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PQ magazine July 2017 /

Rebecca shoots for glory


& YOU Now is not the time to be alarmed


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News 08AAT synoptics Association apologises for ‘technical issues’ 10ACCA exams Feedback from the latest series of exams 12Top uni London South Bank is top accountancy college in town 13News from Accountex A round-up of technological developments in accountancy Features, etc 06Mind your Ps&Qs Why can’t the exam hall be more comfortable? And your AAT Synoptic exam disasters 14Cover story Meet Rebecca Fay, soccer star and prize winner 17Interview We talk to CIMA’s Noel Tagoe about the upcoming syllabus review 18ACCA examiners’ reports What was good and what was bad in the latest set of exams – straight from the horse’s mouth

26ICAEW spotlight The third

and final part in our series on mastering the Certificate level 28ACCA F9 Get the basics right 29Hays survey Money is top of your list of priorities 30Brexit and you Why ACCA will stand you in good stead 32Careers Life at BPP; and our social media round-up 34Fun stuff – and our giveaways The columnists Robert Bruce All hail and praise to the graduate generation 8 Prem Sikka Capital markets are strangling the economy 10 Zoe Robinson Meet our new monthly columnist 12 Subscribe to PQ magazine It’s FREE – see page 31 or go to ABC July 2015 – June 2016


20Rollover relief All you need to know about this important topic

23ACCA F6 exam The inside

track on getting a pass in this paper; plus PQ visits LSBF’s plush central London campus

24Let’s get technical The

humble spreadsheet, and how to use one properly

25AAT conference Reports from

the recent get-together in Brum, including another apology

AAT under the spotlight

July 2017

Publisher’s statement: We send a digital issue of the magazine to an additional 9,677 requested readers Free to subscribers who fulfil our terms of control Annual subscription: £35 (£50 overseas)

The recent AAT Level 3 Advanced Diploma synoptic exams were ‘a shambles’ with ‘huge time issues’, according to students and tutors alike. We have been told of computers freezing and work being lost. PQ magazine has been around since 2002 and as we amassed a dossier of students’ ‘experiences’ it all became a bit déjà vu for us. Back in 2011 the AAT’s move to online exams hit our front cover with the headline ‘Taxi for AAT!’ The launch of its CBA were plagued with gremlins, with some students having to stay seated for five hours to complete a three-hour test. And this isn’t the first problem this year for AAT. Suzie Webb had to stand in front of the AAT Training Provider Conference to apologise for the problems with the MDCL assessment. We have been told that the latest issues are “much worse then the problems with MDCL”. You can read what Suzie had to say on page 25. Our reliance of technology is both a good and a bad thing. When it works it is fantastic, but when it goes wrong there doesn’t seem to be anything we can do about it. There is no ‘plan B’ – look at what happened at British Airways when its systems went down! The AAT is also not unique in having technical issues with online assessments. Both CIMA and CIPFA struggled in the early days of introducing their online testing regimes. AAT will ultimately be measured by how it deals with the ‘problems’. I believe the team there will genuinely listen to their stakeholders and will be working 24/7 to get things right. But that doesn’t mean students aren’t right to feel aggrieved. We will keep you updated, that we can promise. This month’s issue also sees our first report from the ACCA examiner workshops at the Global Learning Providers Conference, and an interview with the man in charge of CIMA’s syllabus review, Dr Noel Tagoe. Don’t worry – we are on it! Graham Hambly, PQ magazine editor –

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PQ have your say

email More comfort please! I am a big fan of PQ magazine, it really helps accounting students keep up-to-date on key issues. There is one thing I really want you to investigate. ACCA is such a huge accounting body, with many students paying subscription fees and exam fees, but the tables and chairs they provide for exams are the lowest quality I have ever seen in my life. The chairs look and feels like they are full of bugs and the tables are so small and wobbly. Sitting a three-hour exam is such a struggle. And there are so many people packed in a hall there is hardly any space to

breathe properly (I’m sure it's very similar to the way Tesco breed their value chicken range). We have a

right to a clean table and chair when we sit our exams. I have made complaints but I’ve not had a response. I would appreciate it if you could do something about it. Thank you for the lovely magazine. Name and address supplied The editor says: I believe this is a problem that will disappear as the ACCA moves from large exam halls to more intimate CBE venues. In the past, accountancy bodies have even shared exam hall furniture so they were ‘well used’. That said, students can expect a certain degree of comfort, they are not in a fastfood outlet! However, in the meantime, over to you ACCA

Our star letter writer wins a fantastic PQ memory stick! Frozen out

I sat the AAT Advanced Diploma Synoptic exam in May. All worked fine through task 1 and task 2.1. Then on task 2.1 I could not open the Excel spreadsheet file. After a while the invigilator logged off and back on again for me. Task 2.2 opened but then froze after about 10 minutes. I couldn’t type into Excel, I couldn’t access ‘File’ so couldn’t save it. I tried to close Excel (to re-open it and try again) but it wouldn’t even close. A member of staff at the centre phoned AAT and were fobbed off when they were told: “Do your best and they will mark what they get!” I worked really hard to get Level 3 finished in time for the May synoptic window as I did not want to wait for July. I am now in limbo. The centre emailed a complaint to AAT and were told they will get a response with five working days. Name & email address supplied. The editor says: Since sending us this letter this PQ received a holding letter along with the promise of a full reponse/update in a further 10 days time.

I chose to delay

I didn’t take the Advanced Diploma Synoptic exam as planned. I took the decision to delay my sitting due

I need

to the issues AAT is facing – plus colleagues who did take the exam experienced computer ‘freezing’ issues and will most likely need to resit. Good luck in taking this issue to the AAT and fingers crossed something can be done before July. Name and email address supplied.

From bad to worse

I think PQ magazine picked up on the disastrous Decision & Control exam in the new AAT Professional Diploma in your last issue. It would seem that this is nothing compared with the complete shambles of the new AAT Advanced Diploma

Synoptic Assessment. Screen freezing, work being lost, impossibility of tasks within the framework even by Excel geniuses, to name a few. Name and email address supplied

It’s all too much

I feel the AAT Synoptic exam asks too much of students in terms of what they are expected to do. We have pretty much had to flag an incident report with every single exam. Very good students, who have passed on AQ2013, have come out in tears. And, of course, no one can sit this exam again until July, which will be more than busy. I see people not getting an exam space unless something changes. Accountancy tutor, name and address supplied The editor says: We asked the AAT for a formal response to the problems experienced by students sitting the Level 3 Synoptic exam. This is what we were sent: “Over the last few weeks we have been listening closely to feedback from our students and training providers regarding our AQ2016 assessments, alongside continuing our own quality assurance processes. “During the Level 3 Advanced Diploma synoptic windows we have received a number of incident reports. Our investigations into these have identified some specific technical issues that appear to have caused some students difficulties in completing certain tasks. “We apologise for any upset and frustration these issues have caused, and we want to assure our students and training providers that we are investigating the issues urgently to make sure they are addressed for the subsequent synoptic windows. “To ensure all students are treated fairly, due consideration will be given for students who experienced technical difficulties before their result is released. “We will be keeping our students and training providers fully updated as our investigation into these issues continues.”

PQ Magazine Unit 3a, Kingfisher Heights, 2 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 All hail to the graduate generation

On a grand old country estate the Earl was telling his gardener he wanted a new avenue of trees planted. The gardener was doubtful – the Earl was already 80 years old and the new trees would take 100 years to come to maturity. The response was direct: “Good God, there’s not a moment to lose!” This is the right answer to questions about the long-term. With businesses being judged more and more on the long-term nature of their strategy, the sooner sustainability can be embedded into the heart of what they are doing the better. So it was heartening to be part of a recent interview about the Finance for the Future Awards, which looks at examples of where the finance function is leading on long-term sustainability. The interview was with A4S CEO Jessica Fries and one of the award’s judges, Alan Stewart, CFO at Tesco. Both were extolling the work of younger members of finance teams, remarking on how the graduate generation was making a huge difference to how ideas of sustainability were changing business processes. They were full of praise for the energy, creativity, engagement and excitement exhibited. They talked of the need to tap into the ideas of the new generation of finance professionals and the way they could think differently and demonstrate ideas that will drive sustainability. It is not often the words ‘exuberance’ and ‘achievement’ appear in the same sentence as ‘finance function’. But increasingly they should. Robert Bruce is an award-winning writer on accountancy for The Times

AAT has apologised for the technical issues that caused difficulties in completing certain tasks during the Level 3 Advanced Diploma synoptic windows. It admitted that it has received a number of incident reports and is now investigating the issues urgently to make sure they are addressed for the subsequent synoptic windows. To ensure all students are treated fairly AAT told PQ magazine: “Due consideration will be given for students who experienced technical difficulties before their result is released.” The AAT told us that over the past few weeks it has been listening closely to feedback from students and training providers regarding its AQ2016 assessment. This latest episode follows problems with the MDCL exam (see page 25). PQ was told of students leaving the Level 3 synoptic tests in tears, with lots of stories of screens freezing and even crashing. One

AAT sitters’ hopes are going down the tubes

top tutor said: “In my opinion the test is not fit for purpose and the AAT should be held to account.” Another said the AAT must have

Making the right choices

The ICAEW has been told by the Financial Reporting Council (FRC) that students who sit and pass the Financial Accounting & Reporting: UK GAAP exam, and the future Corporate Reporting: UK GAAP exam will not be eligible for the Audit Qualification (AQ). However, the FRC has agreed that any student who sits Financial Accounting & Reporting: UK GAAP at the March, June, September and December 2017 exam sittings (including any resits) will be able to

obtain the AQ by sitting Corporate Reporting: IFRS. Students will have to pass both exams and will need to satisfy all other requirements of the AQ. At this point any student who sits the Financial Accounting & Reporting: UK GAAP, and then Corporate Reporting: UK GAAP, will not be eligible for the AQ. ICAEW told PQ that it will continue to work with the FRC and will keep students informed of further developments.

