BPP Exam tips

F4 Corporate and Business Law Exam Resources (UK)

English Legal System
•  Court Hierarchy and the operation of judicial precedent. (BPP Study Text Q1 & Q2)
•  How statute is created, delegated legislation – types, advantages, disadvantages and control. 
•  Impact of the Human Rights Act. (BPP Study Text Q3)

Law of Obligations
•  Types of contractual terms – warranties, conditions and innominate terms. (BPP Study Text Q8)
•  The rules governing offer, acceptance, consideration and intention in contract formation. (BPP Study Text Q4, Q5, Q6, Q7)
•  Breach of contract including common law and equitable remedies. (BPP Study Text Q10 & Q11)
•  Exclusion clauses, including the common law and statutory restrictions. (BPP Study Text Q9)
•  The law of tort - knowledge questions will focus on definitions of the 3 stages in a tort, plus the defences. Application questions may ask you to advise on whether a tort has been committed and what the likely outcome will be. (BPP Study Text Q12 & Q13)

Employment Law
•  The distinction between Employees and Self-employed workers, how this is made, and why it is important.
•  The rights and duties of employees and employers. (BPP Study Text Q14)
•  Workers rights upon dismissal including redundancy, unfair, wrongful and constructive dismissal. (BPP Study Text Q15)

Business Formation and Constitution
•  The law of agency and partnerships – types and duties of partners. (BPP Study Text Q16 & Q17)
•  How a company is formed and the role of agents. (BPP Study Text Q18 &Q19)
•  The advantages of trading via a company, how the veil of incorporation can be lifted under common law and statute.
•  The contents and impact of the Memorandum and Articles of Association. (BPP Study Text Q20 & Q21)
Capital Financing
•  The different classifications of share capital and the rules for issuing and paying for new share capital. (BPP Study Text Q22 & Q24)
•  Fixed and Floating charges. (BPP Study Text Q23)

Management and Administration of Companies
•  Defining/describing the different types of meetings and resolutions. (BPP Study Text Q26)
•  The statutory general and specific duties of directors. (BPP Study Text Q25)
•  Appointment, removal, powers and duties of directors, secretaries and auditors.

Companies in Difficulty
•  The difference between compulsory and voluntary (creditor’s and member’s) liquidation. (BPP Study Text Q27)
•  The process and advantages of administration.

Ethics
•  Questions could be either knowledge or application. The focus is likely to be on the roles and responsibilities of directors. A detailed knowledge of the Combined Code is NOT required. (BPP Study Text Q28)
•  The law of Insider Dealing or Money Laundering will feature on most papers. (BPP Study Text Q29)

F5 Performance Management

•  Performance Measurement – questions are likely to include interpretation of given data and also a discussion of the value of or suggested non financial measures  (a typical question from the April 2007 BPP Study Text is pilot paper Q4)  The discussion elements of such a question could be practiced by looking at appropriate questions such as (question 18 Springfrom the April 2007 BPP Study Text)

•  Budgeting – questions may focus on implications of differing budget approaches and their impacts on motivation.  The conflict between ZBB and incremental budgeting is also likely to be explored (see April 2007 BPP Study Text question 13 ZeroBased Budgeting)

•  Modern cost management techniques  - are likely to feature frequently involving both calculation and discussion requirements (see April 2007 BPP Study Text question 3 Abkaber)

•  Decision making techniques – particularly involving relevant costs, scarce resources and pricing decisions (see April 2007BPP Study Text question 8 RAB Consulting and question 9 Plastic Tools)

•  Variance analysis - particularly mix and yield along with interpretation of variances 

F6 Taxation (UK)
Question 1 
1.  Income from employment, in particular assessable income, allowable deductions and benefits (a typical question from theAugust 2007 BPP Study Text is question 5)
2.  Income from self-employment, in particular basis of assessment, allowable expenditure, assessable profits on commencement and cessation, capital allowances and relief for trading losses (see August 2007 BPP Study Text questions 9,10,11)
3.  Property and investment income, in particular property business profits, savings income and dividend income (see August 2007 BPP Study Text question 8)
4.  The computation of taxable income and the income tax liability (see August 2007 BPP Study Text question 3)
5.  The self-assessment system
6.  The time limits for the submission of information, claims and payment of tax (see August 2007 BPP Study Text question 26)

