.
business than just accounting, but the each of these, although you will look at a Retaining detailed knowledge can be
skills you learn in this module will stay few differences, too. One of the broken down and become more
with you throughout the qualification, and underlying concepts that will be manageable using memorable acronyms.
most likely your whole career. fundamental in your career as an For example, threats to the auditors
This exam has 25 questions: 24 accountant is debits and credits – how independence can be remembered via
objective test questions, which are we actually get from a transaction the acronym MASSIF – management,
multiple choice, multi-part multiple- occurring in our business to it being advocacy, self-interest, self-review,
choice or multiple-response questions, recorded in our financial statements. intimidation, and familiarity.
and one scenario-based question. For These can seem difficult to get your head Overall, success will largely be down to
the scenario-based question you will be around, but stick with it and soon adequate question practice from the
given either extracts from financial enough they will be like a second question bank. A thorough review of
statements and asked to prepare a language. question bank answers from all chapters
statement of profit or loss and statement The key to your success in this exam will give students a good grasp of the
of financial position, or a statement of is question practice – work through the type and class of standard they should
cash flows. question bank twice. expect. In addition, the knowledge that
In the exam, the scenario-based Top tip: The bookkeeping and accounts students do gain in Assurance, they will
question will be presented first, but you preparation program is a fantastic tool to need to retain and build on in Audit and
can answer in any order. You might like help you gain experience of recording Assurance at the Professional Level.
to consider answering all the objective and preparing financial information. Before a Certificate Level exam go to
test questions before making a start on What’s more, it is designed to icaew.com/examresources to download
the scenario-based question. It is very complement the Accounting module. the syllabus and access the exam
easy to overrun if you attempt the Access it at icaew.com/bookkeeping resources. PQ
scenario-based question first, not leaving • Philippa Hood and Charlotte Lewis
enough time to attempt the objective test ASSURANCE are ACA tutors with Kaplan Financial
questions. The examiner wants to see Assurance may not be as time-pressured Reproduced with the permission of ICAEW, this
that you have a good understanding as other Certificate Level exams, but it’s article was first published in Vital (October 2016).
Vital is the quarterly magazine for ACA students.
across the whole syllabus, so try not to not to be underestimated. Answers are © ICAEW 2017. icaew.com/vital

PQ Magazine June 2017 27

PQ ACCA resources

Think ahead
As the global business landscape
evolves, so will the practice of accounting
and what will be expected and required
of you as professional accountants.

Sharpen your professional skills

with ACCA
We’ve revealed previously in PQ
magazine that intellect, creativity,
emotional intelligence, vision, experience,
mastery of the digital world and technical
skills make up the ‘magnificent seven’
sought after skills and qualities.
So how do you measure up? ACCA’s
interactive online test allows you to see
how you perform against the seven
Maggie McGhee outlines what the Professional Insights are and explains why qualities, identifies areas where you can
sharpen your skills and directs you to a
ACCA students would be wise to maximise the resources available to them range of resources that can help you.
To find out about your professional