SIGN UP FOR CIPFA STUDENT CONFERENCE There is still time for CIPFA PQs to get along to the institute’s annual student conference. Manchester is again the venue for this year’s event, which takes place on Wednesday 12 July. The conference is free for all CIPFA students. Chris Roberts, a finance business partner (projects) at Watford Borough Council, will formally take over the reins of the CIPFA student network.

known there were problems because shortly after the Training Providers’ conference they announced a 15-minute extension to the spreadsheet section. Spreadsheets were the talk of the recent conference. Many tutors said they were finding the spreadsheet element of the synoptic test at Level 3 “just too big to handle”. While tutors ‘love’ spreadsheets they admitted they were struggling to get their trainees ready for the test. The requirements were also felt to be ‘pedantic’ by some tutors PQ spoke to. • See our letters page and social media column for more feedback

How to become a partner in your twenties

EY believes robots will take over 30% of the work currently done by its graduates. But the good news is that could mean rising numbers of staff being promoted to partner status in their twenties, 10 years ahead of schedule! EY’s chief innovation officer Harry Gaskell said this doesn’t mean the firm is planning thousands of job cuts (phew). Instead, the robots will take the place of graduates who, in the past, had to be “in the office until midnight adding information into spreadsheets”. Gaskell said: “That knowledge is now in machines, so we can free up graduates to more entrepreneurial projects.”

In brief Pollen maps signpost relief Hay fever sufferers can now look up the location of plants that trigger their allergy following the publication of the first map of pollen hotspots. The Met Office and University of Exeter medical school have produced the map, which could help sufferers decide where to sit exams! We are now moving into the worst months for grass and nettle pollen. One in eight people in the UK suffer from hay fever. The maps are available on the university’s website 8

CIPFA apprenticeships CIPFA has been accepted on to the Education and Skills Funding Agency’s (ESFA) register of apprenticeship training providers. This means CIPFA will now be able to deliver accountancy and finance apprenticeships, starting from the autumn of this year. CIPFA’s Giles Orr said: “Right across the public sector we are seeing tremendous changes in the way services are delivered and in order to meet these challenges it is vital the right people, with the right skills, are in

place – particularly when it comes to managing finances.” Personal insolvencies rising The number of personal insolvencies has hit a three-year high, with 24,531 individuals making insolvency arrangements in the first quarter of 2017. Weak wage growth and rising prices has been blamed. The Insolvency Service reports that the number of firms unable to pay their debts also rose, with 5.3% more going bust compared with a year ago.

New tax certificate The Chartered Institute of Taxation (CIOT) has launched a range of modular certificates to help students demonstrate their international tax expertise. It is expected that many students will use the certificates as a steppingstone to the Advanced Diploma in International Taxation. Since its inaugural exams in 2004, the ADIT qualification has grown to include 14 optional modules. You can check out the ADIT qualification at PQ Magazine July 2017








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PQ news

PREM SIKKA Capital markets are strangling economy Corporate governance and financial reporting frameworks advanced by regulators prioritise the interests of capital markets above all other stakeholders. The assumption is that capital markets provide companies finance for investment. However, the evidence shows that capital markets function as machines for value extraction rather than source for investment in productive assets as investors push for higher returns. Bank of England studies show that in 1970 firms paid £10 out of each £100 of profits in dividends, but by 2015 the amount was £60–£70, often accompanied by a squeeze on labour and investment. Recently, the Bank of England noted that among UK firms share buybacks have consistently exceeded share issuance over the past decade. The equity market is no longer a source of net new financing for companies. For the period 2003 to 2012, Standard & Poor’s 500 US companies used 54% of their earnings – a total of $2.4 trillion – to buy back their own shares. An additional 37% of earnings were absorbed by dividend payments. An analysis of 1,900 US firms that repurchased their shares between 2010 and 2015 showed that share buybacks and dividends amounted to 113% of their capital spending, compared with 38% in 1990. The obsession with capital markets and short-term returns is damaging investment, productivity and economic growth. It is time regulators devised arrangements conducive to building a vibrant economy. Prem Sikka is Emer itus Professor of Accounting at the University of Essex


ACCA June sitters left the P5 exam in shock. It was variously described as ‘shambolic’, ‘a joke’ and ‘horrendous’. Many sitters admitted that despite passing all previous exams first time they were struggling with this optional test. The real worry was in March the pass rate for P5 was a mere 28%, and PQs are concerned it could be even lower this time around. Some students couldn’t help expressing themselves on the noticeboards. “What a dickhead of an examiner, no ROI, no report evaluation, no CSFS, no KIPs. What does this examiner want?” Others accused the ACCA as being too ‘money minded’. Students seem to be really struggling to read and understand exactly what the examiner wants. “I was literally tearing my hair out in Q2 – it was needless confusing.” More anger than is usual came from P1 sitters. “Honestly I think June’s was the hardest P1 ever,” said one. However, many students admitted they struggled choosing between Q2 and Q4 simply because they had PwC, EY, Deloitte and KPMG all made it on to The Times’ Top 50 employers for women list. KPMG said it pays a lot of attention to gender equality. Its graduate recruitment is now 50-50 male/female and the firm’s Melaine Richard said it has made a real effort to attract women since the financial crisis of 2008 made the industry less appealing to them. PwC’s Sarah Churchman revealed it takes a ‘laser-like focus’ to ensure equality. PwC is hoping to reach a target of 24% female partners against the current total of 18% by 2020. “It is going to be

run out of time. Those who chose Q2 regretted it. Section C in the F7 exam also caused an outcry, with one PQ saying: “Oh boy! Never seen anything like it before.” Many sitters agreed with this comment when we tweeted it. It wasn’t all bad news, with some sitters feeling P2 was ‘easier than expected’. Although some found the P7 exam tough, more admitted that it was a fair test. • ACCA will be releasing the June results on 17 July.

What women want

difficult for us to achieve but we have gone public on it,” she said. PwC also runs programmes on unconscious bias awareness

Standard overhaul 20 years in the making The International Accounting Standards Board has now issued its overhauled IFRS 17 Insurance Contracts. It is hoped the first truly international standard for insurance contracts will help investors and other “better understand insurers’ risk exposure, profitability and financial position”. IFRS 17 replaces IFRS 4, which

was brought in as an interim standard in 2004. The new IFRS should solve the comparison problems by requiring all insurance contracts to be accounted for in a consistent manner. Insurance obligations will be accounted for using current values instead of historic costs. Information will need to be updated regularly, providing

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training and skills training to ensure women are able to achieve promotion. Deloitte said that it really does do what it promises – provide a modern, inclusive and respectful working environment where women can balance a successful career with commitments outside work. Other companies to make the top 50 include BT, HSBC, Shell, the Home Office, M&S, JP Morgan and Unilever.

more useful information to users of financial statements. IASB chairman Hans Hoogervorst commented: “IFRS 17 replaces the current myriad of accounting approaches with a single approach that will provide investors and others with comparable and updated information.”

Student loan interest hike Higher inflation means millions of students and graduates face a big rise in interest rates on their tuition and maintenance loans. Rates are linked to inflation and will rise by a third, from 4.6% to up to 6.1%, this autumn. Students who took out loans from 2012 pay interest based on the RPI measure of inflation in March. This March it showed an increase to 3.1%, compared with just 1.6% in 2016. PQ Magazine July 2017

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PQ news

ZOE ROBINSON Mindset is the key to exam hall success As this is my first time writing in PQ I thought I should introduce myself. I am Zoe Robinson, learning and programmes director for Kaplan, and in each edition of PQ I will be highlighting thoughts and observations about education and learning. My role is incredibly varied, but to do it well I have to always be thinking about how students learn and the best ways they can prepare to pass the exam. This week is a good example. I was listening to a presentation given by a colleague on ‘mindset’, a word introduced into the vocabulary by Carol Dweck, Professor of Psychology at Stanford University. It’s very easy to see exams as a process of loading your brain with information and then sitting an exam to see how much of the information is still in there. But exams are sat by people not machines, and learning is an incredibly human process. Dweck argues that there are two types of mindset, fixed, and growth. The former is where the individual believes that their innate abilities cannot change; the latter is where they believe that they can. These two beliefs affect the way you see the world, in particular how you deal with setbacks. Instead of thinking “I’m not good at this”, ask yourself “what am I missing?” And try turning “this is too hard” into “this may take time and effort but I can train my brain”. It may seem like a subtle distinction but it can make all the difference when it comes to passing your exams. Zoe Robinson is Learning and Programmes Director at Kaplan Financial

Use specimen papers, ACCA begs students Students must do everything they can to become familiar with how the CBE exam tools work, said ACCA officials at the Global Learning Providers’ Conference. ACCA pleads that candidates not wait for the exam itself to do this. Current research discovered that

And the top London uni is…

PQ magazine certainly knows how to pick them! Our current Public Sector Accountancy College of the Year, London South Bank University, has shot up to number four in The Guardian newspaper’s university league table for accountancy and finance degrees. The university’s accounting and finance degree is a real hit with students and it jumped an impressive 21 places year-on-year. The three universities above it are Leeds, Lancaster and Warwick – which makes LSBU the top university in London for those seeking to undertake an accounting and finance degree in the UK. The university also recently won The Times Higher Education award for Entrepreneurial University of the Year. Accountants have come clean and admitted that money is the key driver for many of them who are looking to switch jobs. The latest Hays ‘What Workers Want’ survey found that over 50% of respondents were expecting a higher salary when they moved jobs. But almost as equally important (46%) is a more challenging role and better longterm opportunities (43%). That said, 57% of respondents said they would be prepared to take a pay cut in order to work for an organisation that has a better cultural fit for them.