Question 2
1.  Computing profits chargeable to corporation tax, in particular allowable expenditure, capital allowances, property business profits and relief for trading losses (see August 2007 BPP Study Text questions 33)
2.  Computation of corporation tax liability (see August 2007 BPP Study Text question 31)
3.  Groups and overseas aspects of corporation tax (see August 2007 BPP Study Text questions 34 and 36)

If VAT is included within Question 1 or 2 or on its own the following are the most regularly examined areas:
1.  Circumstances in which a person must register for VAT (see August 2007 BPP Study Text question 38)
2.  The computation of VAT liabilities, in particular the tax point, the valuation of supplies, non deductible input VAT, the relief for impairment losses on trade debts (see August 2007 BPP Study Text questions 39 and 40)
3.  Cash accounting, annual accounting and flat rate schemes

Question 3
1.  Computation of capital gains for an individual or company 
2. Part disposals
3.  Chattels (see August 2007 BPP Study Text question 21)
4.  Principal private residence relief (see August 2007 BPP Study Text question 22)
5.  Share identification rules for individuals and companies (see August 2007 BPP Study Text question 25)
6.  Computation of capital gains tax payable for individuals in particular computing taper relief (see August 2007 BPP Study Text question 20)
7.  Rollover and holdover reliefs (see August 2007 BPP Study Text question 23)

Other areas that we would expect to see in questions 4 and 5 are:

1.  Partnerships (see August 2007 BPP Study Text questions 16 and 17)
2.  Trading losses for individuals and companies (see August 2007 BPP Study Text question 15)
3.  Commencement and cessation rules for self employed individuals (see August 2007 BPP Study Text questions 12)

F7 Financial Reporting

•  Group accounting – Preparation of a consolidated statement of financial position (balance sheet) and/or statement of comprehensive income (profit and loss account), often with an associate (Study Text Q13 Panther Group, Q14 Hever) .The question will often contain a related written part, such as the importance of fair values, reasons for eliminating unrealised profit, effect of group relationships on the financial statements, etc (Study Text Q11(a) War)

Other areas that we will expect to see, particularly in the optional part of the paper are:
•  Financial statement preparation (Study Text Q5 Winger)
•  Discontinued operations (Study Text Chapter 7)
•  Performance appraisal (Study Text Q25 Biggerbuys, Q26 Webster)
•  Statements of cash flows (cash flow statements) (Study Text Q27 Dundee)
•  Conceptual framework (Study Text Q1 Conceptual framework, Q18 Alpha)
•  Earnings per share (Study Text Q24 Pilum)
•  Accounting policies (Study Text Q7 Gains)
•  Non-current (fixed) assets and impairments (Study Text Q8 Multiplex)
•  Provisions (Study Text Q17 Provisions)
•  Revenue and substance over form (Study Text Q19 Jenson)
• Construction (long-term) contracts (Study Text Q16 C Co)
•  Leases (Study Text Q22 Lis)
•  Aims and objectives of not-for-profit organisations (Study Text Q3 Standard Setters)

F8 Audit and Assurance

•  Question 1 – a 30-mark scenario based on a particular area of the financial statements,such as revenue/receivables or purchases/payables. Some of the requirements are likely to be based on how the area would be audited. This could include requirements relating to tests of controls and/or substantive procedures. These questions could also include the identification of control weakness and issues relating to internal audit. (Study Text Q11 Knits, Q13 Fenton Distributors, Q14 Cheque Payments and Petty Cash, Q20 Understatement)
•  Question 2 – a 10-mark question broken down into two or three factual requirements. This is likely to test your knowledge of the key principles of the ISAs. Any area of the syllabus could appear here. (Study Text Q9 Audit planning and Documentation, Q10 Audit Evidence, Q25 Audit Review and Finalisation)
•  Question 3 – a 20-mark question that is likely to include risk and audit approach. (Study Text Q22 Boston Manufacturing, Q23 Tap) 