W
hen it comes to the big quotient visit thefuture.accaglobal.com
questions about being an
accountant, ACCA’s Maximising the resources available
Professional Insights team is there to find We take our responsibility of supporting
out all the answers. Capturing views from our students and members very seriously.
all around the globe, we share our Our comprehensive learning support
findings with you, in research reports, at offering includes exam-specific resources
events, in videos and at presentations. available to you through the Exam
Our aim is to create a full picture of Resource Finder on ACCA’s website. And
what is happening and the impact this our research also helps you to
will have on the future of the profession. understand in more detail the issues that
The intelligence gathered from ACCA’s matter.
extensive network of offices and centres We’re continuing to publish sample
enables us to ‘Think Ahead’. exams twice a year after the December
Our research has played an important and June sessions. These exams are
role in moulding global ACCA thought compiled from questions that have
leadership, which in turn has helped appeared in the last two sessions. For
shape and lead the profession. Our example, after the June session, we will
findings are shared with standard setters, publish a sample exam containing
policy makers and regulators, and also questions from the March and June
politicians, influencing discussions that sessions.
impact on all our futures. The content of the sample exams are
We ask the big questions to ensure our selected carefully by the examining team
profession remains at the forefront of so that they contain the questions that
innovation and continues to be trusted to will be most helpful to students, including
deliver what businesses, markets and subject areas new to the syllabus, new
governments have come to expect of styles of requirements and topics
accountants. students tend to struggle with.
ACCA’s Professional Insights, another
Critical questions resource in our rich suite of content,
It’s by asking critical questions and provides knowledge on the topics and
digesting the answers that we can really subjects impacting our profession. It
understand where our profession is today could be an in-depth report that reveals
– and where it is going. The accountancy something new, a fact or a quote that
profession has always helped to shape inspires you.
and support business, other It will help you think ahead, armed with
organisations, and economies of all types knowledge that helps strengthen our
and sizes. profession today, and forms the
As future professional accountants, foundations of tomorrow.
you will need to embrace leadership and We will reveal our future findings here
become trusted expert counsels as well in PQ magazine but for those who enjoy
as key strategic advisers to growing We know we are working in a fast- receiving live updates, I would
organisations across the public and changing world – the evidence is all recommend you download our app.
private sectors. around us. The evolving business Our Professional Insights app gives you
ACCA is well aware that in order to add landscape is constantly bringing new access to research, reports and our latest
value to employers and clients, challenges and opportunities to the thinking on issues crucial for business,
professional accountants of the future will finance profession. economies, society and the accountancy
need an optimal and changing Innovations in technology, increasing profession – now and in the future. It is
combination of professional globalisation and evolving governance available for iOS, Android and Kindle as
competencies: a collection of technical models are moulding the expectations well as a web version. PQ
knowledge, skills and abilities, combined that employers, clients, regulators and • Maggie McGhee, Director
with interpersonal behaviour and other stakeholders have of professional of Professional Insights,
qualities. accountants. ACCA

28 PQ Magazine June 2017

 AVAILABLE NOW!

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PQ leases

Don’t go to pieces over leases

Claire Oglesby explains all you need to know the grant of a short sub-lease out of short the sublease, deduct the percentage for
head-lease) – you are only disposing of a the head-lease years remaining when the
about leases in the form of some top tips few years of your interest in the property sublease Runs out, then divide by the
and the property will revert to you again years remaining when the head-lease

A
great many students seem to at the end of the sub-lease you have was Acquired. I remember these as the
struggle with the different granted. Hence you will be given the first three letters of GRANT.
aspects of leases when they value of the reversionary interest to use If some of the premium has already
arise in tax exam questions, so here are in your part disposal formula. been subject to income tax (where a
some key tips. Where you are either selling short lease has been granted) we need to
Leases can be long or short, (assigning) a short lease or strip out the income element to leave the
assigned (sold) or granted. granting a short sub-lease out capital part.
Transaction in leases can also be of a short head-lease (no The proceeds for your calculation
chargeable to capital gains tax mention of long lease), you where there is a grant of a short sub-
(CGT) or a mixture of CGT and need to use your tax tables. lease out of a long head-lease or freehold
income tax. You need to From the tax tables you will therefore be just the capital element,
remember that a short lease is will take the relevant lease even though the full premium joins the
a lease expected to last 50 depreciation percentages reversionary interest on the bottom of the
years or less. If a short lease is and apportion the cost by part disposal calculation. However, the
granted, the premium will be an appropriate fraction. proceeds for the grant of short sub-lease
split and part will be chargeable When you are selling a out of a short head-lease calculation will
to income tax and part to CGT. short lease you will take the use the full proceeds but include a
So how can you remember the lease percentage for the years deduction for the already charged
different treatment of sales and grants remaining on the lease at Sale income element after the apportioned
of long and short leases? and divide this by the years on the cost has been deducted. This cannot
When there is a sale of a lease there is lease at Acquisition, remember this by create a loss. PQ
a normal capital gains tax disposal – you taking the first two letters of SALE. • Claire Oglesby is a senior tutor at
are disposing of all of your interest in the When you are granting a short sub- Tolley Exam Training, part of
property. When there is the grant of a lease out of a short head-lease you will Lexisnexis, and can be contacted at
sub-lease you generally have a part apportion the lease percentage for the examtraining@lexisnexis.co.uk. The
disposal to calculate (with exception of head-lease years remaining at Grant of views expressed are her own

