Page 1

PQ magazine February 2017 /



Doh Wrong answer


Xs Expenses


IHT Don’t die



Hail to the chief 33






Management accounts 45










Q For toilets



Double entry 46





Budget for the future



Grr Examiners!



Time to celebrate 41


Bookkeeping 47

Sme Not so big!


MiP Members in practice



Zero based budgeting



Trial balance 8


Mind the GAAP

Exams are hard

Mobiles at desk





Newly qualified 18



Alp Approved provider





Cold exam hall 42


Present value 48


Return on capital employed 54

FC Financial controller

Tax Who pays?



Performance is key 31

P7 pass rate 36

Ca Scottish


More tax 29



Big 4 firm

Public finance

Accounts payable

Owner’s equity


A capital tax 28

A Apprentice

Experience counts

Current liabilities



Don’t forget

You can relax 39




Objective tests




T Nice brew



Failed again 43


Profit & loss 49


Net Income 55


Last in, first out

Ey Big 4 firm



Another tax 26


I want to be 32


Too much study 38


Internal audit 44


Fixed assets 50


Balance sheet 56


Top magazine

The science of accountancy

Ready to start planning your next ACCA paper? The ACCA December exam results are out, so this is the perfect time to get organised and plan your next steps for the March and June sittings.

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comment PQ


News 08ACCA exams More flexibility and seeded questions on the cards for ACCA exam sitters 10ACCA survey ‘Generation Next’ show big ambition 12CIMA results We run the rule over the latest exam results Features, etc 06Mind your Ps&Qs 50% pass rate is immaterial; keep your ACA options open; and a fine is fine 14AAT results What were the good papers and what were the stinkers? CIPFA explains its CBE teething problems; and why computer-based assessments are the way forward 16PQ survey Tell us about your study experiences; and we’ve great First Intuition online courses to give away 18International standards We set you a question on equity and debt, and provide a model answer 20CIMA spotlight CIMA shows you how to make 2017 a top year – by passing those exams! 22Online training PQ went to west London to speak to three AVADO students about their online study experiences

February 2017 24App-y talk New app will help

CIMA Certificate in Business Accounting studiers 26Cyber security Welcome to a new land of opportunity 27ACCA P4 Why you should seriously consider this option 28Careers Life at Howett Thorpe; and the best of social media 30Fun stuff Plus our giveaways The columnists Robert Bruce Focus on the value, not the numbers 8 Prem Sikka Investors don’t trust the Financial Reporting Council 10 Carl Lygo The education sector is set for big changes in 2017 12 Subscribe to PQ magazine It’s FREE – go to ABC July 2015 – June 2016


Publisher’s statement: We send a digital issue of the magazine to an additional 9,279 requested readers Free to all accountancy students Annual subscription: £35 (£50 overseas)

More big news for ACCAs The changes to the ACCA exam process are coming thick and fast. Students sitting the F5–F9 March exams now have the chance to opt for a morning or afternoon CBE exam sitting. That’s sound great, but this is a bigger change than many might envisage. Basically, it means each CBE exam will in future be different. No longer will you be able to stand outside the exam hall or visit discussion boards to discuss what just happened, as all your experiences will be different. I feel that although this is progress in some ways, it does change the relationship between trainers, students and the examining bodies forever. It is, for example, much more difficult to bring the bodies to account when the exams go wrong. When 100 students complain about an exam we know there may have been a problem and when the paper is published we can see the problem. Now a lone student sitting a paper no one sees apart from them means accountability becomes more tenuous. The lack of a shared experience will be strange, as will the concept of seeded questions. Yes, you really will have to answer questions where you won’t get the marks if you get the answers right! The exams will have 10 marks for seeded questions, to ensure all students sit ‘a secure and equivalent exam’. Oh, and to be careful what you ask for. Students always say they could do with more time in the exam hall. Now you have got that too. The ACCA exams are increasing to three hours 20 minutes. There will also be up to 10 minutes to read the exam instructions, too. As PQ went to press the ACCA was getting the December results ready to publish. You can find them at and on our Facebook page. We also tweeted them out on 16 January. So make sure you follow us @PQmagazine. Graham Hambly, PQ magazine editor –

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PQ have your say

email Pass rate red herring To reply to your ‘star letter’ in the January 2017 issue about increasing the ACCA pass mark to 60%, I personally don’t believe that performance in an exam is a measure of performance in the workplace. So I have to disagree with the idea that increasing the pass mark to 60% will “ensure that only ‘quality’ accountants are qualifying”. After all, someone might get over 60% because a topic that they are particularly knowledgeable about came up in the exam and they scored well in it – and then never have to apply

their knowledge of that topic. ACCA exams are not designed to be easy and the worldwide pass rates, lower papers aside, don’t get much above 50%, with the option papers getting nowhere near that.

That goes to show that the level of difficulty is commensurate to a 50 pass mark and should be left alone. Joseph McQuade, by email The editor says: Both AAT and CIMA PQs have to get 70% to pass the OT exams they sit, so the ACCA’s 50% may become increasingly untenable. That said, despite what people might think, student doctors only have to get 50% to pass their exams. It all depends on how you feel about exams. Are accountants made in the classroom or the real world?

Our star letter writer wins a fantastic PQ memory stick! Where’s my job?

I was surprised to read your front page article ‘Now is a great time to be a PQ’ in the latest edition of PQ magazine. I am writing to refute the claim that demand for accountants is far outstripping supply. That statement to me is wrong. There are many accountants – myself included – who are not getting the opportunity despite having all the necessary qualifications. I am an accounting and finance graduate, a part qualified accountant with the ACCA and I am registered with many jobs boards. I have applied for many jobs but no one will give me a chance. You can understand my frustration at reading this article. I have just two papers left to qualify as an accountant. Name and address supplied

More power to PQ!

I loved the editorial in the January 2017 issue of PQ magazine. I am a firm believer that through your influence ACCA will proceed to make the necessary steps to be

The editor says: Consider it done, Pantelis – and well done Pavlos!

Keep options open

I’m not sure that it is a good idea for ICAEW to suggest that “your employer will help to guide you on which alternative to study” (‘New ACA alternatives’, PQ, January 2017). If you are in a small firm, the employer is likely to stress the need for the student to study UK GAAP for the sake of their work. However, when the student leaves and goes to a bigger firm with a greater variety of clients (including international ones), the new accountant/PQ would have to learn IFRS. So setting that distinction needs some explaining as to why the restriction might disadvantage ICAEW students later in life. Personally, I still find that I need both. David Hunt, by email

A fine mess

At long last some firms are being taken to task (‘£4m fine for Deloitte’, PQ, January 2017). Although all institutes claim an ethical approach, it does not stop them helping people who earn considerable income in this country from avoiding taxation on it. That

Sorted, thanks to

more ‘student friendly’ (case in point: the release of articles and past exam papers). As a 42-year-old PQ attempting P2 for the first time, our excellent tutor Pavlos Nicolaou, the P2 tutor at the School of Professional Studies at Cyprus College, sent all

his students an email on Sunday 4 December with last-minute directions on what to revise – namely fair values. We were the lucky ones! Any chance of a shout-out to this great tutor in a future edition of PQ? Pantelis C. Fouli, by email

includes the owners of the Daily Mail and the Daily Telegraph. As Leona Hemsley said, during her tax evasion trial: “We don’t pay taxes. Only the little people pay taxes.” The accountant’s view that there is a difference between evasion and avoidance (the latter being within the law) is specious. There is no mention of social responsibility. Name and address supplied

PQ Magazine Unit 3 Block A, Kingfisher Heights, Bramwell Way, Royal Docks, London E16 2GQ | Phone: 020 7216 6444 | Email: Website: | Editor/publisher: Graham Hambly | Advertising manager: Polly Thrasivoulou Associate editor: Adam Riches | Art editor: Tim Parker | Subscriptions: | 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