KPMG investigated The Financial Reporting Council (FRC) has started an investigation under the Audit Enforcement Procedure into the conduct of KPMG in relation to the audit of financial statements of Rolls-Royce Group for the year ended 31 December 2010 and of Rolls-Royce Holdings plc for the years ended 31 December 2011 to 31 December 2013. This move follows the Serious Fraud Office’s announcement on 17 January 2017 of a Deferred Prosecution Agreement (DPA) between the SFO and RollsRoyce, which relates to offences including conspiracy to corrupt and a failure to prevent bribery. In January, Rolls-Royce paid the SFO 12

20%–25% of CBE sitters have not logged on to the specimen papers before attempting their first CBE exam. That same research found that students are 27% more likely to achieve a pass if they have looked at the specimen paper, compared with those who haven’t. CBE candidates were also told to do their workings in the answer

spaces so markers can see them. ACCA reiterated the fact that it does not expect word processing and spreadsheet geniuses. The feedback from markers is that CBE sitters seem to get to the point quicker than their paperbased colleagues. There is not so much ‘random writing’ and students ‘going off on a tangent’, it was suggested. The CBEs allow students to go back into earlier answers and add to them, and this makes it easier for markers to give those marks too, rather than them trying to find where the candidate has put them in the paper booklet!

The London South Bank University team celebrate at this year’s PQ awards

Show me the money Accountants still see analytical skills as the most important attribute to have to be successful. This is closely followed by good communication and timemanagement skills. The survey also found that not everyone wants to be a CEO or CFO. Just 19% of respondents said they hoped to reach this level in their career. The vast majority of accountants would be content to make it to the senior management level (46%). Interestingly, some

£497m in penalties. KPMG will co-operate with the FRC’s investigations and is confident in the quality of all its audit work for Rolls-Royce. • On a brighter note, KPMG has been awarded the Queen’s Award for Enterprise in the inaugural category of ‘Promoting Opportunity’ for its work on social mobility. EY to recruit 200 apprentices EY is to recruit 200 apprentices in September. The firm said successful applicants will work towards an apprenticeship and a globally recognised accountancy qualification, on a structured programme that will offer on-the-job coaching and the opportunity to work with EY clients from day one. The full-time role will have a starting salary of up to £21,500.

92% of respondents believe that the prospect of Brexit will not change their career ambitions. Hays Accountancy and Finance director Karen Young said: “Pay is certainly a key motivator for PQs and organisations cannot bypass that. A competitive salary is a must, but employers can help to retain and attract talented individuals by looking at some other factors without stretching their budgets further.” • See page 29 for more.

PwC fined by FRC PwC and a former partner, Stephen Harrison, have both been fined by the Financial Reporting Council (FRC) over the audit work of the now-defunct social housing maintenance business Connaught. Both have been severely reprimanded and fined £5m (a record) and £150,000 respectively, for misconduct in relation to the 2009 audit. Following an FRC investigation and 12-day hearing, the independent tribunal made findings of misconduct in relation to three areas of audit: mobilisation costs; long-term contracts; and intangible assets. PwC has also been ordered to pay the Executive Counsel’s costs and to make an interim payment on account of £1.5m. PQ Magazine July 2017

news from Accountex PQ

The robots are coming Automation is coming and accountants know their world is going to change dramatically in the next five years, says FreeAgent’s COO Kevin McCallum. Talking PQ magazine through its ‘The Future of Accountancy’ report at Accountex, McCallum said no one would be surprised that 96% of accountants think the robots will be well and truly among us by 2022. Accountants don’t think they will be surplus to requirements though. Some 74% of respondents said that only some accountancy work will be automated. However, nearly two-thirds (62%) did not think their day-to-day tasks would be the same as those they perform today. McCallum emphasised that on top of these seismic changes there is a lot in the pipeline for accountants to deal with,

Time to work smarter

including Brexit and the government’s attempt at Making Tax Digital. There is also the little matter of the General Data Privacy Regulation, IR35 and PSD2 (the second payment services directive) on the agenda. Open banking comes in January 2018 and could be a massive disruptor. FreeAgent had just signed up a deal with Nat West and RBS when PQ went to see them. • FreeAgent is an award-winning end-toend cloud accounting solution for mirco businesses

Training academy: Software developer Reckon is helping UK small businesses

and accountants to improve skills and knowledge in cloud accounting and beyond with the Reckon Training Academy. The new online platform offers a variety of courses and educational content to help companies manage their finances better. Bookkeepers and accountants are being given the chance to become certified Reckon One professionals through a dedicated course, which provides extensive training in the accounting software through five concise modules. See

Automating data entry is the future, and leading the way is AutoEntry. It’s intelligent software automates the whole process of purchase and sales invoices, receipts, expenses, and bank statements. AutoEntry captures data from paper documents and inputs them directly into a user’s bookkeeping software. Gone then are the days spent manually logging data from paper documents! CEO Brendan Woods told PQ at Accountex that AutoEntry will free up accountants time to do what they do best – giving strategic financial advice! And while AutoEntry has only been available for a year it already has 2,000 accounting firms using it. See for details.

It’s time to think cloud

Accountants can now ‘think outside the office’, and really will be able to run an accounting practice from anywhere, says Dominic Allon’s Intuit’s Europe VP (pictured below). He explained that everyone has a super computer in their pocket and businesses will be looking for someone who has the same attitude to things like the cloud as they do. Allon said that today’s new entrepreneurs fresh from school/university will want an accountant who has embraced technology. And he felt that the government’s Making Tax Digital initiative will only accelerate existing trends. One area that he believes Intuit can really help new start-ups is its matching facility. “Accountants can grow their practices through our lead generation facilities,” he suggested.

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PQ cover story

Back of the net!

We spoke to the AAT’s new Apprentice of the Year Rebecca Fay about her prize-winning night, her career so far and her goals (sorry, excuse the pun!)

I started playing competitive football at the age of 11 in 2006 with Burwell Tigers, before moving to Cambridge City aged 16. I then had two seasons with Cambridge United Women’s FC (2014/15–2015/16) before returning to Cambridge City Ladies last summer for the 2016/17 season, where I have captained the team to promotion and two cup finals. Tell us a bit about your current role? I moved from my job in industry to my current role in practice in February 2016 and have been gaining experience in accounts preparation, tax and audit as an accounts junior with Streets Chartered Accountants, Cambridge. I like being able to implement my studying directly into my day-to-day role in the workplace. What is it like being the AAT Apprentice of the Year? Were you surprised to be the winner? It’s still sinking in. The nomination itself came as a complete surprise, and then to be shortlisted to the final four before going on to win on the evening were very proud moments. What’s the best piece of advice you have ever had? Nothing worth having comes easy. It sounds cheesy but it’s true that the more you put in the more you get out! PQ

Left foot forward: Rebecca in action Why accountancy and why AAT? I fell in to it! After studying A Levels I was unsure of what career path I wanted to take and although I knew university wasn’t for me, I didn’t want to go in to a dead end job. I was lucky enough to get the first job I applied for, as a finance apprentice for a property investment company, and studying the AAT qualification was the natural training route. What’s it like studying with First Intuition? They are fab; the class sizes are small, allowing plenty of time per student and the support network is amazing – the tutors are always happy to explain anything in great detail. Engaging with other students from different sectors helps me understand the syllabus. How are you getting along? How far are you with your studies? I’ve completed Level 2 and 3 AAT, and am currently studying towards Level 4, with one exam

to go. I’ve also gained a business diploma through studying on the apprenticeship program and plan to begin studying ICAEW this summer. So how have you found the exams/ assessments? Any tips on studying? As I began with Level 2 AAT and have progressed through all of the AAT levels I have noticed a gradual increase in workload and found the modules more challenging. Be organised and stick to a study schedule, especially in the lead up to exams – don’t underestimate them. How are you find balancing work, life and study? So far so good! Although studying to better my career prospects takes priority, I do believe that downtime is important. By sticking to my study plan it ensures I have time to play football and socialise with my friends. Tell us about your footballing career?

UP CLOSE & PERSONAL Job title and firm: Accounts Junior at Streets Chartered Accountants, Cambridge. First job: Part-time lifeguard – unless a paper round counts! What are you reading: A Lonely Planet guide – I’m off to Thailand. Last CD bought/download: Craig David – I’m a massive fan. Fav TV show: Love Island, my guilty pleasure. When was the last time you laughed out loud: Always! I find it difficult to laugh quietly. How do you chill: Sleeping. What is your claim to fame: I met Princess Anne when I was in year 9.