The highest level tax

qualification in the UK

Find out more at www.tax.org.uk/ctaqualification

30 PQ Magazine June 2017

 CIMA branding PQ

T Transformation is the key to

wenty years ago, Apple asked us
to ‘think different’. In today’s
world – shaped by political shifts,

success – as CIMA is proving

rapid technological change and the
unrelenting march of complexity – it’s
more than a marketing slogan. It’s a
necessity.
“The question organisations need to CIMA CEO Andrew Harding explains the thinking behind the
ask themselves is this,” a recent
Conference Board report concluded. “Are institute’s new branding that has set the tongues wagging
we driving change and disruption, or are
they driving us?” AICPA to form the most influential body
It’s a question CIMA has long asked – CIMA’s new logo, of professional accountants in the world.
and one we have answered time and right, replaced the We are able to advance management
again by choosing the path of innovation. one above and public accounting worldwide, further
There are numerous examples in our enhance the global relevancy of our
history: from our founding nearly a qualifications, and maximise the
century ago by professionals who employability of our members and expanded continuing professional
pioneered a new approach to students wherever they live. development opportunities for CGMAs,
accountancy, to the launch of the created new resources for accountants to
Chartered Global Management Dynamic vision lead in a vital area – cyber security – and
Accountant (CGMA) designation, creation We launched a new brand in March to developed new practical tools to help
of the first Global Management reflect this dynamic vision. The modern CGMAs drive business forward.
Accounting Principles, and the look signals our forward focus and At the heart of this work is the
computerisation of our exams. commitment to building opportunities for recognition that success tomorrow
Members again picked the path of • Andrew Harding the next generation. The logo, defined by requires new ways of thinking and ever
transformation last summer. By voting to is Chief a sweeping ‘A’, carries across CIMA, the faster response to rapidly changing
deepen our relationship with the Executive – AICPA and the new Association to signify market needs. It demands agility and an
American Institute of CPAs (AICPA) in Management the reach and influence of our network of embrace of uncertainty and
June, they created a platform that will Accounting, 650,000 professionals and students on experimentation.
allow us to further extend the vibrancy of Association of the frontlines of economies. In that way, the association is an
our profession. Through the new International This change is only the most visible accelerant for innovation – one that will
Association of International Certified Certified indication of progress we’re making on serve as a catalyst for the success of our
Professional Accountants, we have Professional behalf of members and students. In students and members far into the
combined the strengths of CIMA and the Accountants recent weeks, we’ve also significantly future. PQ

“I am an award winning
certified bookkeeper ”

Student of the year – LUCA Awards 2011

“I am grateful for ICB’s help and support

in starting my own practice. Having started
3 years ago, I have come a long way and
enjoy the freedom and fulfilment of being
self-employed. I manage a large portfolio
of clients and plan to continue expanding.”
Moolchand Dubey MICB CB.Dip PM.Dip

To find out if you could become a bookkeeper call

0845 060 2345 The Institute of
www.bookkeepers.org.uk/PQ Certified Bookkeepers

PQ Magazine June 2017 31

PQ AAT exams

D Practice is the only way

uring your revision phase try to
practise as many questions as
you can from all the different
study support resources available. Cover
all topics – not just those you like the Sally Ball offers five top tips to help you pass the hell that is MDCL assessment
best or find the easiest to understand!
The more variety of questions you and attempt each task step by step. Lots
attempt, the more confident you will feel of practice (see left!) will help reduce
when faced with the tasks in the real panic mode setting in.
assessment.
Watch the time!
Don’t suffer in silence… Good time management is crucial at this
If there are areas of the MDCL syllabus level of the qualification. Mark allocations
that you don’t fully understand ask your are displayed against each task so use
tutor or distance learning mentor for these to plan your time when answering
additional support as soon as you need it. the questions set. Allow just over a
Don’t wait until a few days before the real minute per mark as a rough guide. This
assessment before asking for help. The will allow time for all the tasks to be
sooner you get to grips with the concepts attempted. Many students are
being taught, the more time you will have unsuccessful when they spend too long
to focus on these weaker areas working calculations at the expense of
the written tasks. Maybe even consider
Don’t panic! answering the written tasks first?
Believe it or not, nervousness is a good
sign before sitting an assessment. No Adopt a positive attitude
nerves usually means complacency, Approach the assessment with a ‘can do’
which is never a good quality. However, attitude. If you have followed the
try not to let nerves get the better of you guidance above and have prepared well
during the assessment itself. If you feel there is no reason why you should not be
yourself panicking, pause for a moment able to answer the tasks presented to
and take a deep breath. Read the you. Often, topics may be tested from a
question again carefully and think about different angle to those seen previously
the topic being tested. Don’t get but the concepts being tested will always
overwhelmed by the information remain the same. PQ
presented in the question, break it down • Sally Ball, Kaplan Financial