Published by PQ Publishing © PQ Publishing 2017

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PQ news

ROBERT BRUCE Focus on the value, not the numbers The other day Mervyn King, one of the most influential people in the world of corporate governance, made an important suggestion. He believes the financial figures are but a small part of what makes up the value of an organisation. He said that to recognise this changing viewpoint the title of the position currently known as the chief financial officer should be changed to chief value officer. That would be both a true recognition of what a company is trying to do. I suspect he is right. Increasingly, people want to see companies creating long-term value, both for shareholders and stakeholders. That should be a straightforward definition. But the importance of the change from CFO to CVO would be even greater in the culture and in the long-term. One of the problems that companies and organisations suffer from is an inability to measure, and so communicate, the good they do. Take arts organisations, for example. It is obvious to them and anyone touched by their work in the wider community that they do great things and change people’s lives in ways both great and small. But grants to theatre companies, for example, are judged and assessed on narrow measures. Invariably, given the nature of their work, this fails to show the whole picture of what they provide. If the people in command of organisations had the creating of value in their titles the culture would change. Talking in terms of value, rather than finance, would transform attitudes. n Robert Bruce is an award-winning writer on accountancy for The Times

More exam flexibility and seeded questions on the cards for ACCAs

The ACCA has announced that, from March, PQs opting to sit the F5–F9 CBEs will be able to select a morning or afternoon exam sitting. This means in future not all students will be taking the same exam, and it will make for much confusion on noticeboards! ACCA students will sit different questions, just as they do with the F1 to F4 on demand CBEs. The ACCA has said that it will be using industry-standard techniques to make sure all students sit ‘a

secure and equivalent exam’. The exam duration is also being increased to three hours 20 minutes. There will also be up to 10 minutes available to read the exam instructions, as the ACCA plans to introduce additional questions to the session CBEs. From March, PQs will be sitting seeded questions, which will not count towards the student’s overall results. ACCA said these seeded questions have been added to ensure all exams are fair and equal.

So the CBEs will contain 110 marks of exam content. Some 100 marks will contribute to the student’s results and 10 marks will be seeded and therefore will not be counted. The 10 seeded marks will be either randomly distributed within section A, five single OT questions, or within section B, again five OT questions based around a single scenario. The ACCA stated that students will not know which questions are the seeded ones.

Salary watch

Show us your certificates: More than 70 Sheffield Hallam University students have gained CIMA’s Certificate in Business Accounting during their first year of study. Sheffield Hallam is one of only two institutions at which students can achieve this qualification during their first year. Pictured (left to right) are Professor Kevin Kerrigan, students Brandon Wazirali and Emma Turner and Simon Brook. Wazirali also received a special commendation for achieving the highest overall mark in his year

ACA results on the up

Another year ended on a high for both the ICAEW and advanced level PQs, with 3,178 students passing all the papers they took in November. Strategic Business Management came top of the pile with a pass rate of 87.9%. It was even higher for those who were on their first

attempt – 90.5%. ACA students also excelled in Corporate Reporting (81.1%) and the Case Study (75.6%). Women picked up all the prizes this time around, with PwC students dominating the list of prize-winners. Wigan’s April

ACCA December feedback ACCA December exam sitters believe that the P6 exam was the toughest test this time around. In the Open Tuition instant poll, some 25% of responds said the advanced tax exam was ‘a disaster’, and another 36% found the exam ‘hard’. The other papers students found difficult were P4, F5, P2 and P7, in that order. And the easiest? F8 was deemed ‘OK’ by 60% of sitters. The other papers students found more manageable were P5, P3, F7 and F6.

CIPFA CBE update CIPFA is working hard to iron out its CBE teething problems. The institute moved practice tests onto the cloud to ensure better reliability for the winter diet. Unfortunately, there were still intermittent problems. There were also technical issues for a few students sitting the online exam. Overall, however, the November exams were much better than those sat in June. CIPFA CEO Rob Whiteman has promised the issues will have no impact on exam marks.

The average UK salary for a CIMA PQ studying the final strategic level now stands at £42,515, according to the latest institute salary insight. Management level CIMA PQs can expect a salary of £34,453 and at operational level the average pay packet is now £32,250. This gives a CIMA student an average salary of £35,909 in the UK. You can add a 7% bonus to this of £3,197, bring the total annual pay to £37,708. Newly qualified CIMA members are earning on average £58,885. This includes an 8% bonus of £5,473. Interestingly, CIMA members are 30% more satisfied than the institute’s students with their salary. McMillan and Maidstone’s Amy-Joy Butler took first place in the Corporate Reporting and Strategic Business Management papers respectively. ICAEW ADVANCED 2016 EXAM RESULTS Nov 16 Nov 15 Case Study 75.6% 75.7% Corporate Reporting 81.1% 79.2% Strategic Bus Man 87.9% 85.1%

In brief We are outstanding! Your very own PQ magazine has been named the ‘Most Outstanding Accountant Magazine 2016’ at the AI Excellence Awards. We have been told these annual awards are judged purely on merit and are designed to recognise the very best in the business. And who are we to disagree with that! 8

• CIPFA has been open and honest with PQ about the problems – see what it has to say about these teething problems on page 14. BTL chosen by ICAEW The ICAEW has chosen BTL as its preferred supplier for the delivery of CBE exams in the UK. For international venues it will use the British Council. The ICAEW said that it is working closely with the new suppliers to ensure exam venues are available in similar locations to the paper-based exams. PQ Magazine February 2017


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PQ news

PREM SIKKA Investors just don’t trust the FRC

A spat is developing between the Financial Reporting Council (FRC) and institutional investors. The latest salvo has been fired by Pensions & Investment Research Consultants (PIRC), Europe’s largest independent corporate governance and shareholder advisory consultancy. It has written to the House of Commons Business, Energy and Industrial Strategy Committee to complain that the FRC chief executive has misled the Committee. After the BHS scandal, the Committee is taking evidence on corporate governance, directors’ duties and the need to report to a variety of stakeholders. The FRC chief executive told the Committee that he was looking for powers and a mechanism to have companies report on Section 172 of the Companies Act 2006; that is report to stakeholders and not just shareholders. PIRC said that such powers already exist in Section 414C. Furthermore, the FRC has already issued guidance on the matter, which PIRC considers to be faulty. Previously, the Local Authority Pension Fund Forum (LAPFF) secured a legal opinion to challenge the FRC’s approach to the true and fair override and calculation of distributable profits. The FRC secured its own legal opinion, which naturally supports its own position. The FRC also claimed that the government supported its interpretation of law, which is disputed. Whatever the merits of the spat, the hostility will undermine FRC’s credibility and its fitness to regulate. n Prem Sikka is Emeritus Professor of Accounting at the University of Essex Great online courses up for grabs, thanks to First Intuition! See page 16 for details


Young finance professional are almost permanently looking for a career promotion or a jump to a new job, says a new global survey from the ACCA. Entitled ‘Generation Next’, the survey examined career aspirations of the younger generation in finance today. It found some 71% of respondents are looking to move jobs in the next 24 months to ensure their career keeps moving in the right direction. Head of the ACCA UK, John Williams, said: “Generation Next is ‘generation now’ when it comes to mobility. There is no doubt that the ‘job for life’ is less relevant within the modern world and employers who don’t deliver on their high expectations risk haemorrhaging their best talent to competitors, both at home and abroad.” Williams felt that if employers want to keep hold of their talent

Partner salaries down to mere £582k a year Average partner pay at KPMG fell from £623,000 to £582,000, according to the firm’s latest accounts. Even top man Simon Collins took a hit on his salary, which dipped from £2.2m last year to just £1.8m this. That said, the UK firm broke the £2bn fee income barrier, driving up revenue by 6%.

‘Generation Next’ is ready to move then they need to ensure career planning packages are available, from learning and development to talent spotting initiatives. The survey also found that Generation Next understands that automation will replace the need for human capital across a number of functions. However, they do not feel threatened by this. More than half (57%) of respondents believe that technology will replace many entrylevel roles in the profession. However, 84% say technology will enable them to focus on much higher, value-added activity. • See next month’s issue for more on this. The fall in salaries is due to the firm’s substantial investment to adapt to the market, including setup costs for new technology-led services, which resulted in a profit reduction of 2%. The firm also changed its partner mix, accelerating the retirement of a number of partners. KPMG had over 28,000 applications for its 1,200 graduate and apprenticeship scheme posts. The firm truncated its recruitment process too, and what was a twomonth ordeal has been condensed to just two days.