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PQ Magazine July 2017

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The future of


PQ caught up with CIMA’s Noel Tagoe to see how the latest syllabus review is going


raditionally, CIMA carries out a major syllabus review every five years. That time has come around again, so it is researching ‘what employers want’ as we speak. However, chatting to the man in charge of the review, Dr Noel Tagoe, it quickly becomes clear that CIMA may need to move quicker in today’s every-changing, inter-connected world. Work on the new syllabus started back in January and the research is expected to be completed by the end of January 2018. We can, in normal circumstances, expect the unveiling of a new syllabus by 2019. This would coincide nicely with CIMA celebrating its centenary. However, at the forefront of Tagoe’s mind is ‘The Future of the Professions’, a book by Richard and Daniel Susskind. The father and son have looked at how

Noel Tagoe is executive vice president, academics – management accounting at the AICPA. CIMA and the American Institute of CPAs make up the Association of International Certified Professional Accountants technology is transforming the work of professions, and accountants as well as teachers are on their ‘extinction list’. So its Tagoe’s job to look at the future of finance and create a qualification that will give management accountants the tools and techniques they will need to do their job. Where, for example, will he put analytical thinking into the syllabus? It’s going to be no mean feat. It is fair to say that the changes CIMA unveiled in its 2015 syllabus surprised

many. It jumped heart and soul into CBEs and it means it is ahead of trend. The case study at each level was also ground-breaking. OK, the operational level could do with some more numbers, but we understand CIMA is aiming to fix this soon. How will CIMA incorporate AI, automation, big data and analytics into the syllabus? There is also the little matter of intangibles to take on board, too! Tagoe doesn’t think accountants will become data scientists, but they will need to be given the skills to present and interpret data. The big question is this: once CIMA has its research, how long will it wait to make changes? Employers will want them to move quickly, but Tagoe understands he has to give students enough time to prepare for any changes and he will timetable everything around this. There are going to be some serious conversations this summer and Tagoe admits CIMA might not be able to wait until 2019 to make the changes. There might have to be a bold transformation in thinking, too, about what an accountant is and what they do. Tagoe stressed he has to be clear about the skills the future accountant needs to bring to the table, but he stressed that no matter what they will still need to understand what a credit and a debit is! PQ

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PQ ACCA exams

THE EXAMINERS’ W F9 Financial Management Exam structure Section A – 15 objective test questions. Section B – 15 OT questions from three OT cases. Section C – Two questions. Formula sheet Present value & annuity tables.

Pass rates March 2017 – 40%; December 2016 – 45%; September 2016 – 47%. Results combine PBE and CBE. The examiner is worried some PQs don’t seem to recognise the formulas they are provided with! F9 candidates need to know that sheet and how to insert those formulas into their answers. They are there, explained the examiner, to save students time at their exam desk. He said that the pass rate did take a big drop in March, but this merely reflected the poorer performance of some students. “Too many students are still focusing on investment appraisal to the detriment of other parts of the syllabus.” The examiner also wants PQs to master the simple techniques. Without them they are missing easy marks. He then gave lecturers an insight into the marking process. The marking software means he has access to live statistics – not only day by day but even hour by hour. Each marker gets three practice and three standardised scripts before the marking really begins. They are also some random control scripts in the marker’s pile of papers, so the examiner can quickly see if the quality of marking is being maintained. He revealed that some markers might not even be allowed to start marking if they don’t conform to the marking grid. A common theme at the conference was the call for students to study the whole syllabus. He wants to encourage students to use the ACCA study guide and tick off the areas that need more work. “Students have to continually ask themselves how they are doing,” he said. And the examiner pointed out he uses the study guide when he writes the questions. It was also stressed that if he asks for three points for six marks you won’t get any extra marks for any more than three. “You can’t get marks that aren’t available,” he said. The examiner also pleaded with students to read his Examiner’s Report – it takes him two days to write after all. F9 examiner’s top tips • Calculator errors – normally lose half a mark. • Mathematical errors – more serious and will give PQs problems at CBE – they have to know the formula they are putting into the spreadsheet. • Errors of principles. • Lack of knowledge – he sympathised with students who don’t have a perfect learning environment and don’t have unlimited time. But 18

Here’s what the ACCA examiners had to say about your performance at the Global Learning Conference. We’ll have more reports next month

planning your studies is a key to success. • Time allocation – get it right. • It’s the same marking team for CBE and PBE. For the CBE it’s vital to pick the right cell and made your answers ‘easy to find’. • The question-setting process is wellestablished so look at past papers. • There is rigorous quality control in the marking. • When he asks for three answers don’t provide five – the first three are what is marked, not the best of three out of five.

He also said your tutors should ensure you are keeping up-to-date with what is happening in the real world. Markers love a real-world example and when they have got the scope they will give extra marks for these. And while question practise is important, students need to show they can move beyond that. “Students are good at answering a set question and have learnt this. But if there is a question that has no set format they struggle,” he suggested. Students then need to be able to answer the unstructured questions, too.

P4 Advanced Financial Management Exam structure Section A – one compulsory 50-mark question based on a small case scenario, testing a range of areas. Section B – three 25-mark questions, students chose two. Smaller questions and focused mainly on one syllabus area, but could go across more.

F7 Financial Reporting Exam structure Section A – 15 x two-mark OTs Section B – three OT cases, each consisting of five two-mark OTs, based around a common scenario. Section C – two 20-mark constructed response questions, one on the preparations of financial statements, the other on interpretations.

New structure from September 2018 Section A – one compulsory 50-mark question based on a small case study. At least two syllabus areas will be tested in the question. Section B – two compulsory 25-mark questions. Smaller questions focused mainly on one syllabus area.

Meet the new examiner The examiner, who took over from Steve Scott about a year ago, wants to encourage a love of IFRSs! He said ACCA PQs need to be able to talk about the key principles of the 27 standards in F7. When it comes to section A, he said that there will be some K questions there. Turning to section C, he revealed he will ask either a single entity financial statement or a consolidated financial statement question. The single entity question could ask for an adjustment to profit or extract, rather than a full standard. A cash flow element could also be included. The consolidated question will ask for full detailed SPL and SFP. It would be unlikely he will ask for both of these together – although he might ask for them to be summarised. Students should also understand he can include a discussion element. The examiner stressed that the interpretation question is historically not well done. The single entity financial statements question could ask for redrafting figures before calculating ratios. Generic statements here though are unlikely to be awarded many marks. For consolidated financial statements the analysis will be more focused on group-related issues. These questions may also involve production, he said. The examiner revealed that the move to three sections has helped pass rates and question completion is significantly higher than it used to be.

The examiner said that over the past two years the pass rate has continued to be between 33% and 39%. He said it was vital students bring the tools and skills they honed at F9. “If they don’t they won’t succeed,” he suggested. The examiner said that there was a danger with the four sittings a year. Students seem to sit the exam again and again without seemingly preparing properly. Students should only sit the P4 exam when they have the knowledge base to help them pass, he said. P4 studiers also need to study for a good period of time. It’s not enough to work hard for three weeks and then do a week of revision. The examiner wants students to use the extra time they have in the exam to read the question properly. He doesn’t want you to just dive in and suggests you underline key words. He is also hurt by the fact that students don’t appear to be reading his articles in Student Accountant. There are two new topics there – reverse takeover and behaviour finance. He wrote them and you should be reading them – simple. However, these articles aren’t a hint of what is appearing in the next exam.They are just something for the toolkit. Interestingly, he felt there was an over-reliance on past papers and intensive study programmes. Too many candidates are also making fundamental calculation errors.

Problem areas He emphasised that sections A and B often contain ‘distractors’, so PQs must take their time. PQ Magazine July 2017

ACCA exams PQ

WORKSHOPS Candidates struggle when asked for adjustments to draft profits and time apportionment of consolidated SFP with midyear acquisition. Students really do need to ramp up their interpretation skills too, and the examiner stressed that textbook answers are worth very little – you have to use the information provided to structure your answer. CBE candidates also have to show their workings for their ratios and calculations. He wants to know where the ratios come from. Looking ahead From September 2017, IAS17 Leases is replaced with IFRS 16 Leases. The calculation on lease liabilities will be largely similar in F7 and there will be an exemption for low-value/short-term leases. The examiner also admitted he probably won’t examine a full cash flow question in F7. P2 Corporate Reporting When it comes to recent exams the examiner felt that candidates often focus on retention of information and memorisation rather than understanding. He wants candidates to understand the principles behind the learning

and then interact with the material. A good candidate thinks critically and relates the information to practice, he said. The examiner was quite critical of students and said he was “disappointed with the standard of students scriptsâ€?. He revealed that he has decided that there is no point trying to examine the nuances of the syllabus as students aren’t up to it. So he won’t test the nitty gritty of the IFRSs, he only expects PQs to know the key points of the standard. Students also don’t seem to understand what the verbs are asking for. When he asks for ‘advise’ and ‘appraise’ he just gets a list. The examiner emphasised that the conceptual framework is relevant to all questions. However, candidates’ answers are sometimes naĂŻve in the practical application of IFRSs. He suggested that tutors should be teaching subjects across the IFRSs. Another worry was the fact that students seem to be taking a strategic (rather than deep) approach to study, selecting topics and basing their studies on past questions. The examiner said it was good practice to show separate workings, particularly for complex calculations. PQ • See the August issue of PQ magazine for more examiners’ workshops