32 PQ Magazine June 2017

 apprenticeships PQ

Why training and upskilling

Mark Farrar explains why the
economy will benefit from
continuing to upskill UK
workers – whatever their ages
should be a lifelong habit
T
he new Apprenticeship Levy is
now in force, which should act branch out into a new career entirely.
as a helpful prompt for many AAT has consistently suggested that, in
businesses to invest in apprenticeships time, the Apprenticeship Levy’s scope
for the foreseeable future. Around the should be increased to support other
same time as the Levy, a report was forms of high quality training, and that it
published by the Skills Commission, part should be renamed as the Skills Levy to
of Policy Connect, into issues faced by reflect this. In a recent AAT survey
older workers throughout the country, conducted with MPs across all parties,
referred to in the report as the “largest 65% supported this suggestion.
pool of untapped potential”. AAT is one of There’s no doubting the benefits that
the report’s principle supporters – we apprenticeships and similar schemes can
recognise the need for training and bring to people of all ages. Our own
upskilling throughout people’s careers. research with CEBR in 2013 found that
This is to the benefit of both individual Still going strong: those who complete an apprenticeship at
and employer, and more widely, the accountant Monica level 4 and above could earn
economy as a whole. Evans, 89, has approximately £150,000 more over the
Learning through either a formal worked for course of their lifetime.
apprenticeship scheme or some other Warwick-based The Skills Commission report also
high-quality traineeship can benefit social firm Kigass Aero highlights the advantages of additional
mobility and adapts workers to the ever- Components for training from a health and wellbeing
changing needs of the British economy. 70 years. Above, point of view, not to mention the financial
The report refers to ‘Skill-based Monica with work improvements in later life and the
technological advancements’, which colleagues benefits to the taxpayer in terms of
simultaneously helps produce new jobs reduced state reliance.
while contributing to the decline of average age of those taking our short Retraining and upskilling could help
others, as seen for example in the rise in qualifications is 35, and thousands of AAT reduce the UK’s skills shortages; give
IT roles, or a fall in the number of students are aged over 50. older workers new skills and be of
dressmakers in recent years. With our nation’s ageing population financial benefit to all. Employers large
There is no upper age limit on learning and the need to improve productivity and small need to proactively consider
new skills, and at AAT we frequently see when faced with increasing global the role these workers have to play when
new students who prove the old adage competition, it is imperative that older considering their own training
that ‘you can’t teach an old dog new tricks’ workers remain competitive in the labour programmes and hiring practices. PQ
to be totally wrong – more than two-thirds market, and have the appropriate skills • Mark Farrar is Chief Executive of the
of our apprentices are aged over 25. The for evolving jobs, or indeed the ability to Association of Accounting Technicians

THE TROUBLESHOOTER IS GUNNING FOR...

Divisional performance
PQ troubleshooter Philip Dunn explains how ACCA F5 RI is a concept that was developed by Alfred Sloan at General Motors
Corporation in the 1920s. This is the excess of pre-tax controllable profit
sitters should tackle questions on this tricky subject over the notional cost of capital (the target return).
Example: Davenports plc has a Divisional Structure and its Artists’
Question: I am an ACCA student preparing for the F5 Performance Materials and Paints Division showed the following performance for 2016.
Management exam, where there is reference to divisional performance and
the use of ROI (return on investment) and RI (residual income). How are Notional cost of capital or target return 15%
these PIs used in practice? Pre-tax controllable profit £110m
Answer: Many large corporations have divisionalised structures. For Divisional investment (capital employed) £440m
example, prior to its takeover by Vildiz Holding, United Biscuits had four ROI = £110m/£440m x 100/1 = 25%
operating divisions with clear graphic and product remits with their own RI notional cost of capital £440 x 15% £66m
management, financial targets and strategic plans. Pre-tax controllable profit £110m
The management within that type of structure is expected to produce a ————
satisfactory return on capital while producing consistent long-term growth Residual Income £44m
in the sector. ————
Performance measurement in such environments is based upon
responsibility accounting with expense/profit and investment centres being This is clearly in excess of the target return.
the responsibility of management who need to utilise the assets most The divisional RI would be compared with that of other divisions in the
efficiently. group and used when preparing project appraisals and strategic plans.
PIs as ROI and RI together with EVA (economic value added), a similar One final note: please look carefully in the study text at the advantages
concept to RI, are often used in divisional performance. and disadvantages of these PIs when revising for the exam. PQ
ROI is usually measured as pre-tax controllable profit as a percentage of • Dr Philip E Dunn is a freelance author and technical editor for
capital employed. Kaplan and Osborne Books

PQ Magazine June 2017 33

PQ big data

Is your future in data science?