The accountant’s apprentice

Big changes are coming, and being an apprentice may mean something very different in the future, particularly from May 2017. The push comes from the introduction of the Apprenticeship Levy, a charge of 0.5% on company payrolls over £3m. And, this is only the start, all employers will eventually be contributing to the apprenticeship pot. Apprenticeships have the potential to become the ‘term’ used for all in-house company enclosed programme. So even graduates, in

effect, will go on an apprenticeship programme to get their accountancy qualifications. And all schemes will all run for four years, as this is what the government rules stipulate.

Are you sitting ACCA exams tomorrow?

It’s the night before the ACCA exams, so what do you need? Well, LSBF decided to put on a series of Live ACCA mentoring Q&As – #FacebookLive. Top tutor Rob Sowerby ran last-minute revision advice for the F9 and P1 exams. His P1 session was watched by nearly 12,000 people. P3 lecturer and a PQ magazine tutor of the year David Laws, got over 11,700 looking at his live broadcast of some of the key elements of P3. It eventually reached the newsfeeds of 51,800 Facebook users globally, with likes and reactions from 255 people. These sessions are free and give learners a fantastic opportunity to get answers to their unanswered questions. Watch out for the same sessions for March!

PQ Magazine February 2017

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PQ news

CARL LYGO Big changes are afoot for 2017

This year promises to be a big one for higher education, with two major changes due to be made by the UK government. The first relates to the introduction of the new apprenticeship levy; the second is the enactment of the Higher Education & Research Bill. The apprenticeship levy kicks into force from the new tax year, with a new 0.5% levy being raised on all payrolls over £3m. The new levy requires employers to provide 20% free study time for employees, which may prove to be a sap on productivity levels in the short term, although it also promises to boost part-time study routes. The Government is close to passing the Higher Education & Research Bill (HERB). HERB is designed to remove regulatory barriers of entry “preventing a level playing field” for different types of providers including “FE colleges and alternative providers, to meet the changing needs of employers, individuals and their communities”. The Government argues that these new challenger institutions drive up teaching quality and boost the life chances for students from all backgrounds.” As Vice-Chancellor of one of these challenger institutions I agree! Our system is predictable, with more and more 18 year olds going straight to university (over 50%). Professor Alison Woolf of Kings College argues that too many students are studying worthless degrees and accrue significant debt. The new apprenticeship policy could change all that. n Professor Carl Lygo is chief executive of BPP



Just when you thought CIMA pass rates couldn’t get any better the latest set of results come in! The November 2016 case study results for operational and strategic are both up on the August pass rates. The strategic case study success rate this time around was a healthy 65%. That’s much better than May 2016’s 45% pass rate. CIMA’s Steve Flatman explained students are definitely getting better at the case study, and this will be

CIMA CASE STUDY EXAMS – 2016 Nov 16 Aug 16 Operational 67% 64% Management 71% 71% Strategic 65% 63%

Making the switch

Six in 10 accountants would like to make a career switch to industry or practice – but they don’t know how to do it! Despite this desire to trade places nearly half (43%) admitted there are issues holding them back from making the jump, according to research conducted by More than a quarter (26%) felt it was too risky to move in the current economic climate. A fifth (20%) said they did not have the right skills and some 17% were worried that it would not be as they imagined it. A further 12% believe that there is currently too much competition out there for jobs. CareersinAudit’s Simon Wright said: “For professionals looking to

Procurement king It has emerged that KPMG is the government’s favourite accountant, winning more than half of the money spent on accountancy advisers across Whitehall. During 2016, KPMG earned £401m from contracts with the government – that was 60% of the £673m up for grabs. PwC won work worth £182m, Deloitte £48m and EY just £40m. Record fine for Deloitte The US audit watchdog has fined Deloitte’s Brazilian division a record $8m for falsifying audit reports, altering documents and providing false testimony. The Public Company 12

translated into better management accountants in the workplace. The pass rates for the OTs during 2016 are also holding up well. Even P1 and P2 are becoming less of a hurdle, but their pass rates are still much lower than the likes of E1 and F1. The paper with the highest first time pass rate is E2 at 86%, followed by F1 with 77%. Flatman said the OT pass rates show that more students are now

move from practice to industry it is often thought of as an easier move, but it is not always the case. Commerce and industry work expectations and company culture in general are often overlooked as contributing factors and potential issues to consider, and the change can come as a shock. With less defined study structure and focus it can take longer to complete qualifications than in practice.”

Accounting Oversight Board has also sanctioned 12 former partners and other officials for their roles in the scandal. Director of Enforcement Claudius Modesti said: “This is the most serious misconduct we’ve ever uncovered. It’s cover-up after cover-up after cover-up.” He went on: “As an investor you are expecting that the audit was done properly and

CIMA OT pass rates for 2016 Overall First time Total E1 87% 77% 73% P1 68% 48% 44% F1 83% 72% 68% E2 93% 86% 83% P2 72% 51% 45% F2 76% 51% 48% E3 81% 65% 62% P3 77% 55% 51% F3 78% 55% 51% able to take exams when they are ready. CIMA has promised to keep publishing updated OT pass rates every quarter in conjunction with the case study pass rates. • See next month’s issue of PQ for an in-depth look at how CIMA May 16 Feb 16 pass rates have 67% 62% improved since 63% 64% the new system 45% 56% came into being.

RSM merges with its N Ireland arm RSM UK has merged with the RSM Northern Ireland practice (formerly RSM McClure Watters). This includes PACEC, the consulting business. The merger means all 70 staff in Northern Ireland will join the combined business that now has a headcount of nearly 4,000. David Watters will be leaving the newly merged group, with Richard Gardiner taking on the role of Belfast managing partner going forward.


LSBF has become the official provider of ACCA tuition material for PwC in Central and Eastern Europe. The partnership will see LSBF providing its materials to thousands of PwC staff across 29 countries.

sufficiently and that wasn’t the case.” • Deloitte has agreed not to bid for any UK government contracts for the next six months. The move follows a two-page assessment by the firm that was leaked to The Times newspaper, reporting that civil servants were struggling to cope with Brexit (see PQ, January, page 12). Deloitte hopes the bid freeze will “put the matter behind us”. Women more trusted Women are far more successful than their male counterparts at crowd funding companies, says PwC. A study of 440,000 companies show 24% of those led by women reached their investment targets. This compares with 19% of those led by men. PQ Magazine February 2017

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PQ computer-based exams


ow many times have you heard someone at work talk about “the good old days” and how “exams were harder in my day”. Whether it’s GCSEs, ‘A’ levels or accountancy exams, this has been an ongoing conversation for many years. The latest water-cooler topic is computer-based exams (CBEs) and how they compare to ‘traditional’ handwritten papers. If you are studying towards the CIMA, ACCA or ICAEW exams, for example, at least some of your exams will have to be taken on a computer, with ‘objective test questions’ and multiplechoice becoming commonplace. Let’s look at the facts – no system of examination is perfect. The traditional paper-based can test different areas of the syllabus, often in rotation, so that over a year most core topics are examined and some aren’t. This means that you can “get lucky” or unlucky if a topic that you are good or bad at appears or doesn’t appear in a particular paper. With CBEs, more of the syllabus can be tested so that ‘question-spotting’ becomes irrelevant and any weak areas that a student has are exposed. One question can test several different rules. You have to know your stuff and then think, really think, about what you have to do to solve the problem. Get one aspect of a question wrong and all the marks go down the plughole. These days you have to know your

OK COMP Mike Pennington (left) explains the advantages that CBEs bring

stuff, across a much wider range of topics, and be able to apply your knowledge to some very specific situations. Anything less than precise, detailed, knowledge will result in no marks being scored. In my view at least, this is a much tougher ask than in the past. In the CIMA case study exams, now examined throughout the qualification rather than just at the end, candidates are receiving a very good general business education right from the outset, and developing communication and judgement skills to complement this education. I have been very impressed with some of the new breed of candidates who make it through to the strategic case. Overall then, a win-win for CIMA students and their employers. Precise, targeted, knowledge-orientated multiple choice exams that can be taken on demand, and in-depth investigations into three different industries across the qualification.