PQ Magazine July 2017

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PQ rollover relief

Hit the rollover jackpot T

here are a number of reliefs available to mitigate capital gains: some exempt the gain, some defer the gain to a later date. Here we will cover a deferral relief called ‘rollover relief’, sometimes referred to as ‘Replacement of business asset relief’. (s.152 TCGA 1992)

How does rollover relief work? Rollover relief allows a gain on the sale of a qualifying asset (the old asset) to be deferred if some or all of the proceeds are reinvested in a qualifying asset (the new asset). For example, Bob runs a manufacturing business. He wants to relocate the business so he sells his old factory for £1,000,000 (it had originally cost £250,000). He then purchases a new factory in the new location for £1,000,000. The disposal of the old factory generates a capital gain for Bob of £750,000 (£1m – £250,000), on which capital gains tax is due. However, Bob has reinvested all the proceeds in the new factory, so how can he pay the tax? This is where rollover relief comes in – because Bob has reinvested all the proceeds from selling the old factory in the purchase of the new factory, rollover relief allows him to defer the gain. The gain is deferred by reducing the cost of the new factory to £250,000 (£1m – £750,000). This has the effect of deferring the gain until the new factory is sold because any reduction in the cost of an asset will increase the gain on its disposal. When does rollover relief apply? If an individual or company disposes of a chargeable asset used in their trade look out for them replacing that asset. In an exam question it is often a building such as an office or factory being sold and replaced, but remember there are a number of other classes of qualifying assets including: • Fixed plant and machinery. • Goodwill (individuals only). • Ships, aircraft, hovercraft. Note that the assets being sold and


Juliet Smith explains all you need to know about a subject that is frequently tested

acquired do not need to be in the same class – for example, rollover relief could be claimed if a building is sold and a hovercraft is acquired. Are the conditions met? Once you have identified that there has been a sale of and purchase of a qualifying asset you need to check a couple of other conditions before you can be sure the relief will apply: 1. The new asset must be acquired either 12 months before the sale of the old asset, or in the 36 months after the sale of the old asset, and 2. The new asset must be immediately taken into use for the purposes of the trade. How much relief is available? The full gain will be deferred if: • All the proceeds from the sale of the old asset are reinvested in the new asset, and • Both the old and new asset are used 100% for trade purposes. Returning to our earlier example of Bob, let’s assume that Bob acquired his new factory for £900,000 instead of £1,000,000. He would still have £100,000 cash left, this amount of gain is treated as immediately chargeable to capital gains tax. Bob would only be able to rollover £650,000 (£750,000 –

£100,000) of gain. If the old asset is not used 100% for trading purposes, then only the trading proportion of the gain qualifies for relief. Likewise, if the new asset is not to be used 100% for trading purposes only the trading proportion of its cost can be taken into account when deciding whether proceeds have been fully reinvested. Lastly, if the new asset is ‘depreciating’ (useful life of 60 years or less or fixed plant and machinery) the gain to be deferred is not deducted from the cost of the new asset; it is instead ‘frozen’ and becomes chargeable on the earlier of: • Sale of new asset. • Trader ceasing to use the new asset in the trade. • 10 years after purchase of new asset. Claim deadline Rollover relief must be claimed by the sole trader (or company) within a certain time limit. The time limit for a sole trader is four years from the end of the tax year in which the gain arises or the new asset is acquired (whichever is later). For a claim by a company we refer to accounting periods instead of tax years. PQ • Juliet Smith is a senior tutor at Tolley Exam Training, part of Lexisnexis, and can be contacted at

PQ Magazine July 2017

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ACCA F6 exam PQ

Tax planning is an important aspect of the F6 Taxation (UK) paper. Here Caron Betts explains which Capital Gains Tax reliefs can be used to mitigate tax liability

What a relief!

Rollover relief The aim of this relief is to defer the point at which Capital Gains Tax is paid. It’s available when the disposal proceeds of an asset are reinvested in a new asset. The amount of the gain rolled over is deducted from the base cost of the replacement asset. There are conditions for the relief to apply: • Both the old and new asset must be a ‘qualifying’ asset such as land, buildings, fixed plant and machinery, and goodwill. Tip: they don’t have to be in the same class. • The reinvestment must be within 12 months before, or 36 months after, the date of disposal. Watch out for partial reinvestment! This is where the seller does not reinvest the entire disposal proceeds and receives some cash; expect HMRC to want a portion of that, in tax, immediately. Holdover relief It’s easier to remember this relief when thinking of its alternative name – ‘Gift relief’. If a gift is made of a qualifying business asset then the gain is deferred against the base cost that the donee will use when the asset is eventually sold. Tip: this is a really useful relief for families who want to pass a business down to future generations. The assets that qualify are: • Assets used for trading purposes by a sole trader. • Shares in a personal trading company, if the individual holds at least 5% of the shares. • Shares in unquoted trading companies.

Watch out for sales at less than market value, as the reduced price means there is a ‘gift’ element. Like rollover relief, when the seller (donor) receives some cash, HMRC will be looking to receive some tax. Any excess of the sale proceeds over the original cost of the asset, is chargeable. Entrepreneur’s relief The name is a little confusing as it’s not a relief at all, but a lower rate of tax. A reduced rate of 10% will apply if a disposal qualifies for entrepreneur’s relief. It’s available to individuals who dispose of all or part of a business as follows: • For sole traders, relief is only available in respect of gains arising from the disposal of assets used for the purpose of the business. Tip: remember to exclude any investments. • For shareholders, it is available for the

A quiet space in the city

PQ popped in to LSBF’s top-notch premises in London’s Bunhill Row


unhill Row is a historic part of the City of London. Yet the hustle and bustle of the Square Mile is in stark contrast to the open space and tranquility provided by the Honourable Artillery Company’s grounds and the famous Bunhill Row Cemetery, where John Bunyan, Daniel Defoe and William Blake are buried, among others. Close by is LSBF’s new centre for the college’s PQ Magazine July 2017


accountancy students. Number 2 Bunhill Row is now home to its part-time, weekend, evening and revision courses. The accountancy team have in effect taken over the third floor and are finally feeling at home. These are impressive premises. There are two cafés on campus and a massive library. We really liked the huge study zones, they really work well and students just love them. But it is the quiet that gets you, and the views of the Royal Artillery grounds – they are one of the largest green spaces in town. The classrooms are state-of-the-art and can be rearranged to suit any teaching experience,

disposal of shares in a trading company if the individual has at least a 5% shareholding and is an officer or employee. Tip: if it is a trading company, there is no restriction to the relief for investments. Watch out for any prior disposals that might have qualified for entrepreneur’s relief. The relief covers the first £10m of qualifying gains that a person makes during their lifetime. Once that limit is reached, the gain is taxed at the normal 18% or 28% rates. PQ

• Caron Betts is AVADO’s F6 tutor

college visit PQ

and they overlook the grounds so you get a great sense of space. LSBF’s lecturers and students love their new home and there is talk of launching AAT courses there some time in the next year or so. PQ 23

PQ AAT exams

LET’S GET TECHNICAL Nick Craggs just loves spreadsheets – and here he explains how you should use them to pass your exam


he March 2017 advanced level synoptic window was the first window when a large number of students sat. This exam involves some element of human marking, so the results take six weeks. So it was not until May that it was discovered a lot of students did not do as well as they would have liked, and it was the spreadsheet section that was the area students struggled with. In fact, AAT has since added 15 extra minutes to this section to help students. Problems, however, seem to have persisted (just read this issue of PQ). I love spreadsheets and think a long, convoluted, formula that includes as many functions as possible is a thing of beauty. In fact, if you asked me to choose my favourite spreadsheet function I don’t think I could. It would be like asking me to choose between my children. Before I get into functions, the first thing I would like to stress to students sitting this exam is to be very diligent with your formatting. So if the question says all monetary values must be to two decimal places, with a £ sign and a comma to separate thousands, don’t think that is just to make it look nice. If it isn’t exactly in the prescribed format asked for in the question you will drop valuable marks. After stressing that, I want to move onto the more exciting part of this exam; the functions. I do not have space to go through every assessable function, but I want to go through some of the more common and, in my opinion useful, functions. The exam will be based on various scenarios and you need to be able to use simple functions to achieve certain accounting tasks; these could include add (the function you type is +), subtract (-), multiply (*) and divide (/). An example of the type of question you may get is a flexed budget. Why don’t you have a go at flexing the above simple budget, using * to flex the figures from the original budget to 12,000 units, note overheads are fixed. You could also use + and – to automatically calculate the profit: Sales (based on 10,000 units) Cost of sales Gross profit Overheads Net profit