•  Question 4 – a 20 mark question that is likely to feature a more specialised audit area (Study Text Q3 Corporate Governance, Q5 Objectivity, Q7 Role of Internal Audit, Q8 Glo, Q15 Using the Work of an Expert)

•  Question 5 – a 20 mark question that is likely to include topics relating to collection of audit evidence at the end of the audit, audit closedown or reporting (Study Text Q19 Sitting Pretty, Q24 Going Concern, Q26 Wiseguys National Bakeries, Q27 Builders Merchants)
F9 Financial Management

•  Financial management function – questions are likely to test understanding of objectives and will use ratio analysis to test the candidate’s ability to evaluate business performance.

•  Financial management environment– this area is most likely to be tested as a part of an exam question; questions are likely to require an understanding of the practical implications of government economic policy or the practical importance of key financial markets such as the stock market (a typical question from the April 2007 BPP study text is question 2a).

•  Working capital management – questions are likely to test candidates’ understanding of practical issues in the management of more than one type element of working capital with a requirement to evaluate a proposed change in working capital management (a typical question from the April 2007 BPP study text is question 6).

•  Investment appraisal – questions in this area will expect candidates to be competent at the basic techniques for evaluating the return on a project (NPV, IRR, ROCE) and the risk of a project (payback, adjusted payback and sensitivity analysis). A typical question from the April 2007 BPP study text is question 12.

•  Business finance – questions are likely to test understanding of the types of short and long-term finance that are available to a business and the appropriate balance between debt and equity. The examiner will often test the test the candidate’s ability to evaluate the effect of a source of finance on the balance sheet of a business using ratio analysis. A typical question from the April 2007 BPP study text is question 20.

•  Cost of capital – this will test the calculation of the weighted average cost of capital (possibly involving more than two types of capital) or a project specific cost of capital. Make sure you can discuss the limitations of the weighted average cost of capital, and the use and limitations of Modigliani and Miller theory. A typical question from the April 2007 BPP study text is question 23.

•  Business valuations – questions will require you to use a number of different valuation techniques to value a company.
Discussion areas are likely to include the limitations of the techniques that have been used and the relevance of the efficient markets hypothesis to business valuations (a typical question from the April 2007 BPP study text is question 25).

•  Risk management – this will normally focus on currency hedging (a typical question from the April 2007 BPP study text is question 27).

P1 Professional Accountant

• Discussion of one of the fundamental principles underlying good corporate governance
•  Discussion of corporate governance best practice
Identification and assessment of business risk and/or a review of internal control mechanisms
•  Ethics or corporate social responsibility (including sustainability) 

(Please note the only Section A question contained in the current edition of the BPP Study Text is Pilot paper Q1)

Other areas that we will expect to see, particularly in the optional part of the paper are:

•  Governance (2007 Study Text questions 2, 3 and 9)
•  Risk assessment and management (2007 Study Text questions 6, 7 and 8)
•  Internal control (inc. internal audit) (2007 Study Text questions 5 and 11)
•  Professional values and ethics (2007 Study Text questions 10 and 12)

P2 Corporate Reporting

•  Group accounting – Complex groups, foreign subsidiaries, disposals of subsidiaries or associates, discontinued operationsor group statements of cash flows (cash flow statements) (Study Text Q19 Big Group (UK Q21 Armoury), Q22 Harvard (UK Q24),Q21 Holmes and Deakin (UK Q23), Q23 Tastydesserts (UK Q25))
•  The question will also include adjustments on other areas, such as
–  pensions (Study Text Q5 Radost (UK Q6 FRS 17))
–  financial instruments (Study Text Q7 PQR (UK Q8))
–  share-based payment (Study Text Q15 Share-based payment (UK Q16))
•  The remaining part of the question is likely to include something on ethical, social or environmental issues normally based on a scenario (Study Text Q1 Fundamental principles)

Other areas that we will expect to see, particularly in the optional part of the paper in multi-part questions are