Now, and in the interests of remaining reasonably neutral, I got a huge kick out of teaching the ACCA paper F6 Taxation for the December sitting. It is a mix of multiple choice, short-form scenariobased questions and longer questions. In my view, the new format is a big improvement on the old approach in that a broader range of topics can be examined in any one exam. I am also looking forward to the challenge of preparing students for the new ICAEW computer-based exams. The ICAEW have done a great job with their approach to examining accounting on the computer and I am sure they will get my other papers right. It is fantastic to see how the professional body exam boards are evolving to meet the needs of today’s organisations. I am writing this in the last days of 2016; 2017 looks very exciting for tutors and students alike. I can’t wait! PQ • Mike Pennington is chairman of First Intuition Ltd

PQ CIPFA spotlight

CIPFA irons out its CBE teethin

CIPFA has apologised to students who experienced difficulties with the institute’s online exam system


n June 2016, CIPFA rolled out its ground-breaking assessment strategy, enabling CIPFA students to sit their exams anywhere in the world through computer-based exams and live online invigilation, complementing the institute’s new PQ syllabus. During the roll-out a number of issues were revealed, with a minority of students reporting a difficult experience with the new online system. As reported in PQ magazine, CIPFA took the feedback from this group of students on board directly, offering an apology to those individuals affected and implementing an action plan to remedy the issues. Improvements included changes to communications, the availability of practice tests and enhancements to the technical platform. The second diet of these exams in September 2016 – albeit for a smaller number of retake students – was largely trouble free, and CIPFA’s next major exams in November did not in the main see a recurrence of the June issues. However, in a recent exchange with CIPFA, the institute explained to PQ that two new significant problems emerged prior to, and during, the November exams. The organisation found that the main exam system used extensively by students for practice tests in the lead up to the main exams suffered from intermittent downtime. Ironically, CIPFA discovered this was primarily due to the system being moved to, ostensibly, a more reliable cloud service which then suffered a number of failures. This led to some back-end technical issues around database synchronisation and system links, which adversely influenced the exam experience for some students. 14

PQ Magazine February 2017

AAT results PQ


RESULTS IN evel 2 Introduction to Payroll Systems continues to hold the dubious honour of being the AAT assessment with the lowest pass rate – just 45.2%. That said, this figure is a slight increase on the last set of pass rates, where the Level 2 paper had a pass rate of 43.4%. The latest pass rates (below) cover the year to June 2016. The figures show students also struggling with Personal Tax (Level 4) and Level/Assessment name L1 Access L1 Bookkeeping and Accounts L1 Computerised accounts L1 Computerised Payroll Administration ** L1 Spreadsheets software L2 Applied Business Communications and Personal Skills L2 Accounting skills to run your business *

Keeping watch: an invigilator at the Pearson Vue exam centre

ng problems

CIPFA explained that for those affected the system was down for just under an hour, and that all students were able to conduct their tests once the system was back online. CIPFA also stated that a more concerning issue, caused by the intermittent breaks in cross-system links, was related to intervals over a four-day period during which some students were unable to book their appointments with the online invigilation service. Giles Orr, CIPFA’s Director of Learning Delivery and Partnership, told PQ: “Unfortunately these issues slowed down the development and implementation of ongoing service improvements, meaning that scheduled improvements, and fixes for some of the arising issues, could not be completed fully.” He added: “Additionally, the online invigilators, while fully briefed on the significant changes made to the exams, provided inconsistent and sometimes incorrect information to students during the exams. This did lead to confusion, frustration and some additional stress for a number of students, which is a cause of great regret.” In all, over 2,300 CIPFA exams were conducted during the period, with significant problems reported by fewer than 100 students. CIPFA surveyed all students directly after the sitting in order to understand and assess the impact of the reported problems. On balance, CIPFA says, the November exams were technically more successful than the June sitting with fewer overall issues, although the two major problems experienced created a significant overall impact. Rob Whiteman, CIPFA’s chief executive, has issued a full apology to all students. He also offered reassurance to those affected, stating that CIPFA will ensure that the issues experienced will not impact on the exam marks that were due out in January 2017. PQ

PQ Magazine February 2017

L2 Basic costing L2 Control accounts, journals and the banking system L2 Computerised accounting L2 Computerised Payroll Skills L2 Developing Study Skills L2 Introduction to Payroll Systems L2 Processing bookkeeping transactions L2 Spreadsheet Software L2 Work effectively in accounting and finance L3 Accounts preparation L3 Cash management L3 Computerised accounting* L3 Costs and revenues L3 Prepare final accounts for sole traders and partnerships

Accounting Skills to Run Your Business (Level 2) – although the latter only had a few sitters over the year (57 in all). At 50.5%, the pass rate for Personal Tax is also on the rise. For the year ending 31 December 2015 the PTAX pass rate was 46%. It has now broken the 50% barrier. • The next report for the year-ending 31 December 2016 will be available in mid- to late March 2017. PQ


UK 94.1% 84.9% 92.5%

Int'l 92.9% n/a n/a

World 84.9% 82.0% 92.5%


























94.6% 79.6% 92.2%

79.2% n/a n/a

93.6% 79.6% 92.2%


















61.4% 61.4% 90.5% 81.3%

44.3% 44.3% n/a 59.6%

59.6% 59.6% 90.5% 79.0%





L3 Indirect tax L3 Professional ethics L3 Spreadsheet software L4 Budgeting L4 Business tax L4 Credit control L4 Cash management L4 External auditing L4 Financial performance L4 Financial statements L4 Internal controls and accounting systems


78.2% 75.0% 87.7% 72.2% 58.0% 78.9% 57.9% 85.3% 62.2% 71.7%

54.1% 55.6% 68.4% 43.7% 54.3% 47.1% 25.9% 48.5% 36.3% 44.1%

75.6% 72.8% 86.2% 68.8% 57.7% 75.5% 54.5% 67.6% 59.3% 68.3%





L4 Personal tax





* Less than 50 assessments (ASYB = 57, COAG = 42, PTAX Int = 24 15

PQ PQ survey

Who needs study support? PQ has joined up with Hays to discover if you are happy with the way your employer is treating you! All we need a few minutes of your time – and you could win a fab Kindle Fire


o how generous is your employer when it comes to your study? We want to discover if employers are walking the walk when it comes to study support. Or are they just talking the talk? We have a quick survey for you (you can be anonymous if you want to be), which will help paint the current state of play in 2017. You even have the chance to rate your employer ‘very good’ or ‘very poor’ when it come to their support. It is vital you, the PQs of today, help us, as it is only through your experiences that we can improve the lot of those who follow behind. Now we know some of you will be on approved employer programmes, and we want to hear from you, too. The ACCA, for example, has Gold and Platinum status for employers. These organsations must provide PQs with a mentor and provide ‘financial contributions’ to some study support, but this does not have to be 100%. In fact, it is a lot less strict/generous than you might think! CIMA’s quality partner scheme seems more prescriptive. It says companies must pay 100% of the cost of a study course and the exam for first-time sittings only. It states that students should receive three days study leave plus the day of the exam at operational and managerial level, and a further day for strategic.

Our survey also asks about online exams. We want to know if you prefer to sit your exams on a computer, and again we need you to be as honest with us as you can be. We ran a similar survey way back in 2012 and concluded that employers needed to do more to support their PQs. The hope is that employers have taken note and are supporting you better. But

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we won’t know unless you tell us! Four years ago the consensus seemed to be that PQs were ‘happy’ if their firm paid for a revision course, let them have the day of the exam off and gave an additional two days per subject to study. Is that good enough for you in 2017? So please get online and tell us what you expect from your employer when it comes to the ideal study package. One lucky respondent will also be in with a

Go to to complete our survey chance to win a 7” Amazon Kindle Fire. A great gift if you missed out this Christmas! We need you to go to http://feedback. to complete the survey. PQ


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videos range from five to 45 minutes, so you can choose how much time to dedicate to each study session. All FI Go courses are available for a period of 12 months, to watch on your mobile device, tablet, laptop or PC. FI Go is cloud-based, so there is no need to download any software in order to start studying. All videos can be downloaded to watch offline should you run out of mobile data. FI is giving you the chance to win

one free ACCA FI Go course and one CIMA FI Go course. You will need to choose the course you want, which can be any ACCA tuition or any ACCA revision one, or any CIMA course, excluding the case studies. Deadline for this great giveaway is 24 February. To enter email to and put ‘FI Go’ in the header and don’t forget to tell us if you want an ACCA or CIMA course. It’s as simple as that! PQ Magazine February 2017

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PQ international standards

A MODEL ANSWER analysis required by law in many countries (UK and the US, for example) and by culture in other countries (France and South Africa, for example).