£ 240,000 (110,000) 130,000 (50,000) 80,000

The next function I want to mention is the IF statement. There are three sections to an IF statement: the test, the action if the test is met, the action if the test isn’t met. Let’s have a look at an example: =IF(B2>500,B2*1.2,”no commission”) The IF tells the program that you want to use an IF statement. Then in brackets you have three sections separated by commas. The first section, B2>500, is the test. So the program is looking to see if the value in cell B2 is greater than 500. The next section is what you want the program to do if the test is met – in this case it will multiply the value in cell B2 by 1.2. The third section is what the program will do if the test isn’t met. In this case, due to the inverted commas, it will return the “no commission” as a text value. Why don’t you have a go at an example? Enter the following figures into an individual cell in your spreadsheet program: 257 280 303 312 220 In the cell to the right of these enter an IF statement. This will calculate 20% of these figures if the figure is above 300, and returns “no tax due” if the figure is below 300. As I have mentioned, formatting is really important. A key tool is conditional formatting. This changes the formatting of a cell if a test is met. It is pretty

straightforward too – go to home, then conditional formatting, and highlight cell rules. Here you can see the functions available; try highlighting the numbers above red if they are above 266 Another function I really like, and it is used extensively in AAT’s Sample assessments, is Goal Seek. When you know the result you want from a formula, but not one of the variables, this will work backwards through the formula to find the missing variable. A common use for this when you know how much money you want to borrow, you know how long you want to pay it off, and you know how you can afford per month. You could use the PMT (not assessed by AAT) function to calculate the maximum rate of interest your potential loan can have. Let’s look at a simple example In a cell in a new worksheet enter the figure 456 into cell A1. Then in cell B2 enter the following formula = A1+B1. We want Excel to enter into B1 the number that will make our formula output 1,000. So we go to the Data Tab, then What-If Analysis, then Goal seek. We can then enter our values. So the set cell is the cell we have the formula in, which is B2. Set the value to 1,000, and we want to do this by changing cell B1. Press ok and it tells us that cell B1 should be 544. My last piece of advice for the exam, is save your work frequently. You can check the answers at PQ • Nick Craggs is distance learning director at First Intuition PQ Magazine July 2017

AAT conference round-up PQ

AAT admits ‘we got it wrong’ over MDCL T

he bottom line is we got it wrong with MDCL,” said AAT director of education Suzie Webb (pictured above). She told a packed AAT Training Provider Conference that there was no pretty way to say it and she said she was “very sorry” for the problems tutors and students had had with the assessment.

Webb stressed that it was now her priority to ensure there are no residual problems with the MDCL assessment and that no student is disadvantaged. There were audible groans from the audience when she mentioned MDCL, and Webb promised the assessment will be continually monitored with questions being reviewed and revised. She explained that all other assessments were also under review. Webb stressed that AQ2013 is still available until the end of the year. The cut-off point is 31 December 2017, and she told tutors that they

needed to prepare students for that date. She revealed that since its introduction on 1 September students have sat 104,000 AQ2016 assessments (until the end of April). She did, however, stress that pass rates would only be released when 500 or more students have sat the assessment. Webb also tried to end speculation that the practice assessments don’t compare to real assessements. The tests are written by the same people who do ‘the real thing’ and she believes they are vital resource, helping to introduce students to the technology. PQ

The AAT Training Provider winners are: AAT unveiled this year’s winners of the Training Providers Awards at the Hilton Birmingham Metropole Accountancy Learning walked off with the AAT Champion award at the recent AAT Training Provider Awards. PQ magazine editor Graham Hambly was again a judge this year. He said: “Accountancy Learning is everything an AAT provider should be. What is so great about the team is that they really care and it shows. They were a worthy winner.” The Distance Learning Provider of the Year award went to Premier Training for the second year in a row. “Premier really are offering a premier service to its PQs,” said Hambly.

The award for Best Use of E-learning went to First Intuition Distance Learning. “First Intuition are another provider who goes that extra mile for trainees,” he said. The other winners on the night were: • AAT Student of the Year: Rob Thornton • Apprentice of the Year: Rebecca Fay (pictured) • Distance Learner of the Year: Peter Freeman • Training Provider – small: Southend Adult Community College • Training Provider of the Year – medium: Preston’s College • Training provider of the Year – large: BPP Professional Education • Pauline Sparkes Award for Best New Training Provider: Aspire Accounting School • International Training Provider of the Year: Management & Accountancy School (Myanmar) • Apprenticeship Training Provider of the PQ Year: Kaplan Financial

How to get your small business off the ground Cyber crime is something that happens to other firms, right? Wrong! Follow Darren Nicholls tips and keep your firm safe Following the news of various recent attacks, could my business be at risk of cyber crime? There are a wide variety of crimes that fall under the term ‘cyber crime’ and it is highly likely that you, and your business, have already fallen victim to it. For example, most of us have received an unsolicited email at some point – known as spam – but rather than this simply being an annoyance it is in fact illegal and therefore a cyber crime. The most common types of cyber crime are: • Virus infections to business computers. • Phishing – where sensitive information PQ Magazine July 2017

such as passwords are stolen. • Debit and credit card fraud. While you may have security, cyber crime is rapidly evolving and there is always a risk that you might have been compromised. You should consider having a policy that regularly reviews any threat to your business. Take a look at Cyber Essentials – a government-backed scheme to help organisations protect themselves against common attacks. Cyber security needs to be a priority for every business. Security breaches could put businesses out of action and cost money, which could be fatal for small businesses with little time and money to spare. You should ensure you:

• Protect your computers by having the latest versions of security software. • Make back-up copies of important documents. • Hide and encrypt wi-fi. • Use different passwords for every different account you have. • Consider speaking to a cyber security specialist. With cyber crime rarely out of the news, any business of any size is a potential target for criminals. As a business owner you will need to ensure you have the right security measures in place to protect your data, and keep your business safe and secure. PQ • Darren Nicholls is Product Manager for Informi, powered by AAT. Visit to find more practical advice 25

PQ ICAEW spotlight

Master the Certificate level: the conclusion

In the final part of our series on the Certificate Level we focus on Principles of Taxation and Law. Discover the common mistakes in the Principles of Taxation exam, and find out exactly what you will be learning in law Principles of Taxation Analysis of students’ actual answers in this exam highlights common mistakes that are costing students marks. This guidance will help to improve your chances of demonstrating the knowledge you have. • Use a hyphen or brackets to input the personal allowance/deductions: 10,600 (10,600) 10600 (10600) • With any adjustments to profits working, read the questions carefully. Examples include: 1. “In arriving at her taxable trading profits, Elan deducted the following amounts:” The accountant has deducted various expenses, but for tax purposes you need to adjust the profit figure by adding back any disallowed expenditure. 2. “The following items have been added or deducted in arriving at the draft accounting profit for Knight Ltd:” Add back any disallowed expenditure and deduct any items that increased profits that are not taxed as part of trading profits, such as a profit on disposal, any item of non-trading income or a decrease in a general provision. For these items the accountant added the amount to profits, so to do the opposite you need to deduct the amount using a minus sign or brackets. 3. “In arriving at her draft taxable trading profits, no account has been taken of the following amounts as Becky was unsure of the correct treatment:” and “In addition, the following items have not yet been included in Sigil Ltd’s accounts:” You are not reversing what the accountant has done, because the accountant has done nothing. You need to deduct any expenses which are allowed or add in any items of revenue which should be taxed as part of trading profits. For anything that is not allowed

(eg, client entertaining) you need to input a zero or a dash into the relevant box on the answer screen. • Be careful when working out corporation tax payment dates. Double check that you have the correct year, that is nine months and one day added to a December year end cannot be the same year as the accounting year end. Law You might wonder why accountants need to learn law. If it makes you feel better, trainee lawyers also wonder why they have to learn about accounts. The reason is that as an ICAEW chartered accountant you’re not just going to be working

with numbers – although these are a vital part of what we do. You are also going to gain an understanding of how a business works, so that you can work within or advise them. Part of this all-round expertise is a working knowledge of the law. The law you’ll learn includes: • Contract law – the legal background to every business transaction. • Negligence – what happens when we get things wrong. • Employment law – a brief overview of the law governing employees (of which you’ll be one, at least to start with). • Company law – an extensive area covering starting and running a company. The majority of trainee chartered accountants are involved with auditing the accounts of companies, so this knowledge is essential. On being issued with the study manual your first reaction is likely to be ‘how will I ever learn all this?’ Fear not – people do manage it and the pass rate in the exam is high. By all means use a highlighter pen, but don’t spend ages making copious notes. The secret to retaining the knowledge is to test yourself by using the questions at the end of each chapter and also using the question bank that you’ve been given. Also, be sure to look at the exam resources available on ICAEW’s website for further guidance and a sample exam, so that you can get the best out of your learning materials and study time. The exam itself consists of 50 questions in either multiple-choice format or multi-part multiple-choice format. For more study resources, including exam webinars and sample exams, go to PQ • Thanks to the ICAEW for this article Reproduced with the permission of ICAEW, this article was first published in Vital (October 2016). Vital is the quarterly magazine for ACA students. © ICAEW 2017.

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Get the basics right Josie Kelly explains how you can get a pass in the very tough F9 paper – by keeping things simple


veryone knows that F9 is a difficult exam and the pass rates reflect this. But it’s easy to get bogged down in the difficult aspects and forget to focus on one major thing – getting the basics right. In the F9 examiner’s report for the March 2017 exam, many of the comments were about students who failed to perform the basics. Here we look at a couple of the items mentioned. Inflation in discounted cash flow calculations As the examiner says, inflation is cumulative in its effect. This means that when inflation applies in a discounted cash flow investment appraisal, it needs to be applied in every single year. Example A project lasts for four years. Sales in the first year will be 1,000 units, with 1,200 units in the second year, 1,500 in the third year and 900 in the fourth year. The sales price in current terms is $100. Inflation of sales prices is expected to be 5%. In current terms, sales revenue in the first year would be 1,000 × $100 = $100,000. But sales will first be recorded at time period 1 (t1) as, although the sales will happen throughout the year, we record them at the end of the year in which they occur. As the sales price has been given in current terms (i.e. a time period 0 value) then $100 is not the correct value to record t1 sales. Inflation of 5% for one year needs to be applied. So the t1 sales price will be $100 × 1.05 = $105 and t1 sales revenue will be $105 × 1,000 = $105,000 The mistake commented on by the examiner is that many students will then use this same price of $105 for the remaining three years of the project, feeling that they have taken inflation into account already. But as the effect is cumulative, the remaining sales values are calculated as follows: t2 revenue = $100 × 1.0522 × 1,200 units = $132,300 t3 revenue = $100 × 1.0533 × 1,500 units = $173,644 t4 revenue = $100 × 1.0544 × 900 units = $109,396 Note: you would get the same result by taking the previous year’s inflated price and multiplying by 1.05 to get the new price before multiplying by the sales units.