•  Conceptual framework
•  Non-current (fixed) assets and impairments (Study Text Q2 Greensmith, Q3 Acquirer (UK Q4 FRS 11, Q5 Invest))
•  Deferred tax (Study Text Q6 DT Group (UK Q7 Taxable))
•  Provisions (Study Text Q9 Clean (UK Q10 Leased warehouse))
•  Revenue (Study Text Q11 Tree (UK Q12 FRS 5 Scenarios))
•  Related parties (Study Text Q14 Ace (UK –))
•  Leases (Study Text Q26 Planet (UK Q29))
•  Performance measures (Study Text Q13 Grow by acquisition (UK Q27 German competitor))
•  Application of accounting standards to specialised entity scenarios (Study Text Chapter 22)
•  Essay question on current developments in reporting (Study Text Chapter 24)

P3 Business Analysis
section A of the paper are:

•  Strategic position – assessing and discussing the environment and capabilities of the organisation including the mission and role of stakeholders, ethical stance and corporate governance (2007 Study text questions 1,2, 3 and 5)
•  Strategic choice – identifying and evaluating strategic options open to an organisation making a distinction between the approach adopted by the corporate parent and that adopted by an Strategic Business Unit (2007 Study text question 6)
•  Strategic action – recommending courses of action to solve the business problems faced by the organisation – usually based on the evaluation undertaken earlier in the question; the solutions will often (but not solely) be process improvements using software solutions and will always have a people aspect to them; change management will in these circumstances be a relevant point whether specifically asked for in the requirements or not. (2007 Study text questions 7, 8 and 9)
•  Quantitative evaluation – section A questions will include quantitative data – both financial and non-financial. You will be expected to make use of this data to support your answer and may even have the opportunity to calculate and comment upon relevant ratios (eg the December 2007 paper contained data on operational usage, an Income Statement and a Balance Sheet)

Other areas that we will expect to see, particularly in the optional part of the paper are:
•  Quality – this is a potential source of competitive advantage and was tested in the
pilot and December 2007 paper
•  Software packages – their role in process improvement is an area of interest to the
examiner.
•  Project management – process improvement and many strategy initiatives are run as projects therefore this is a key area (2007 Study Text question 12)
•  Strategic HR  - people are seen as key and so a section B question could focus on areas such as leadership, job design and staff development (2007 Study Text question 14)’
•  Configuration and control – the way in which an organisation is organised, the control processes and the way in which it manages relationships is also an important area (2007 Study Text questions 7 and 13)
•  Customers and competitors – are key to an organisation’s success (Study Text questions 3 and 6)

P4 Advanced Financial Management

•  Advanced investment appraisal – the basics are now tested in paper F9 so a question will include a twist e.g. use of adjusted present value, overseas aspects (a typical question from the April 2007 BPP study text is question 11) or the recognition and valuation of real options or value at risk.
•  Acquisitions & mergers – questions in this area will expect candidates to be competent at the basic valuation techniques (a typical question from the April 2007 BPP study text is question 15) and an ability to discuss the practical aspects such as strategic factors and financing issues.
•  Corporate reconstruction & reorganisation – the ability to predict corporate failure using Z scores (a typical question from the April 2007 BPP study text is question 22) and to analyse a financial reconstruction (a typical question from the April 2007 BPP study text is question 23)
•  Treasury and advanced risk management techniques – expect a question on currency hedging (a typical question from the April 2007 BPP study text is question 27), interest rate hedging (a typical question from the April 2007 BPP study text is question 32) or the analysis of credit risk to establish the cost of debt finance (a typical question from the April 2007 BPP study text is question 34).

Other areas that we will expect to see, particularly in the optional part of the paper are:

•  Role and responsibility towards stakeholders – one of the optional questions will focus on the managerial or ethical dimensions of the finance managers job (a typical question from the April 2007 BPP study text is question 3)
•  Economic environment for multinationals – an awareness of the mechanics of raising finance on the global capital markets and of the importance of dividend policy and transfer pricing policy for multinationals (a typical question from the April 2007 BPP study text is question 35) 
•  Emerging issues – it is important to be able to use a variety of new techniques: a key model is the Black-Scholes option pricing model which can be used to value interest rate options, currency options, real options, and share options (a typical question from the April 2007 BPP study text is question 10).