Martin Jones sets a question on equity and debt – and provides a specimen answer

Integrated report This compulsory publication of ROCE is usually in the Management Commentary component of the annual report. ROCE is then copied across to the Integrated Reports of entities that embrace integrated reporting.

Capital There’s a word loaded with meaning and ambiguity. And this ambiguity can have a massive influence on how users view an entity. The phrase ‘capital’ is usually taken to mean ‘financial capital’, as in debt plus equity, and is the bottom of the key ratio return on capital employed, or ‘ROCE’, as everyone calls it. The problem is that this ratio is very widely used but because the meaning of capital is ambiguous the widespread use of ROCE introduces problems of inconsistency and incomparability. Debt/equity The problem is further compounded by the lack of clarity in the distinction between the above two. This ‘debt/equity problem’ has been kicking around forever and I have written about it before. It can be very difficult for an entity to distinguish its debt from its equity. Indeed, some issued capital can have features of both. The classic example is preference shares. These financial instruments were going out of fashion when I started accounting in 1990. But preference share issue seems to be raising its head again. National Grid recently issued prefs and won a prize for innovation. You know the guys. Always digging up your roads and then disappearing off for a cup of tea. A little harsh, but I bet you wish they were as innovative with their roadworks as they are with their capital issues. Question Anyhow, I thought you might like to see a question and answer on this subject, so here we go… Required The definitions of ‘debt’ and ‘equity’ are problematical in financial reporting. Discuss this problem and the resultant effects on ratio analysis by users. Answer Here is an answer using the standard heading + sentence + sentence structure. ROCE The key ratio affected by the ambiguity of debt and equity is return on capital employed. ROCE is usually defined as profit before interest and tax (PBIT) divided by debt plus equity. 18

Equity And that is just the start of the problems. Another massive problem is the poor quality definition of equity. This is defined within the conceptual framework as the residual in this classic equation: equity = assets – liabilities. Liquidation That looks fine until you look a little harder. The equation says equity is what is left over when all the assets are turned into cash and the suppliers have been paid off. But this describes liquidation and has limited meaning in a going concern. Solution The solution to the problem of defining equity is part solved in a standard dedicated to this issue (IAS 32). This IFRS defines equity as ‘not a liability’ or in more detail ‘possessing no contractual obligations to cash outflows’. But this definition is often criticised as it says what equity is not rather than what it is. Users Users widely use this ratio to analyse investment decisions. Essentially, the higher the ROCE, the more keen investors will be to put in their money, either by buying shares or lending loans.

Problem with the solution Because the above solution (IAS 32) is so clumsy, the definition works poorly in practice resulting in interpretation errors where debt is classed as equity and equity is classed as debt.

Debt One problem is that the phrase ‘debt’ is entirely undefined within financial reporting. Some companies include lease liabilities and overdraft and short-term borrowing and others do not.

Gearing This makes no difference to ROCE but makes a huge difference to another widely used ratio; gearing. Gearing is usually defined as debt over debt plus equity. Clearly a misclassification of debt as equity would reduce the quoted gearing.

Published ROCE This problem is particularly visible in published ROCE. This should be comparable from Tesco to Sainsbury to Carrefour to Walmart. But ROCE is not comparable because of the different interpretations of debt. Compulsory publication This problem is exacerbated by the compulsory publication of performance

Disclosure In theory it should not matter if entities mess up their classification. This is because in theory everything you need to know about the financial structure of the entity should be disclosed. But in practice disclosure of finance is often poor. PQ • Martin Jones is a lecturer at LSBF PQ Magazine February 2017

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PQ CIMA spotlight


o doubt 2017 will be very different to 2016. Brexit, the inauguration of President Trump in the US and the inevitable speed of technological change will all result in a rapidly-changing world, with a constantly evolving employment landscape and prospects. In this environment employability is everything. At CIMA, we have done all we can to ensure a forward-looking syllabus and assessment system that will deliver the skills employers worldwide told us they need from their finance staff. The case studies in particular bring together the knowledge and skills gained at each level into a realistic test of competence. The preparation required for the case studies is very similar to that you would undertake for a job interview, namely background research into the organisation and its markets, customers and financial arrangements, plus an intention to answer the questions set as if they were part of a competence-based interview. You need to show the CIMA Faculty that you could actually do the job of a finance officer at Operational level, for example – the syllabus has given you the tools and knowledge, but now is your chance to show you know how to use them. Review your preparation All well and good, but what happens if the preparation doesn’t pay off? Pass rates are very good for the case studies, but all professional exams are tough; they need to be hard enough to be ‘valuable enough’ and an average student will fail at least one exam on the road to membership. So how do you move onwards and upwards after a setback? The first thing to do is review your preparation, as exam performance provides essential feedback on your learning experience. Then review what you did in the exam itself – be honest, as learning from your mistakes is the key to success next time around. We have lots of resources on CIMAconnect to help you prepare for the case studies, but sometimes identifying which are most useful is the biggest challenge. Think about what you did last time, go onto CIMAConnect and see what other people are saying about the exam. Why do they think they passed or failed? Does any of it ring true for you? For example, had you really interrogated the pre-seen? Did you make sure your knowledge from the three subjects was sharp, or were there some gaps you glossed over, or topics you knew were wobbly but hoped wouldn’t come up? Did you get hung up on looking for the competence marks rather than simply producing a good answer to all parts of the requirement? This reflection will provide insight. In addition, have a look at our self-test checklists (see box, right) these will help 20

2017: onwards

and upwards

CIMA’s Jackie Durham explains why preparation is key to exam success in 2017 outcomes in their preparation. Sadly, this is the way to ensure a rough ride through the OTs. You must study and feel competent in all Learning Outcomes across the syllabus as anything can and will be tested. The positive news is that the pass rates are good and offer a fair reflection of a student’s learning. Get your learning right and you are en route to a pass. Students still refer to subjects like F3 and P3 as ‘tricky’. In fact, all subjects are ‘tricky’ if you aren’t well prepared. As you move up through the syllabus you’d expect the exams to get more challenging, and this is why employers value our qualification. But if you are well prepared and follow our guidance on time management and exam technique you should succeed. Read my CIMA Connect blog on time management for F3/P3, which includes some fabulous advice (relevant to all subjects) from a successful F3 student.

Mr President: what will 2017 hold for us all?

• Jackie Durham is an education and training consultant at CIMA

you reflect further on what you should have done to prepare. Make sure you fill any gaps or address any shortcomings in knowledge or technique before your next attempt. Unless you were a long way short of the pass mark and have some serious studying to do, don’t leave it too long before booking in for your next case study exam. It is tough gearing up for a new case, but it’s still better to re-sit while the knowledge from the OTs is fresh in your mind and you feel you have learned the lessons from your previous attempt. Remind yourself that the pass rates are good, of the exams you’ve passed to get to this point, and the rewards of a pass next time around. Suppose it’s the Objective Test exams for the three subjects at each level that are giving you the biggest headache. What can you do then? Again, the first step is to reflect honestly on where you might have gone wrong. We still talk to students who hope that their weak topics won’t come up or assume they are safe to ignore more peripheral learning

Trust your judgement Confidence is important, too. Not over confidence mixed with optimism, but the true confidence that comes from knowing your stuff and being prepared. If you know the syllabus inside out and upside down trust your own judgement when it comes to tricky questions like the ‘selectall-that-apply’ ones. With these, for each of the given responses, simply ask yourself, “am I sure this response is true/correct?” If the answer is a yes, tick that response. If you are not sure, ignore that response and move on, as your first answer will almost certainly be right. I am studying for some exams (not CIMA) so have to take heed of my own advice! My exams are OTs like yours, and the temptation to go back and ‘fiddle’ with my responses can be hard to resist. But I have learned through the practice tests that as long as I read the questions carefully first time (I learned the penalties of not doing that very early on!), I do select the correct answer… So remember all your achievements to get to this point, re-book your exam asap, and then prepare to pass next time around. PQ

CIMA’s self-help checklist PQ Magazine February 2017

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PQ college visit

Life in a virtual world

PQ magazine went to Hammersmith to discover how three of AVADO’s ACCA studiers are finding the online world of accountancy training


VADO may be a relatively new name in ACCA training, but as Home Learning College it enjoyed many successful years as an AAT online provider. In fact, last year it won the ‘Best use of e-learning’ category at the AAT awards. As well as designing and building the first fully online digital programme, AVADO is unique in that it is creating its online courses as its students progress through their studies. So AVADO now offers F1 to F5, and F6 will soon be available. Built from scratch, it means it can work with PQs to provide them with exactly what they want. So, breaking with the virtual reality concept we got three of AVADO’s students together (in person) to have a chat about their experiences. Meet Joseph We first chatted to Joseph Aganna, who is now studying F5 online. He also studied F4 with AVADO and admits that he “kind of liked the criminal law aspects of F4”. In fact, he went as far as saying that “it got more interesting as we went on!” Joseph started life as an AAT and completed an apprenticeship last April, working in a law practice as an accounting assistant. After finishing AAT he decided to go ‘accountancy hardcore’ and got a new job in September in St Albans, working for a small practice. They are training him up and he now feels so much more grounded in accountancy.

