CIMA November 2014 Exam prediction from BPP



P1 - Performance Operation

• Working capital management – the calculation of the cycle, the impact of decisions on the cycle, EOQ calculation, cash flow forecast and compound interest calculation
• Operating statement reconciling budgeted to actual profits including fixed overhead variances and possibly mix and yield calculations
• NPV including tax and inflation and/or incremental revenue and costs
• Sensitivity calculations and yield to maturity using the IRR
• Expected values, joint probabilities and risk based decisions
• Decision trees requiring both appropriate construction and evaluation
• Activity based costing calculations and discussion of benefits and drawbacks
• Benefits/problems of budgeting techniques for discursive marks


F1 - Financial Operation

Section A
• Taxation (3 to 5 questions): definitions of key terms such as jurisdiction and hypothecation; calculations such as corporate tax due, underlying and withholding tax and sales tax
• External audit: the purpose of the audit and the rights and duties of the auditor 
• Ethics: definitions of the fundamental principles and ethical threats
• Accounting standards: questions testing definitions/ calculations on areas such as IAS 18 Revenue, IAS 38 Intangibles and IFRS 8 Operating Segments

Section B
• Taxation (3 to 4 questions): written questions relating to tax definitions such as underlying and withholding tax and the administration of taxes as well as more detailed calculations on the areas of direct, indirect, international tax and deferred taxation
• External audit: practical questions based on a scenario requiring you to consider whether the auditor’s report needs to be modified
• Ethics: practical questions based on a scenario requiring you to explain the ethical dilemma and consider the practical steps that could be taken to address the issue
• Accounting standards: written or computational questions on areas such as IAS 7 Statements of cash flows, IAS 11 construction contracts, IAS 17 leases and IFRS 5 Assets held for sale and discontinued operations

Section C
• Prepare the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity for a single entity (including adjustments for inventory, property, plant and equipment, intangibles, current and deferred tax, provisions, leases and construction contracts)
• Prepare the statement of cash flows for a single entity
• Prepare the consolidated statement of financial position and/ or the consolidated statement of profit or loss for a parent, subsidiary and associate (including adjustments for goodwill, the impairment of goodwill, inter-company trading and unrealised profit) 
• The preparation of financial statements for a single company and a group are the most common requirements in Section C. Where the statement of cash flows is tested, it is likely that this will be worth 15 – 20 marks and a separate requirement will examine another aspect of the F1 syllabus.

E1 - Enterprise Operation

• The political, social and economic context – explaining how a business relates to the national and international environment it finds itself in.
• Operations management – explaining how an organisation’s relationship with suppliers has developed (e.g. TQM, relational procurement).
• Information systems – discussing how information systems can be used to add value to an organisation (potentially linked to HR / Operations issues).
• Marketing – applying key concepts such as the marketing mix to a scenario that could have ethical implications.
• Managing human capital – explaining how HR can maximise the potential of an organisation, both strategically (HR plan) and operationally (recruitment & selection). 



F2 - Financial Management

Section A
• Groups question – numerical (consolidated statement of profit or loss and other comprehensive income, financial position or changes in equity; extracts/workings from group financial statements) or written question (explanation of accounting treatment of various investments).
• Interpretation of accounts question – segment reporting (usefulness, limitations, analysis), limitations of financial analysis, interpretation of pre-calculated ratios/statement of cash flow or written/numerical EPS question.
• Written question on external reporting e.g. human asset accounting, environmental/social reporting, narrative reporting (such as management commentary or operating and financial review), or convergence between US GAAP and IFRS.
• 2 multi-topic or single-topic questions on ‘Issues in Recognition and Measurement’ on some 
or all of the following:
- Classification, recognition, initial and subsequent measurement of financial instruments – requiring explanation of accounting treatment and/or calculations and/or journals
- Substance over form – discussion of accounting treatment (risks and benefits) and journal in context of consignment inventories, sale and repurchase, structured entities, debt factoring or loan asset transfers 
- Share-based payment – cash or equity settled; requiring explanation of accounting treatment and/or calculations and/or journal entries.
- Pension accounting – numerical question with notes to financial statements or written question explaining accounting treatment for defined benefit plan and/or defined contribution plan
- Asset valuation and changing prices - explanation of, comparison between or advantages & disadvantages of historic cost accounting, current cost accounting and current purchasing power; IFRS 13 definition of fair value and/or advantages & disadvantages of fair value accounting.