P5 Advanced Performance Management

The largest question in the compulsory section of the paper is:

•  Financial and operational performance measurement of an organisation against a benchmark, such as budget, prior period or a competitor.  Discussion as to the value of such comparisons. (April 2007 BPP Study Text question 12 is a typical example involving private and public sector considerations.) 

Other areas that could be examined in either section A of the exam, as the second compulsory question, or in section B include :
•  Use of an established theoretical model to evaluate the performance of an organisation. (April 2007 BPP Study Text question 13 covers the Boston Consulting Group matrix).
•  The features of the not-for-profit sector and difficulties in performance management thereof. (April 2007 BPP Study Text question 15 (a) is an essay-based question on this area).
•  Transfer pricing mechanisms linked to goal congruence and dysfunctional behaviour. Likely to include international aspects of transfer pricing. (April 2007 BPP Study question 14 indicates how little numerical analysis is required at this level).
•  Non-financial performance indicators to cover quality. (April 2007 BPP Study Text question 15 (b) is a scenario-based question on this area).

Areas that are more likely to appear in the optional part of the paper are:
•  Budgeting approaches including the circumstances when they are more or less appropriate.
•  Discussion on the uses of mission and objectives for performance planning and control. (April 2007 BPP Study Text question 11 is a common essay style question for this exam).
•  Requirements of and procedures for collecting information for strategic management accounting. (April 2007 BPP Study Text question 9 links this to a scenario).
•  Assessment of divisional or managerial performance. (April 2007 BPP Study Text question 16 covers this together with motivation).

P6 Advanced Taxation  (UK)

1. Termination payments and share incentive schemes (see August 2007 BPP Study Text question 6 and 37)
2. Overseas aspects of income tax (see August 2007 Study Text question 11)
3. Inheritance tax involving lifetime gifts and death estate (see August 2007 Study Text question 18 and 38)
4. Capital gains tax (see August 2007 Study Text questions 13,14,16,19)
5. Groups for corporation tax (see August 2007 BPP Study Text question 28)
6. Overseas aspects of corporation tax (see August 2007 BPP Study Text question 29)
7. Close companies (see August 2007 BPP Study Text question 27)
8. Reorganisations and liquidations
9. VAT particularly imports and exports, partial exemption, VAT groups, special schemes (see August 2007 BPP Study Text questions 31, 32)
10. Standard tax planning measures (see August 2007 BPP Study Text question 33)

P7 Advanced Audit and Assurance
The areas that we would expect to see most regularly in the exam in the compulsory section of the paper are:
•  Risk and planning - the examiner has already set one such question in the December 2007 exam, asking for principal audit risks to be considered when planning the audit
(a good example of this from the 2007 BPP Study Text is question 7 “Gasoleum”)
•  Evidence gathering – with particular emphasis on specific assertions and audit procedures (a good example of what to expect is question 14 “Griffin plc” from the 2007 BPP Study Text)
•  Reporting – Students will require a knowledge of the relevant financial reporting requirements to answer a reporting question well (see question 27 “Reporting issues” in the 2007 BPP Study Text)
•  Ethics & professional issues – A question on this area of the syllabus will be wide ranging and will not just focus on independence issues (see question 2 “Aventura International” in the 2007 BPP Study Text for an exam standard question on ethics)
•  Definitions of specific terms were required in December 2007 (eg “outsourcing” and “forensic accounting”). See question 11 “Bingham Engineering” from the 2007 BPP Study Text for an illustration of how this might be examined.
You should note that any of these items could also be tested in Section B of the paper.

Other areas that we would expect to see, particularly in the optional part of the paper are

•  Non-audit assignments, for example the audit of prospective financial information or forensic audits (question 23 “Scenarios” in the 2007 BPP Study Text is a good indication of what to expect here)
•  Group audit issues (see question 18 “Annabella Ltd” in the 2007 BPP Study Text for an exam style groups question)
•  Quality control and practice management (Question 3 “PLD Associates” from the 2007 BPP Study Text is a useful question to test understanding in this area)