In becoming an accountant Joseph is following in his grandfather’s footsteps. He had always been good at maths, too, and just thought accountancy was the best way to earn some money! Interestingly, it was his mum that found him AVADO. He was looking for flexibility and wanted to study in his own time and choose when he sat the exams. He loves the way the courses are scheduled and the fact you can take the practice test as many times as you like. He was also ‘blown away’ by how intuitive the online courses are.

Meet Rob Rob Welsh came all the way from Wolverhampton to speak to us. He is so impressed with AVADO that he wanted to help them out! Rob works for a security firm that supplies staff to schools, hospitals and building sites. He had only been there for three weeks when we chatted, but he soon discovered he had his work cut out as not a lot of accounting had been going on before his arrival. Before that he worked for an engineering firm in Norfolk, but no one there was called ‘Shaun the Dragon Slayer’. Yes, there really is a security operative called that at his new firm! Rob also liked maths at school and had 10 years of purchase ledger experience. But he needed a qualification, and when he looked online


AVADO were the quickest to get back to him. But it was the guy that rang him back that swung it. Rob said: “AJ was down to earth and gave all the background. I also loved that the one price covered the whole course. I could also put that in front of my Norfolk bosses.” Rob also had a full-time job so needed a course that gave him flexibility and time, and online learning does that for him. He really likes the fact that AVADO readily requests students feedback and makes additional course content available if students ask for it. Meet Ben Ben Maitland is perhaps not your typical ACCA PQ – he spent 18 years in the City as an investment analyst. He had studied for the CFA exams and thought he should do accountancy ones too, to see how they were, and admits they are more difficult than he thought! He can’t remember where he saw the advert for AVADO, but when he talked to them he liked the positive interaction. He said: “It’s nothing like studying alone.” When students asked for revision guides in the revision phase we got them, he said, adding that they were “a big help”. When it came to the F3 exam, Ben stressed that it was easy to get bogged down. Get to the end as quickly as you can, he advises, leaving what you can’t do, and then go back and finish! PQ

Three of the best: Joseph Aganna (left); Rob Welsh (above); and Ben Maitland (right)

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PQ CIMA exams


new app has been released for the 2017 CIMA Certificate in Business Accounting. The CIMA Cert BA app from smartMCQ enables students to use their smartphone to study wherever and whenever they have a spare moment. The app is free to download and comes with four free tests. To get it visit the App Store or Google Play on your smartphone or tablet, search ‘CIMA Cert BA’ and download the smartMCQ app. Here’s a taster for you: BA1 Fundamentals of Business Economics Which one of the following taxes is an indirect tax? • A tax on the income of individuals. • A tax added to the sale price of goods and services. • A property tax that the property owner is required to pay. • A tax on the profit of businesses. The correct answer is ‘A tax added to the sale price of goods and services’. Indirect taxes are taxes on goods and services, for example sales tax. Direct taxes are taxes on income or wealth. Income tax, corporation tax, property tax and inheritance tax are examples of direct taxes. BA2 Fundamentals of Management Accounting Which one of the following activities is associated with financial accounting rather than management accounting? • Working closely with senior managers to achieve strategic goals. • Reporting financial performance to external stakeholders. • Providing information to managers. • Assisting managers to make business decisions. The correct answer is ‘Reporting financial performance to external


APPY DAYS A new app will help CIMA students get through the Certificate in Business Accounting, says Barry Walsh. So get downloading now – the app is free!

stakeholders’. External reporting is a financial accounting activity. The other three activities are ‘typical’ management accounting activities. BA3 Fundamentals of Financial Accounting The Smoothie Company pays rent quarterly in advance, making payments on January 1, April 1, July 1 and October 1 each year. The company’s annual rent was increased from $72,000 per year to $84,000 per year effective from October 1 20X8. What rent expense should the company report in their statement of profit or loss and other comprehensive income for the year August 1 20X8 to July 31 20X9? • $72,000 • $76,000 • $82,000 • $84,000 The correct answer is $82,000 August 20X8 to September 20X8: $72,000 / 12 x 2 = $12,000 October 20X8 to July 20X9: $84,000 / 12 x 10 = $70,000 $12,000 + $70,000 = $82,000

BA4 Fundamentals of Ethics, Corporate Governance and Business Law Two statements relating to ethics follow. 1. Society expects professional accountants to act in the public interest. 2. CIMA’s Code of Ethics for Professional Accountants does not apply to registered CIMA students as they are not yet professionally qualified. Is each statement true or false? • Statement 1 is true, Statement 2 is false. • Both statements are true. • Statement 1 is false, Statement 2 is true. • Both statements are false. The correct answer is ‘Statement 1 is true, Statement 2 is false’. Society expects professional accountants to act in the public interest. This reflects the higher expectations society has today towards the conduct of businesses and to those who work in business. CIMA’s Code of Ethics for Professional Accountants applies to CIMA members and to registered students. PQ • Barry Walsh is managing director of the Content Team

PQ Magazine February 2017

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PQ cyber security


hirty years ago, stories of cyber attacks would have been reserved for the likes of a Hollywood sci-fi blockbuster. Now we regularly hear of news of cyber attacks on small and large businesses across the globe. The National Audit Office estimates that cyber crime in the UK costs the economy over £27bn a year and this is set to increase dramatically if companies do not start taking cyber threats seriously. As a result, cyber security professionals are in higher demand than ever. However, due to a shortage of skilled candidates in the field 1.5 million opportunities will go unfilled. Experts predict that by 2019 the demand for cyber security professionals globally will see the creation of six million jobs. If you are considering a change of career in the cyber security space, help is at hand – here are some pointers…

Cyber security offers new career options Simon Wright explains why this growing area offers opportunities for the right candidates

Making the move into cyber security – what skills or qualifications do you need? A degree in cyber security is not necessarily the best choice, nor is the traditional computer science route. The fundamentals of elevated computer science, enhanced by mathematics and followed up by industry standard certifications such as CISSP, CISA or CISM, will better prepare you for a career evaluating everything from statistics to fixed mechanisms. Degrees with a business focus may also offer an edge later on, as they will encourage an individual’s understanding of an organisation’s inner workings and enable a more effective appraisal of that business’ security needs. Cyber security professionals will need a good grasp of hardware, software and data from a technical and business standpoint. Experience and proficiency in project management is also valuable. As

new software or hardware is released, projects will be rolled out throughout the company in order to facilitate the use of the new mechanisms. Many individuals opt to pursue the popular penetration (pen) tester position as a pre-curser to the more senior cyber security and information security roles. This position isn’t just about discovering weak spots in an organisation’s systems; it’s about understanding why those weak