James Taylor looks at how big Why now? is more data interrogation, analysis of
A year ago only a handful of our clients data from different sources and more
data is changing the world were talking to us about big data, R intelligent data samples.
for accountants – and programming and linear-regression-in-
python. This is changing. In most client What does the future hold?
creating opportunities, too meetings now we have discussions about From what I see, the accountants of the
future skills needs, big data, analysis future are going to need to be able to

I
n March 2016, ACCA published an tools and how we can help them change tackle more in-depth data analytics:
article entitled ‘The Big Data Effect’. the finance • Descriptive analytics: historical and
The article focused on the notion department current data.
that as businesses are being transformed from a service • Diagnostic analytics: patterns and
by the impact of big data and data function to a irregularities.
analytics the role of accountancy and business- • Predictive/prescriptive analytics:
finance professionals will change, too. critical service, forecasting.
I remember reading the article and central to There is clearly an opportunity for new
thinking, does this mean that strategic ‘hybrid accountancy/big data’ teams to
accountants need to start developing and decision be established. These teams/individuals
adopting data scientist skills-sets? making. will not only process a large amount of
A number of unstructured, semi-structured, and
What and who are data scientists? our clients structured data that flows into business
Data scientists are big data wranglers. recognise that every day, they will undertake more in-
They take an enormous mass of messy data science is depth analysis to give businesses a more
data points (unstructured and structured) the intersection comprehensive understanding of their
and use their formidable skills in maths, of technology, functions and opportunities.
statistics and programming to clean, statistics and While we are helping clients develop
massage and organise them. Then they business (domain) knowledge – take the training programmes to take advantage of
apply all their analytic powers – industry Venn diagram for example (above). the obvious opportunity and I would
knowledge, contextual understanding and They also recognise that their finance recommend looking at some of the free
scepticism of existing assumptions – to departments are ideally positioned to SQL, R or python resources out there to
uncover hidden solutions to business take advantage of this transition from see if it’s an area that interests you. PQ
challenges. traditional data analysis to something that • James Taylor is a partner at HTFT

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34 PQ Magazine June 2017
 careers PQ

Land your
Greg Thorpe offers the job
hunters among you some top
tips for standing out on paper
and in person