Section B
• Group financial statements e.g. preparation of consolidated statement of profit or loss and other comprehensive income, financial position, changes in equity or cash flow incorporating a change in group structure (step acquisition and/or disposal), a foreign subsidiary or a complex group and often written explanation of accounting treatment.
• Analysis of financial performance and position in a scenario (including some or all of statement of profit or loss and other comprehensive income, financial position, changes in equity, cash flow, segment analysis, pre-calculated ratios). Usually approximately 8 marks are available for calculation of ratios and approximately 12 marks for commentary. Possible part (b) on limitations of ratio analysis or extra information required.


E2 - Enterprise Management

• The competitive environment – discussing and distinguishing between different competitive environments (e.g. using stakeholder mapping & PEST).
• Strategic management – discussing how a firm develops a strategy, including the rational planning model and its alternatives.
• Project management – explaining what a project is and discussing the tools and techniques used to manage it (e.g. 4-D / 7-S models).
• Linking project management to the external environment (e.g. stakeholder management /reconciling time, cost and quality criteria).
• Leadership – discussing the difference between power, authority and responsibility as well as understanding and managing conflict.
• Managing the relationship between manager and subordinate, including teamwork, legal issues and interpersonal (negotiating / communication) skills.



P2 - Performance Management

• Limiting factors – calculations and discussion of shadow prices
• Pricing – optimal pricing and discussion of pricing policies 
• Learning curve – calculations and impact on variances
• Budgeting – impact of participation on motivation 
• Performance evaluation – via financial and non financial measures
• Transfer pricing – discussion of differing policies and their consequences linked with NPV
• Brought forward knowledge from P1 – this can be pretty random, so expect the unexpected


P3 - Performance Strategy

• Risk management – being able to evaluate risks and discuss their significance in the context of the scenario (both preseen and optional) 
• Corporate governance (but not always in a profit-making context) and its role as a form of organisational control, including identifying weaknesses and recommending improvements 
• Controls (especially organisational, HR and management accounting – so don’t forget what you’ve learned in P1 and P2!) 
• Internal audit – especially as a form of control and when being used for specific internal control purposes (such as fraud investigations or value-for-money projects) 
• Financial risk (including hedging controls and economic risk in the context of transnational organisations exposed to multi-jurisdictional currency risk – you must be prepared to discuss these risks as well as perform the necessary calculations) 
• IT/IS systems in specific organisations for specific purposes – recent examples have included supermarket customer data analysis, transport route revenue analysis and online vacation booking systems. 






E3 - Enterprise Strategy 

The Competitive Environment
• The way an organisation develops strategy is affected by its external environment and stakeholders. Be familiar with the PEST and Five Forces models.
• Strategic planning approaches vary from the rational model to emergent strategy 
• Information systems (IS) and information technology (IT) can have a significant impact on an organisation and its competitive position.

Strategic Position & Choices
• Internal resources and capabilities of an organisation shape its strategic options
• Be able to identify different strategic options, using models such as Ansoff, Lynch and Porter’s generic strategies
• The evaluation of strategic options should be structured around the SAF framework.

Change Management
• Be able to discuss the change process and identify triggers for change, be able to draw on models such as Balogun & Hope Hailey’s change matrix and Lewin’s Force Field Analysis.
• You may also need to recommend how change can be managed successfully to support an organisation’s strategy, and how resistance to change can be overcome, referring to the McKinsey 7S model.

Implementation & Performance Evaluation
• Performance measurement is very important for an organisation to be able to evaluate the performance implications of a given strategy, and whether it is delivering the benefits an organisation hoped it would.
• Performance measures can be both financial and non-financial, be able to refer to the Balanced Scorecard and the Performance Pyramid.




F3 - Financial Strategy

Formulation of Financial Strategy 
• You will often be asked to produce a forecast to assess whether objectives will be achieved. Discussion areas could include analysing the appropriate dividend policy and the inter-relationships between dividend, financing and investment policies

Financial Decisions 
• You are often required to analyse a source of finance (leasing is an especially important area), including cost of capital calculations and discussion of gearing levels; knowledge of the role and limitations of Modigliani & Miller theory is very important.
• Make sure that you can discuss the role and structure of a Treasury Department
• The different working capital financing and dividend strategies are a popular area for this examiner

Investment Decisions and Project Control 
• Overseas investment appraisal is one of the most important areas in this syllabus and is often tested in question 1. Make sure that you revise this area very carefully and that you can apply the two different methods for assessing overseas investments and also that you can discuss risk and financing issues too
• Business valuations are another crucial area and is also commonly examined in question 1 of the exam; make sure that you can apply all of the valuation methods and that you can debate financing issues and post acquisition integration
• Adjusted present value and real options are also important areas where a solid knowledge is important
• Finally, make sure that you are able to discuss project control techniques such as post auditing

courtesy - http://www.pqaccountant.com/
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