A QUICK LOOK AT... Today, the role of IT and the internet are wide ranging in industry, government and society. It is more so with the growth of Software as a Service (SaaS) and outsourcing. Organisations use internet and communication technologies to streamline their business processes and make them more efficient. Organisational computerised accounting function plays a major role in assembling accounts by collecting, recording, classifying, presenting and communicating accounting information. The nominal ledger is the core of any computerised accounting system. It provides central control over the accounting requirements of the accounting system and account maintenance through to trial balance, profit and loss account and balance sheet. Trial Balance The trial balance is a listing of all of the 26

spots exist and being able to recommend best ways to protect the organisation from becoming compromised. Cyber security demands continuous self-education as the nature of technology means its landscape is forever changing, which means those working on the allimportant first line of defence must be flexible and forward-thinking. As businesses grow more and are more reliant on technology, new threats arise. If you are an IT consultant or IT auditor hoping to move into cyber security a beneficial step would be to get involved with cyber security or technology risk projects within your current company in order to gain some first-hand exposure to what they do and how they do it. What are employers looking for? Employers are looking for a passion for technology and a keen understanding of the fundamentals of configuring systems and coding. A balance of technical strength and soft skills is also needed by employers, so you can take on network issues and database management, just as competently as communicating with non-IT colleagues. Crucially, the right candidate for the job will need to demonstrate a good understanding of business procedures and processes, particularly for senior and management roles. PQ • Simon Wright is operations director of and

the nominal ledger

accounts in the chart of accounts with their account balances (values). The balances are listed under one of two columns, either as a debit or credit. The totals of the two columns should always be the same. On a computerised system the total of debits will always equal the total of credits. Errors not affecting trial balance agreement: • Errors of commission – wrong person’s account, for example sale to B Smith is entered in the account of F Smith. • Errors of principle – wrong class of account, e.g. fixed asset entered as an expense • Errors of original entry – figure entered is incorrect (for both debit and credit). • Errors of omission – transaction completely omitted from books. • Compensating errors – errors cancel each other out.

• Complete reversal of entries – correct amounts but on wrong sides of accounts Profit and loss account The profit and loss account shows the expenses and revenues for a period. The expenses are deducted from the revenues to give the profit or loss. Balance Sheet The profit and loss account will deal with the revenues and expenses for a period. The remaining account balances are shown on the balance sheet, which lists a company’s assets, liabilities and capital in a specified format. • Chitharanjandas Chinnapaka is an AIA Achieve e-tutor. The AIA Achieve team is producing a series of ‘A Quick Look at….’ articles and more can be found on the AIA website: PQ Magazine February 2017



s all ACCA students know, to complete their studies they must clear two out of four option papers. One of their choices is P4 Advanced Financial Management. However, this has not been the most popular choice made by candidates – why? It is accepted that the professional firms of accountants encourage their ACCA students to sit P6 and P7 as they see these papers to be more relevant to the work their employees do. That would mean that the ACCA students working in industry and commerce should take P4 and P5. But this has not been the case, particularly with P4. When P4 was born in 2007, the original examiner set some reasonable papers covering the key topics of the syllabus. In addition, the examiner published some useful technical articles, the contents of which were subsequently tested in the following exams. However, in June 2009 all things changed. The exam paper set for the June 2009 candidates was, in my opinion, impossible to complete within the exam time. I have always attempted the published P4 exam papers in exam time to ensure I can understand what the students are facing. The June 2009 paper left me feeling like I had tried to race Usain Bolt over 100 metres! Hence P4 got a ‘bad boy’ reputation – too hard, unfair, can’t be done, too difficult, etc. Unfortunately, mud sticks. But it’s only mud, it can be washed off. From December 2010, a new examiner was setting the paper. The papers were by no means

Why the mud does not

stick forever Sunil Bhandari explains why you should consider the optional P4 easy, but they were consistently fair. The questions have tested the five core areas that make up the P4 syllabus. In addition, we saw a larger number of officially approved P4 articles, including several that I wrote, which assisted students’ preparation for future sittings. Yes, I can’t deny the official pass rates could have been higher and it would be nice to see them consistently at 40%-plus, but that’s a story for another day. The pass rates have generally got better and I believe they will improve even more in the future. Since September 2015, an examining team has been creating the exam questions. From my analysis of the question styles it appears that the examiner appointed in December 2010 creates Q1 and the three Section B questions are the

product of the new member of the examining team. The really positive news is that the Section B questions appear to be relatively easier than the equivalent ones set before September 2015. In addition, this theme appears to have rubbed off on the ‘Q1 examiner’. The first question is now more ‘do-able’, as students would say. All is looking good for future P4 candidates. So I say to those ACCA students about to choose which option papers to sit, make sure you consider P4 as a very feasible choice. Ignore all the stories and myths you have heard about this paper. That’s history. All that mud has now been washed away for good. PQ • Sunil Bhandari is a freelance ACCA F9 and P4 tutor

Accounting & Tax We go together like...

Complement your accountancy qualification with a tax qualification. The CTA qualification is held in high regard by employers and their clients and contributes to career progression. It enhances reputation and value and ensures credibility for the individual and the employer.

Find out more about the benefits of the CTA and to register as a CTA student visit: PQ Magazine February 2017


PQ careers

social media ROUND-UP This month we tweeted out the ‘useless fact’ that almost one-third (32%) of the UK’s electricity was generated by wind power on Christmas Day. In fact, renewable power met 42% of total demand throughout the day. Thanks @MattArsenal1 for his immediate response: “Sprouts?” Sorry Matt, we hope not! Others said it wasn’t a useless fact and was “almost interesting”! Lots of you also retweeted our story of January 4 about ‘Fat Cat Wednesday’. By lunchtime on that day FTSE100 CEO’s had, on average, raked in the average yearly salary of their staff – £30,800. All in just threeand-a-half days. People forget these guys and girls are on Premier League professional footballers’ salaries. You decide who actually earns their take home pay! This news came out just after an academic study found that bosses are being paid a fortune for delivering little of long-term value because their rewards are linked to the wrong kind of performance. The pay of the UK’s top FTSE 350 executives rose by on average 82% between 2003 and 2014. Yet returns using the most meaningful measure of value creation improved by less than 8.5%, according to researchers from Lancaster University Management School. Instead of using earnings per share growth and total shareholder return for performance related pay, the authors say ‘economic profit’ is a better measure. This measures the return a company makes against its cost of capital. So, if a company makes a profit that is lower than the cost of capital it could be deemed as effectively destroying value for its shareholders and creditors! Meanwhile, we loved Nick Craggs’ comments on the AAT Students Independent Group about what the difference is between tax avoidance and tax evasion. The First Intuition tutor said: “When you are my student there is no difference, as you can’t avoid or evade choosing tax as your optional units!” As he said: “Thank you, thank you very much, I am here all night.” 28

Life at Howett Thorpe Cheryl Ramsden, 33, is a senior consultant based in Farnham, Surrey. She has worked for the recruiter for four months. Her claim to fame is that she once took a selfie with David Ginola, the former France international footballer What time does your alarm clock go off on a working day? Early – my son is my alarm clock! What’s the first thing you do when you get to your desk? Sink a mug of coffee while sifting through my emails. What’s on your desk? Lots of lists, a picture of my son and a full mug of coffee at all times. What’s the best thing about where you work? The team I work with. Where’s your favourite place to go for lunch? The closest sandwich shop or to the office kitchen fridge. What (or who) can you see when you sit at your desk? My lovely team and a board full of

stats and job info. Which websites are your favourites and why? Topcashback, it makes me feel better about buying things I just don’t need. Which websites do you use for work? Too many to remember passwords for – LinkedIn, Reed, CV Library and indeed, for example. How many hours a week do you spend in meetings? On average about 10 hours What time do you leave the office? 5pm, to relocate to my ‘home office’. How do you relax? Getting up to mischief with my son. What’s your favourite tipple? Wine!

How often do you take work home with you? More often than I should do. What is your favourite TV programme? The Missing was fab – I’m a little lost without it. Summer or winter? Summer. Pub or club? Pub. Who is your hero? My nan. If you had a time machine, where would you go? Florence in the 15th century. If you hadn’t chosen accountancy, where might you be right now? Probably on a beach serving beer.

due to students reneging after accepting a post. In accountancy, this percentage is even greater, with 10% of accepted offers not being taken up.

finance to HR without warning and her job given to a subordinate. Her boss admitted to the tribunal that a director was “furious’ when she did not “bow to him every morning” and when she left work.