M
dream job
aking a great first impression
when applying for a job is no
longer confined to the CV
and covering letter. Your first point of
contact with a potential employer may
now be on social media, for example
through LinkedIn. Even when you apply
for a role in the traditional way, the
employer may check out your Facebook information they require, and highlight
profile or Google you, before they decide the most important information first.
whether to shortlist your application. A short, punchy personal statement is
Consequently, there is more to a great starting point giving employers a
standing out on paper than having a clear idea of your experience and the
professionally written CV. Here we share value you can add to their company. This
our tips for making a great first should then be followed by your work
impression when applying for jobs and history in chronological order focusing on
when attending an interview. your most relevant responsibilities,
achievements and skills that make you a
Your digital presence great fit for their role.
Many jobs go unadvertised because they Always proofread for spelling and
are filled using social recruiting. grammatical mistakes – these will make
Employers and recruiters search for you stand out for the wrong reasons –
passive and active candidates on social and get a second opinion from a trusted
media platforms such as LinkedIn, Twitter colleague or your recruitment consultant.
and Facebook.
Passive candidates are hot property – Standing out at an interview
these are people who are not actively One of the best ways you can stand out
looking for a new job but if the right in an interview is by being confident and
opportunity comes along might be engaging. Confidence comes from doing
interested. Platforms like LinkedIn have your homework, and knowing that you’re
made recruiting passive candidates much a great fit for the job. We recommend
easier; recruiters can search online using that you do plenty of research on the
a variety of filters to identify potential company before you attend so you can
candidates. This means that active speak with confidence about the role,
candidates have more competition and your experience, and how you can help
really must ensure that their social them fulfil their objectives.
profiles stand out. Many interviewers are using
This can be challenging if you don’t competency-based interview (CBI)
want your current employer to find out. A techniques to discover more about
top tip is to change your privacy settings candidates’ skills, qualities and
so that your LinkedIn network is not motivations. They may ask questions like
notified of any profile changes – a sure “give an example of a time when you had
give away that you’re looking for a new to make a difficult decision.”
job! If you’re unprepared for this type of
Although LinkedIn is the ‘professional questioning it can be very unsettling and
network’ and therefore your LinkedIn you may struggle to think of something to
profile needs to be in great shape, don’t say that reflects positively on your
discount other social media platforms like abilities. Therefore, it is really important
Facebook and Twitter. Depending on the to prepare for CBI type questions.
role you’re looking for and your industry, Search online for competency-based
employers may be using these to recruit interview questions to familiarise yourself
as well. with what you might get asked.
They may also be using them to vet Then give some thought about your
candidates. So even if your Facebook experience, personal qualities and
profile is used entirely for social achievements, and how you can use
interactions, a potential employer may be these to answer questions providing the
looking at it. Therefore, it is essential to detail and insights the interviewer is
make sure there is no content on there of a CV is to get an interview, not to share looking for.
that might leave a less than desirable your life history, so keep it succinct and Preparation is the key to a successful
impression: if in doubt lock down your relevant to the job opportunity. interview and you’ll find it much easier to
profile by changing your privacy settings. Potential employers may have be engaging and make a great
hundreds of CVs to look through and so impression if you prepare thoroughly
Your CV you only have a few seconds to stand beforehand. It will also help you manage
At some point in the recruitment process out. Therefore, keep to a traditional those interview nerves! PQ
you will be asked for a CV. The purpose format so employers can find the • Greg Thorpe, Director, Howett Thorpe

PQ Magazine June 2017 35

PQ careers

Life at BDO
social media Catherine Devine is a trainee accountant based in Belfast. She has worked there for

ROUND-UP two-and-a-half years. Catherine, who is studing with Chartered Accountants Ireland,
was recently named Apprentice of the Year at the PQ Awards 2017