Tax-allowable depreciation (TAD) in discounted cash flow calculations This may not feel like a basic area when you first see it, but students need to be rock solid on this technique by the time they take the exam as it is so frequently tested. The first thing to remember is that the TAD itself is NOT a cash flow for the investment appraisal. It is a calculation of depreciation that the tax authorities will allow as a deduction from taxable profits and so it reduces the tax bill for the company. It is the reduction in tax that goes onto the investment appraisal as a relevant cash flow. The next thing to remember is to read the question. TAD is most often calculated on a reducing balance basis over the life of the project – the question will tell you how to calculate it so you just have to follow the instructions. The third thing to remember is to focus on timings. There are two issues here: 1. If the asset is bought at the start of an accounting period (assume this if not told otherwise), then the first TAD won’t be available until the end of the accounting period, i.e. at t1 for the investment appraisal. If, however, the asset is bought on the last day of the period then the first TAD is immediately available at t0. 2. If the question states that tax is paid one year in arrears then a TAD value in t1 will lead to a tax saving in t2. Example An asset is purchased for $50,000 and used on a project for three years, at which point it is sold for $5,000. TAD is available at 25% reducing balance. Tax is payable at 30% and tax liabilities are settled one year after the year in which they arise. Tax saving Cash flow × 30% timing $ $ t0 Purchase asset (assume 1st day of accounting period) 50,000 t1 1st TAD (25%) 12,500 3,750 t2 Tax written down value 37,500 t2 2nd TAD (25%) 9,375 2,813 t3 Tax Written down value 28,125 t3 Sell asset – proceeds 5,000 Balancing allowance 23,125 6,938 t4 Remember – picking up the basic marks is essential to achieving a pass. PQ • Josie Kelly is Kaplan Financial’s F9 content specialist

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PQ Magazine July 2017

careers PQ


Show me the money

art qualifieds have revealed that pay remains their top priority when contemplating staying in a role or accepting a new job. However, it is not enough for employers to rely on salary alone – competitive pay is a must, but doesn’t provide complete satisfaction in isolation. Culture, work-life balance and career progression are all important to professionals when choosing to stay with their current employer or move to a new job, according to our latest ‘What Workers Want Report 2017’.

A new survey reveals what you really want from your job, says Karen Young

A competitive salary isn’t enough Interestingly, our findings revealed that, after pay, it was cultural fit that was ranked by PQs as most important when considering to stay in a job (22%) or when evaluating accepting a new job (23%) – more than career progression and benefits in both instances. More than half of you would also be prepared to take a pay cut to work for an organisation with a better cultural fit, highlighting the importance for employers to offer PQs more than just a competitive salary. We can’t ignore the fact that a significant 80% of you would be tempted to consider another job if it meant a higher salary, which shows an obvious need for employers to offer a competitive salary. But it is also important to note that

aside from salary it is improved work-life balance that is most likely to tempt you to consider a new job, with almost half of the PQs surveyed saying so. Further to this, almost a quarter of you said you are actively looking for a new job, with 45% of you hoping for a more

challenging role; 43% longer-term opportunities; and a third hoping a new job will offer improved work-life balance. It’s clear today’s PQs have their sights set on progressing in their career while having a good balance between work and personal life. Over three-quarters of the PQs surveyed said they are ambitious, with almost two-thirds wanting to reach the ‘C-Suite’ or senior management later in their career. A third also said they would turn down a job if no training or development was offered. We anticipate pressure will mount on employers to review career paths and training opportunities to encourage loyalty from their trainee accountants. As we can see from the report’s findings there are a number of factors aside from salary that are desirable to PQs, so employers will need to assess how they can offer employees the complete package, to retain and attract the most ambitious individuals. PQ • Karen Young, Director at Hays Accountancy and Finance. See

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PQ ACCA focus

Brexit and the ACCA member


rexit uncertainty is the new norm, to the extent that alarming stories have emerged of UK students being advised that the only way to find employment within the EU is to obtain citizenship of another European country. In the midst of all this scaremongering ACCA’s stance is clear… it’s business as usual, folks! Now the Lisbon Treaty’s Article 50 has been triggered, the UK’s departure from the 27 nation block is just two years away. During that period, ACCA will continue to break down barriers and maintain its presence on the global stage. We will still be the number-one body worldwide offering professional qualifications, leading to rewarding careers in accounting, finance and business management. With more than 480,000 students in 181 countries well on their way to fully fledged membership we will continue to provide support throughout each individual’s journey and on-going career. Crucial role In any period of uncertainty, accountants have a crucial role in boosting confidence and stability within business. The next two years will be the time for ACCA students and members alike to show they can really make a positive difference. ACCA prides itself on its values. It is no coincidence that opportunity features first on ACCA’s core list of values – we ‘provide opportunity free from artificial barriers to people around the world’. Our qualification is truly global, offering 30

John Williams says ACCA PQs are well placed to enjoy a successful career, whatever happens when the UK leaves the EU

flexibility across geographies and sectors. ACCA offers opportunity to its students through its powerful network of 7,000 Approved Employers worldwide, our globally-portable qualification and our emphasis on preparing individuals to become business leaders of tomorrow. Looking beyond Europe While the future legal status of EU nationals in the UK and vice versa may not yet have been agreed, one thing is certain: both sides are keen the continued freedom and right to remain of foreign nationals in the UK and in EU jurisdictions is the first issue to be settled. The good news is that, regardless of the outcome of negotiations, this is an opportunity for students to look beyond the shores of Europe. ACCA’s recent Generation Next research, which polled almost 19,000 respondents under the age of 36 from 150 countries, found 80% want a role in a different country at some point; 44% see a move abroad later in their career and over one-third see themselves going for a global role in their next move. ACCA operates the largest jobs board of any professional finance and accounting body, so both existing and future members can take full advantage of the global accountancy job market. During the two-year negotiation process for Brexit, ACCA will keep members and students in touch with the many practical implications of proposed changes and widely engage on how ACCA will adapt to major shifts.

Even though careers in the UK and European states may become subject to visa and employer sponsorships for workers it is likely that an element of freedom of movement will remain, and career paths will continue to have flexibility. Global accountants are in high demand and future ACCA members will have the added advantage of an internationally renowned qualification being recognised by employers around the world, not just in the EU. One of the prime benefits of an ACCA qualification is that it is designed to be applicable in many countries across the world. It also prepares students for work in a range of sectors and jurisdictions. Furthermore, with 100 offices and centres all over the world, and dedicated technical advisory, professional CPD courses and member network teams, ACCA will be on hand to help and support members with their problems, wherever they are based. Business leaders of tomorrow Accountancy as a profession has transformed in recent times. The 21st century accountant is a strategic business advisor with a wide set of skills underpinned by excellent technical and ethical knowledge. Brexit presents an opportunity for many accountants to take a leading role in strategic business decisions and financial forecasting. Embedded in business practices across every sector, accountants have incomparable insight into the financial security and growth potential of every country’s enterprises. They are adept at spotting risks and opportunities. We believe that ACCA members occupy a uniquely valuable position in their advisory and oversight roles within businesses and the public sector across the UK and indeed, all over the world. The UK government has put international trade deals with new partners at the top of its agenda after Britain leaves the EU. This outwardlooking approach will generate opportunity for many more businesses to begin or expand cross-border operations. ACCA members will have the unique advantage of having a global network of fellow members, employers and market offices at their fingertips to draw on market specific intelligence and technical expertise. This is a time of massive change, and I hope PQ readers feel optimistic about the career choice they have made. The skills and abilities gained will be highly valued across business and the economy in the future. As our Generation Next report identifies, accountancy training is an opportunity to acquire a portfolio of skills relevant in the wider business world beyond the professional finance function. So look ahead – with confidence! PQ • John Williams is Head of ACCA UK PQ Magazine July 2017

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social media ROUND-UP AAT’s ears must have been burning as social media went into a whirl about the problems with the Level 3 Synoptic test. As one tutor told us: “It has been a bit of a nightmare to be honest, much worse than the problems with MDCL.” There are a lot of upset students, training managers and training providers out there. One PQ told us: “There was not enough time to complete the mammoth tasks set. The system kept freezing and I had to toggle between the Excel worksheets and the AAT platform in order to check the time!” Another said: “The computer froze four times while I tried to complete the exam and it had to be restarted. This made the exam even more stressful than it already was!” And yet another told us: “The software kept freezing and my computer had to be restarted, I lost the spreadsheet and completed formulas I had been working on.” For others there were even more issues to overcome: “There was a trumpet player outside, a fire alarm, a few tears from one person and lots of muttering of swear words from me. What a horrible stressful exam!” A tutor agreed: “We had students in tears. Poorly written questions (so they say – yet we will never know) and a huge time issue were just two aspects.” Elsewhere, PQ magazine wished all the ACCA June sitters good luck, and reminded them that students who use the Examiner’s Reports are 28% more likely to pass. This research comes from matching the September 2016 results with the post-exam student feedback survey. Despite the advice one student admitted that they hadn’t, with a simple “Nope!” on Twitter. Another, popsicle, also confessed “Not fully ”. And then the exams began… We tweeted out for F7: “Section A ‘piece of cake’, section B ‘a bit tricky’ and section C ‘oh boy, never seen anything like it before’.” Becky agreed that she had never seen anything like it. When it came to P2 Joshua thought: “Q1 was lenient and Q3 was horrible.” And Margaret said: “Wow. P7 – hard!!!” 32