In brief Graduate blacklist Graduates who accept jobs but then pull out as the last minute in favour of a better offer could be blacklisted because of rising concerns over ‘gazumping’ in the employment market. The Times has reported that some recruits want to bring in rules that would require students to turn down subsequent offers and withdraw from interviews once they accept a job. Last summer, 2,200 jobs on large graduate programmes (about 8.2%) were unfilled

Bowing not on A Dongbu Daewoo Electronics financial manager who was demoted for refusing to bow to her Korean boss has won her tribunal case and looks set to win thousands of pounds of compensation. Misook McDonald was moved from

French can ignore emails French employees have been granted the right to ignore emails and telephone calls from work colleagues out of work hours. This makes France the first country in the world to introduce a ‘right to disconnect’ in an effort to give employees sanctuary from their smartphones and other devices.

The PQ Book Club: books you should read Future Brain: The 12 Keys To Create Your High-Performance Brain by Dr Jenny Brockis (Wiley, £14.95) Future Brain is the busy professional’s secret weapon for boosting mastery, efficiency, and productivity to gain that coveted competitive edge – in business and in life. Designed to be implemented at the individual, team or organisational level, this indepth, step-by-step framework leverages neuro-scientific principles to help you develop a solid, habit-changing plan for building and maintaining brain fitness and healthy behaviours. Author Dr. Jenny Brockis will

help you develop your thought processes and your regular routines to get more done with less effort and time. Based on the idea of neuroplasticity, these daily exercises improve focus, creativity, and effectiveness to help you stay relevant, competitive, and way ahead of the pack. You already have a magnificent brain, but you probably take it for granted; we often develop ‘survival techniques’ that force our brain to work with an incompatible ‘operating system’ in an effort to keep up with the everincreasing velocity of change and information overload. This

book helps you beef up your brain awareness so you can take advantage of the built-in features and native capabilities that make the human brain a truly awesome machine. This book will help you: • Reduce stress and avoid stress-related illness. • Foster healthy thinking habits. • Build your expertise with renewed focus and stamina. • Drive innovation through productive collaboration. PQ rating 4/5 Give the old grey matter a boost! PQ Magazine February 2017

real jobs real people Part-Qualified Management Accountant, Fleet Reference number: 13302 This is an exciting opportunity for a Part-Qualified Accountant to join this Management Accounting Function within a leading and dynamic business. This organisation offers a clear career path and encourages development, as such this would be an excellent opportunity for a CIMA or ACCA studier looking to progress. The role will sit within a small Management Accounting function supporting the Technology division, you would need to have made good progress on your studies to date and be looking to qualify within an ambitious time frame. The role would include: • • • • • •

Compiling management reports Responsible for month-end close to tight deadline Revenue analysis and reporting Provide detailed analysis on order to dispatch financial performance Preparation and delivery of forecasting to CFO level Balance sheet Reconciliation and control

The right candidate will hold strong management accounting skills, have an eye for detail and strive to improve and develop business processes. You will need to work well under pressure, on your own initiative and hold a proactive and professional work ethic. An Excel user to an advanced level and experience of financial modelling is essential, SAP experience would be desirable.

Financial Analyst, Woking Reference number: 12987 A newly created role within a nationwide business, operating within the services sector and experiencing phenomenal growth with a forecasted turnover in excess of £30 million this financial year and further growth forecasted over the course of the next twelve months through organic growth. Working closely with the Head of Financial Analysis, you will be facilitating key decision making through the provision of management information reports through the analysis of financial information. As Senior Analyst, you will be providing accurate and timely reports in the format of scheduled and ad hoc management reports, budgeting, forecasting and statutory financial reporting. You may be qualified by experience within an analytical role or currently studying a relevant accounting qualification (ACCA or CIMA) and keen to further your exposure and development within this area of accounts. You must have strong and proven financial modelling skills to include data analysis and report definition with the ability to work with and reconcile multiple complex data sets.

For more information on these positions or to register for new opportunities, please contact Cheryl Ramsden, 01252 718777 Weybridge Office T: 01932 901 900 E:

Reigate Office T: 01737 304 050 E:

Slough Office T: 01753 313 033 E:

Farnham Office T: 01252 718 777 E:

PQ got a story, funny or serious, you want to share? Email



Junior accountant roles (read PQs here) have been identified as the fourth most likely jobs to vanish to automation ‘the soonest’, according to a recent survey. Only customer service, sales and supermarket checkout staff were deemed ahead of you! Accountants don’t do any better when the survey asked which jobs people want to see automated asap. Again, accountants came in fourth. This time they were behind train drivers, bus drivers and cycle couriers. Even doctors’ receptionists (they came in fifth) are more appreciated!


For the modern-day mega-rich Premier League footballer what you do after you stop playing isn’t an issue these days. However, Middlebrough’s £12m Dutch signing Marten De Roon knows what he wants to be when he retires. The 25 year old dreams of becoming an accountant! He recently told a Dutch football website: “A friend of mine works as an accountant in the construction industry. He visits companies, speaks to different people each day and does new things all the time. How great is that?”


Forget Jenny from the yacht – a rich sailor has made the taxman’s hall of shame for the worst reasons for not filing a return on time. He told HMRC: “My tax return was on my yacht, which caught fire” – which didn’t hold too much sway at the Revenue. Other excuses included dogs, wasps and even the postman. There is, of course, an initial £100 fixed penalty for late filing, even if there is no tax to pay, or if the tax due is paid on time. After three months an additional daily penalty of £10 per day is due, up to a maximum of £900. The fines increase after this, too! Top excuses to the taxman that didn’t work: • “My tax return was on my yacht, which caught fire.” • “A wasp in my car caused me to have an accident and my tax return, which was inside, was destroyed.” • “My wife helps me with my tax return, but she had a headache for 10 days.” • “The postman doesn’t deliver to my house.” • “My husband told me the deadline was the 31 March.”


PQ recently came across a copy of Viz magazine lying around the office. The Christmas special issue had a calendar for 2017 with some great advice each day. This included: “A simple pocket calculator placed alongside your TV can be a constant source of amusement. Watch your friends’ faces as they try in vain to change the TV channel with it.” Another suggestion was: “Save energy by placing your solar powered calculator under a hat when not in use.” When it came to those spam emails it said: “When replying to Nigerian lawyers that offer millions in return for a £50k finder’s fee, only send half the money and keep the rest until you get the paperwork.” Then there was: “Stop bread drying out by keeping it in a bucket of water.” Oh what fun we had!



Cheerful women are less likely to die young, say researchers at Harvard University. It appears women who look on the bright side of life cut their risk of dying by nearly a third. Harvard’s Eric Kim said there is a direct biological impact of optimism – it reduces inflammation and increases antioxidants.


Apple may have its iBook and MacBook, but now it has gone for the real thing – it has produced an actual book. But, true to its nature, this new book comes with an Apple price tag. ‘Designed by Apple in California’ is a coffee-table tome celebrating the products Apple has produced over the past 20 years, dating back to the original iMac in 1998. Now you might want to opt for the wallet-size edition, which comes in at £160, or go for the larger one, which will set you back a cool £240.


Train your brain

Do you need the 12 keys to create your very own highperformance brain? Well, we have three copies of Dr Jenny Brockis’ ‘Future Brain’ to give away this month. Her book reveals how you can expand your brain’s capability to think well under stress, to focus and get more out of your day, to be more creative and innovative, and to prepare you for future challenges. To enter this great giveaway draw just send you name and address to Head up your email ‘Future Brain’.

A logical prize

We know how doing a Sudoku puzzle can reduce stress, so we have three sets of The Times’ sudoku four-book series to give away. The four books are worth £28, but could be yours for free simply by sending your name and address to us in an email! We will then put your name into the PQ hat for our monthly draw. If you want to enter this super giveaway then just email with ‘Sudoku’ as your 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 10 February. The main draw will take place on Monday 13 February 2017.


PQ Magazine February 2017

MAKING LIFE SIMPLE Sorted, thanks to


A jobs board just for you! We know how busy your lives are and want to give you easy access to the jobs market. With you will be able to match your CV with the job of your dreams. Isn’t it time to advance your career? Then will help you plan your next career move. Our site offers real jobs ‘right here, right now’, taking the stress out of finding your ideal position


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Profile for PQ magazine

PQ magazine, February 2017  

PQ is a free monthly magazine for student accountants, focusing mainly on the ACCA, CIMA, CIPFA, ICAEW and AAT qualifications. It's packed f...

PQ magazine, February 2017  

PQ is a free monthly magazine for student accountants, focusing mainly on the ACCA, CIMA, CIPFA, ICAEW and AAT qualifications. It's packed f...