What time does your alarm favourites and why? Miss show? Changes on a regular
clock go off on a working Guided – I’m obsessed with their basis – Suits at the minute.
When should the ACCA release its
day? 6:30am. clothes. Summer or winter?
exam results? The March set were
What’s the first thing you do Which websites do you use Summer.
accessible from 17 April at 5.00 GMT.
when you get to your desk? for work? Companies House Pub or club? Pub.
Or students could have opted to
Turn on my laptop and make a and HMRC are the main two. Who is your hero?
receive their results by email and text.
cup of tea. How many hours a week do My daddy. He literally
The ACCA starts issuing these from
What’s on your desk? you spend in meetings? Bar works around the clock
12.00. In the UK, results day was also
Calculator, pencil case, laptop. a few planning meets for and is one of the most
on a Bank Holiday Monday this time
What’s the best thing about upcoming engagements, not inspirational people I’ve ever met.
around.
where you work? You learn often. If you had a time machine,
Student Marta Cecylia went on
something new every day and it’s What time do you leave the where would you go? Back to
Facebook to ask whether “anyone else
close to Marks & Spencer. office? It varies, but usually the 1920s – I’m obsessed with
was staying up til midnight and
Where’s your favourite place around 6pm. The Great Gatsby and I would love
waiting for a text?” No one, it seems,
to go for lunch? Ocho Sandwich How do you relax? I’m crazy to dress up as a flapper.
appeared to be having a results’ night
bar. about the gym, I feel like it really If you hadn’t chosen
party! So we took to twitter to ask if it
What (or who) can you see de-stresses me after a day’s work. accountancy, where might
wasn’t time for the ACCA to look at
when you sit at your desk? How often do you take work you be right now? I’d probably
releasing results at sensible set times,
Glass office, 30 trainees, Marks & home with you? During busy be in my final year of university,
rather than by Greenwich Mean Time.
Spencer (through the window). season, frequently. studying either law or English
How about at 9am for each time
Which websites are your What is your favourite TV literature.
zone? Nick B agreed: “Has to be
better than sat up at midnight
constantly hitting the refresh button.” In brief
However, Nadia loved the fact that the
The morning ritual charge – not those
results fell on a Bank Holiday:
Brian Scudamore, CEO of faceless online people!
“Personally, I love it. None of the
O2E Brands, recently set out six 4) Eat properly – fuel
Monday morning ‘so how did you do?
morning rituals that he believes your body. Get yourself
in work!’” We hate to break it to her
will make you productive all day. a sharp knife and
but she will get the same conversation
Here they are: peeler. Lots of fruit and
on Tuesday!
1) Set you alarm (with precision) veg is the key here.
PQ magazine was, as always, out
and don’t compromise here – 5) Commuting is a killer
and about this
6am is 6am! – make it work for you.
month. We met up
2) Have one ‘daily intention’. Do You need to get the
with our PQ of the
you have a written down ‘to do’ it’s morning then use that time to balance right, What do you do on
Year at the CIPFA
list? If you don’t you should have revise. That alarm went off at your commute? You need to
Public Finance
one thing you need to achieve 6am, so use the first hour of your maximise the dead time.
Innovation Awards.
each day. Oh, and it can be as day to study. And Scudamore 6) Sleep is key. A good night’s
Our Tim was up for
simple as eating a carrot. says that during that hour you are sleep is a must. Bad days just
the ‘Newcomer of the
3) Have a ‘power hour’. Are you a not allowed to check your make it harder. So try to end the
Year’ award, but lost
morning or an evening person? If phone/email, etc. You are in day on a positive note.
out to University of
Edinburgh’s Lee
Hamill. Still, he wasn’t
too concerned – he The PQ Book Club: books you should read
has a shiny PQ award
TED Talks: The Official TED explanation, persuasion and worth sharing is
at home!
Guide to Public Speaking by revelation. Each concept has its capable of giving
PQ also visited
Chris Anderson (Headline, own chapter and is explored in a powerful talk.
Osborne Training, who were
£18.99) detail. These are illustrated with The only thing
shortlisted for this year’s PQ awards in
the use of anecdotes, making that truly matters
the Online College of the Year
Presentations are a part of the this an engaging and lively read. in public speaking
category. They are a real success
modern working world, and let’s Anderson doesn’t go it alone is not confidence,
story, starting out with just four AAT
face it, most of us are terrified here, eliciting the help of many stage presence or smooth
students. Osborne Training now has
by the prospect. Whether it’s to of his associates who give their talking. It’s having something
over 500. It also offers ACCA training
the board at work, or 600 spin on the art of public worth saying.”
too out of its Stratford, London offices.
delegates at a conference, the speaking. And very useful for the This book explains just how
idea of public speaking brings novice speaker are the FAQs – powerful public speaking is
the jitters to the best of us. these cover a wide variety of achieved, and equips you to
That’s where this book – and the public speaking-related issues, give it your best shot. There is
author, Chris Anderson – comes from what to wear to how to no magic wand and no two talks
in. He is, after all, Head of TED. prepare beforehand. should be the same. The goal is
In this informative yet lively The author never loses sight for you to give the talk that only
read Anderson shares his five of the single most important you can give.
key techniques to a successful factor – content. As he writes: PQ rating 4/5 Time invested in
presentation – namely “The central thesis of this book this book will be time well
connection, narration, is that anyone who has an idea spent.

36 PQ Magazine June 2017

www.howett-thorpe.co.uk

FIND YOUR
INNER HERO

FARNHAM WEYBRIDGE SLOUGH REIGATE

01252 718777 01932 901900 01753 313033 01737 304050
farnham@howett-thorpe.co.uk weybridge@howett-thorpe.co.uk slough@howett-thorpe.co.uk reigate@howett-thorpe.co.uk
PQ got a story, funny or serious, you want to share? Email graham@pqaccountant.com