Life at BPP Nitin Rabheru, 44, is a senior tax tutor and has commercial responsibility for tax courses. He has worked for BPP in London for 16 years. Nitin has a law degree from the University of London and is the current PQ magazine Lecturer of the Year What time does your alarm go off on a work day? 5.30am. What’s the first thing you do when you get to your desk? Check my work and personal emails. What’s on your desk? The latest copy of tax legislation, my PQ magazine ‘I love tax’ mug and plenty of colourful pens, together with my two laptops. What’s the best thing about where you work? Definitely my fellow tutors. There is always a great atmosphere in the office with lots of banter. Also, the support I receive from my bosses and all the teams within BPP. They are just amazing. Where’s your favourite place to go for lunch? Pret, I love all their vegetarian food options. What (or who) can you see when you sit at your desk? I mainly work from home so, all I can see is a field surrounded by

trees and a few horses. I also have a five-foot-long painting by Robin Mullen of the New York skyline above my desk. Which websites are your favourites and why? BBC News for keeping up-to-date and also TechRadar to see what new gadgets are being introduced into the market (I love gadgets!). What websites do you use for work? I often need to refer to the HMRC website and taxation magazine regarding any developments in the tax world. How many hours a week do you spend in meetings? Zero. What time do you leave the office? On a good day I can finish by 5pm. How do you relax? I enjoy spending time with my two boys and my gorgeous wife, going out

for meals with friends and taking walks in the Surrey countryside. What’s your favourite tipple? Anything non-alcoholic. How often do you take work home with you? All the time! What are your favourite TV shows? Mock the Week and Only Fools and Horses. Summer or winter? Summer. Pub or club? Pub. Who is your hero? Pramukh Swami Maharaj, who devoted his life to humanitarian causes. If you had a time machine, where would you go? Back to 1966 when England won the World Cup. I would love to experience the joy and passion of us winning the tournament. If you hadn’t chosen accountancy, where might you be right now? A police officer trainer with the Met Police.

(37%) comes in second. And the least enjoyable bits? That’s chasing information (36%) and sorting out messy books (23%).

years in a scheme, that’s up from 9% in 2016.

In brief Love what you do Do you love being an accountant? This was a question asked by FreeAgent in their ‘Future of Accountancy’ survey, and 83% of respondents said a resounding ‘yes’. In fact, 80% of accountants would even recommend accountancy as a career for young people. So what part of the job do accountants really like? Solving problems is top of that list (42%) and helping clients grow their businesses

Graduates not staying Ambitious young graduates are proving ever more difficult to retain, according to research that shows they are increasingly willing to ditch their first-time employer at the earliest opportunity. A study by the Association of Graduate Recruiters (AGR) found that employers are losing 16% of their graduate intake in the first two

One minute to impress One in five employers make a decision about the candidate in front of them at an interview just one minute after meeting them. Research by totaljobs found that nearly half (44%) of employers wait a little longer to make a decision – 15 whole minutes! With first impressions playing such a crucial role totaljobs has launched #TheElevatorPitch, a campaign to help candidates through the process.

The PQ Book Club: books you should read What Everyone Needs To Know About Tax by James Hannam (Wiley, £19.99) This is a cracking little guide to the UK’s tax system. The author, a veteran tax expert with the likes of EY, KPMG and Freshfields on his CV, takes the reader on a jolly romp taking in all the UK’s various taxes – and there’s a lot of them. What makes this book such a joy are the myriad fascinating facts about tax. Did you know that Stamp Duty was introduced to this country by William of

Orange, who brought it over from Holland when he acceded to the throne in 1688? Or that playing cards were once subject to excise duty, as it was the only way the Treasury could instigate a ‘gambling tax’ (which is what the cards were used for)? This is a very readable book that’s a joy to dip in and out of. It’s not designed to save the reader from paying taxes, as the author says himself, but it does highlight the foibles of the tax system and the way it can be manipulated by politicians for their own ends.

There are too many tales to relate here – you should check them out for yourself. PQ rating 5/5 Although too basic for professional tax advisors, this is a great introductory text for those just starting accountancy training


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How do you get ready for the exam season? One of our favorite tutors, BPP’s Colin Naugthton, likes to run. He recently completed the Marathon Des Sables – six marathons in six days across the Sahara desert. Temperatures range from 50c during the day to -5c at night. Oh, and he took his long-suffering wife along for the run. Truth be known, she’s the real athlete in the family, and we heard there were times when Colin just wanted to lie down next to the man having a heart attack (true story)!

Put your name on the shirt

Last June, Premier League club Swansea City was taken over by Jason Levien and Steve Kaplan. They lead an investment consortium, which acquired a controlling majority of shares. PQ was thinking there was a perfect way of Kaplan getting one over on his partner – get top accountancy trainer Kaplan to become the shirt sponsor! It is not such an outlandish idea. Quickbooks sponsored Aston Villa and BPP Doncaster Belles (ladies team). We are sure the Association of International Accountants (AIA) is making the most of the other AIA sponsoring Spurs, too. That deal has just been renewed and AIA is believed to be paying more than the £16m a year it currently hands over.

SACK THE ENGRAVERS PQ recently visited ICAEW headquarters for the prize giving ceremony. It is a wonderful building and well worth a visit when there is another ‘open house’ event. However, we couldn’t help but smile at the marble plinth listing the current and former institute CEOs. So Michael Izza’s full name is Michael Donald McCartney Izza. Do you think his parents were Beatles fans? But then we saw the dog’s dinner that is the engraver’s attempt to date the former chief executives’ time in charge. We don’t know how much one of those marble plinths cost, but we would get a new one!

United profiting from Europa run

Manchester United have had a mixed season on the pitch, to say the least. But one place they hardly ever do badly on is the balance sheet. Record revenues of £570m are being predicted for United to the year ending in June. Their Adidas kit deal could have been cut by £21m if they lost to Ajax in the Europa League final, but this would have been spread out over the remaining life of the contract, so would only hit the accounts with a £4m loss in 2017, and a further £2m hit over the remaining years of the contract. The run to the final, however, more than made up for any loss from Adidas. The win means that forecasted profits are thought to be just under £200m.

Go straight to jail – not

Footballer Lionel Messi’s 21-month jail sentence for tax fraud has been upheld in Spain’s Supreme Court, However, he is unlikely to go to prison. Messi, along with his father, has been convicted of defrauding the Spanish people of £3.5m in taxes. Brazilian teammate Neymar is also facing allegations of corruption and fraud over his transfer to Barcelona. It doesn’t stop there. Spanish prosecutors are now considering whether Cristiano Ronaldo should face charges over allegations of non-payment of £13m of taxes between 2011 and 2014.


ROSEMARY REVISION BOOST Sales of rosemary oil are on the up after researchers suggested that it could help those studying for exams. Holland & Barrett have reported that sales of the oil have almost doubled following a trial by Northumbria University, which found exposure to rosemary helped boost memory. OK, the trial was smallscale and involved 10-11 year old children, but those in the scented rooms achieved much higher scores when asked to recall words.


Instagram is the worst social media in terms of its impact on the mental health of young people, says a new report. Although positive for self-expression and selfidentity, the photo-sharing app had a negative affect on sleep, body image and ‘the fear of missing out’. The survey of 14-24 year olds found YouTube and Twitter had the most positive ratings. A call has come for some sites to introduce pop-ups to warn users about their heavy usage to help those suffering from mental health issues.


The pressure of exam revision often leads to more takeaways, and apparently they might not be as bad as you may think – as long as you make the right choices. Researchers at Boston University have found that the intake of choline (found in egg yolks) helps improve some performances in memory tests. So, a little bit of egg fried rice or a Florentine pizza could be good for your diet. The spinach on the pizza will also help to fight sluggishness. Now we are talking pizzas another healthier option is the Neapolitan with its olives, capers and anchovies. These ingredients all help increase your cognitive function.


IFRS in your pocket We have five IFRS ‘Pocket Guide to IFRS Standards: the global financial reporting language’ to give away this month, courtesy of the IFRS Foundation. The 2017 update is written by Paul Pacter and has a foreword by IASB chairman Hans Hoggervorst, no less. This is a fantastic reference tool that you won’t be able to put down! To enter this great giveaway send your name and address to Head up your email ‘IFRS Pocket Guide’.

EWI’s ACCA study texts EWI’s 2017-18 ACCA study texts are now ‘available’ to download and purchase. The texts come in at £19.99 and cover the full syllabus without getting into too much detail – that’s a plus, promise! They are also written in clear English and use a simple attractive layout. EWI is offering 10 lucky readers the chance to download the text of their choice! To be in with a shout of winning head up your email ‘EWI ebook’ and tell us which paper you want (eg F8). Please include your full name with your entry.

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 14 July. The main draw will take place on Monday 17 July 2017.


PQ Magazine July 2017

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PQ magazine, July 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...