A ‘SHERLOCK’ MEMORY IS POSSIBLE

Sherlock Homes used it and so should you! The ‘method of
Ioci’ memory technique really can double or even treble the
number of facts you can retain. Scientists say the skill can
be taught to just about anyone. The method itself is pretty
straightforward. As you learn key words, numbers or figures,
you place them somewhere on an imaginary route or a
certain location in a ‘mind palace’. After just six weeks you
MOVE TO HOVE can increase your memory to elite levels. It will not, however,
help you remember where you left the remote control.
Hove, East Sussex, is the most
popular location for young
professionals, according to a new
poll. This is the third year running GANGSTA’S
PARADISE
that the seaside town has ticked all
the right boxes for young workers (do
they know about Southern Rail?).
The average house price in Hove is So what aspect of the tax system would
£380,000, compared with the American rapper Coolio want to change?
£763,000 for second place
Wandsworth, London. London
He might be best known for his hit single
Gangsta’s Paradise, but he recently told a
HOW YOUR
boroughs dominated the top 20 leading newspaper that he would get rid of
tax completely. Then again, he also said
PAST CAN
desirable places for young
professionals; just Brighton, Reading he would get rid of money, too! He wants a CATCH UP
and Didsbury managed to join Hove
on the list.
return to the barter system. “In my
opinion, and according to the constitution WITH YOU
of my country, tax is illegal,” he said. PQ editor Graham
Hambly visited Russia
MY LAPTOP HAS DIED that HP and Dell were the worst performers.
HP’s batteries lasted on average five hours
with a group of
So it isn’t you – most laptops really accountants many
and two minutes – it claims that they
don’t have the battery life promised moons ago – when he
were nearer 10 hours! Dell’s just
on the box! In fact, several tested had some hair! It was
made it over five hours. The claim
by Which? were found to have that long ago. He
is they will run over nine. However,
only half the claimed capacity. thought on a visit to
FROM The consumer group tested 67
Apple says its laptops have a
battery life of 10 hours and tests
Moscow it was a great

ACCOUNTANCY models and six of the seven brands

did not ‘perform’ as promised. It said
showed they could in fact last longer
idea to wear a red
nose in Red Square.
TO POLICING – 10 hours and 15 minutes.
Well, it was the time of
glasnost and Mikhail
New Metropolitan Police chief
Cressida Dick has a secret. In
HOW NOT TO SEND WOOD FOR Gorbachev. What he
a recent interview she A FAKE INVOICE THE TREES didn’t know was that
revealed that she was turned PQ magazine recently received Ashley Smith, who is
down by Thames Valley an email purporting to be from a It appears Apple has caused now on the ACCA UK
Police after leaving Oxford ‘junior accountant’. We were an acute shortage of trees Corporate Network
University. So, before she duly informed that we were on the West Coast of Panel, won Highly
joined the Met she went to being issued with a subpoena America. The reason is its Commended in a UK
work for a ‘large’ accountancy and our invoice was only a click rush to finish its ‘spaceship’ photo competition with
firm. Obvious, accountancy away. They almost had us and campus in Cupertino, the picture and the
just wasn’t exciting enough then we read the ‘here you go, California. So far 3,000 editor was on display
for Scotland Yard’s first you fucking thief” line and knew mature trees have been in a gallery in Covent
female commissioner. it couldn’t be us. How very rude! gobbled up by the project. Garden!

E ’
W V E GOT THE L OT
Five go… Sudoku heaven
Join Julian, George, Dick, Anne and Timmy the dog Time to unwind and immerse yourself in hundreds
doing things they never did when Enid Blyton was alive! of Times Sudoku puzzles. Our four-book pack
We thought we would cheer you up with these best would cost £28 in the high street, but it is yours for
selling books for grown-ups. There’s ‘Five Give Up the nothing in this month’s prize draw! And we have
Booze’, ‘Five Go on a Strategy Away Day’, ‘Five Go three sets to give away. The books have a selection
Gluten Free’ and ‘Five Go Parenting’. Instead of one big of easy, mild, difficult and fiendish puzzles so
prize we are going to send one of these books to four there’s something for everyone.
lucky readers – but it will all be random! If you want the chance to win one of the three sets of books up for
To enter this giveaway with a difference send your name and address to grabs then send an email to graham@pqaccountant.com along with your
graham@pqaccountant.com. Head up your email ‘Five Go’. name and address. Put ‘Sudoku’ in your email header.
Terms and conditions: One entry per giveaway please. You must send your name and address to be entered for the draw. All giveaway entries must be
received by Friday 9 June. The main draw will take place on Monday 12 June 2017.

TO ENTER THESE GIVEAWAYS EMAIL GRAHAM@PQACCOUNTANT.COM

38 PQ Magazine June 2017
Your jobs board
I need to find
pqjobs.co.uk now!

PQ jobs pqjobs.co.uk
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