ACCA Pass Rates December 2018 Exam: Part 2 Tips (Focus on SBL, SBR, AFM, APM & AAA)

Updated: Aug 19, 2019


ACCA published December 2018 pass rates for each paper.

First of all, congratulate to 5,470 ACCA students passed their final exam and become ACCA affiliates.


Two observations I would like to highlight before sharing each individual paper –

  • Number of students taken SBL and SBR exams are more than double those of the September session;

  • An increase in the uptake of on demand ACCA and Foundations exams shows the demand for ACCA qualification increase

These two news are really appreciating as it shows the professional qualification are more recognized and welcome by more new joiners.

Link to announcement:

https://www.accaglobal.com/gb/en/news/2019/january/Dec18_exam_results.html

In addition to more people joining the professional exams, it is also encouraging to see the overall pass rates are similar to or better than September session.


It is always important to review examiner comments as they are highly regarded as the exam tips directly from the authority. No matter you will attempt March 2019 or any future exam, they are the ‘tips’ to you.

Let’s start the sharing of what examiners tell you need to pay attention in next exam!

Strategic Professional Module Pass Rates


Comparing to September 2018 session, many of papers in Strategic Professional Module pass rates are higher. SBL, AFM and ATX are examples of significant improvement.

SBL and SBR are new to many students. Pass rates are possibly improved when more attempts are over as both tutors and students are familiar to them.

For those optional papers, it is another story. Since September 2018, all questions are compulsory and the only way to pass is to study the whole syllabus instead of questions spotting.

It is glad to see more students passing strategic professional module papers and becoming ACCA affiliates.


ACCA SBL – Reading and Planning is the key to pass

It is a 4-hour exam with a single compulsory section.

The marking scheme included 80 technical marks for the correct use and application of technical knowledge.

In addition, 20 marks are for professional skills and competencies.

Generally, you need to take note of the following in order to do well in SBL:

  • Spend sufficient time to read case study materials including all exhibits and make sufficient reference to them in your answer;

  • Planning how to answer is important because it ensures important points are produced logically, the reading and planning time is suggested to be 40 minutes;

  • It is recommended to answer the requirements in order especially examiner considers future exams may follow a timeline or have question requirements that progress in other ways.

Professional skills tested in this attempt include analysis, commercial acumen, scepticism, evaluation and communication.

General comments on this session SBL exam are –

  • Some evidence of shortage of time when answering final question, Question 3(b). Examiner recommends all students to take mock exam before actual exam to get used to the demands;

  • Mostly answered the questions in sequence although some of students leaving one question to answer at last. Examiner recommends candidates should normally answer the requirements in order.

There are two parts in question 1.

Part a requires discussion of key factors enabling the target company, HiLite, to be successful in its home country. Part b asks for an evaluation of a proposal to acquire another country hotel chain.

Good answer in Part a included applying Porter’s Diamond model to identify those factors with balanced discussion of them.

Part b asks the application of suitable, acceptable and feasible (SAF) framework on the evaluation of proposal. Not few students earn good professional marks in the report presented.

Question 2 is divided into two parts. Part a asks for a response to the negative newspaper report while most answers were well structured.

Part b requires an assessment of the roles and benefits of Integrated Reporting while not many answers showing a full understanding of it.

Question 3 is worst question answered in this exam. It is divided into two parts. Students are asked to demonstrate a sound knowledge of disruptive technologies but many answers show limited understanding about it.

Evidence shows Part b is answered with rush work by many students. Time management is an issue. In addition, the risks identified by finance director are asked to be addressed and recommendations needed. There were only few answers correctly addressing this.

Detailed examiner’s report can be found:

https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/SBL/sbl-examreport-d18.pdf


ACCA SBR – It is a new paper and NOT P2

The purpose of SBR is to assess your professional competences within the corporate reporting environment.

Its syllabus is not significantly different to the P2 syllabus but it requires more written answers rather than numerical ones.

The exam contains two sections, A and B. Section A includes 2 questions which totaled 50 marks while Section B has 2 questions and 25 marks each.

SBR December 2018 pass rate is 47%, the same as September 2018.

Examiner disappoints on SBR performance while the pass rate shows it is lower than P2 average pass rates.

Key problems in worse than expected performance are –

  • Many candidates demonstrated rote learning techniques and did not apply their knowledge to the question scenario.

  • Also, some candidates appeared to answer the questions by showing the accounting entries without any discussion of the principles that support them.

  • It appeared as though some candidates had not read the guidance on the ACCA website as they seemed to expect an examination in the style of P2 Corporate Reporting (SBR’s predecessor).

  • Some candidates also spent a disproportionate amount of time on question 1 which seemed to indicate that they had not made the transition from P2 to SBR.

  • Finally, it was apparent that where candidates did not attempt a question or part of a question, then their chance of success was greatly diminished.

Question 1 is divided into 4 parts. Part a asks for an explanatory note to directors on cash flow statement generated, with some calculations supported. Many students ignore the explanatory note and only focus on cash flow statement and adjustment preparation.

Part b is done quite well by many students on explain the principles behind the adjustments to the statement of cash flows.

Part c asks for advice on the held for sale and discontinued operation classifications and discontinued operation classifications.

Final part is about the application of probability criterion across different accounting standards.

3 parts in Question 2 while all parts were answered in acceptable quality. The question is about proper accounting treatment and ethical issues, such as investment property accounting with debt covenants, revenue recognition from sales contract and incorrect accounting practices.

Question 3 asks about IFRS standards and conceptual framework on different transactions. Part (a) is about valuation of inventories; part (b) is treatment of reconditioning costs and impairment indicator; part (c) is about control issue in a business combination.

It is found the discussion is limited to IFRS 10 or IFRS 3 while not covering ED Conceptual Framework for Financial Reporting.

Question 4 is not well answered. Part a requires an understanding of IFRS Practice Statement Management Commentary and how different qualitative characteristics (understandability, relevance and comparability) should be applied.

Part b is a question based round an investor perspective and from Examiner, it will appear on a regular basis in this examination. Students are asked to explain why accounting profit is differ from taxation profit, a reconciliation showing why there is difference between effective tax rate and statutory tax rate, and comments on the impact from the change of tax rate.

Detailed examiner’s report can be found:

https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/SBR/sbr-examreport.d18.pdf


ACCA AFM (was P4) – Highest pass rate among optional papers

Advanced Financial Management (AFM) pass rate is the highest among all optional papers in Strategic Professional module. It also goes up from 35% in September 2018 to 41% now.

This exam is in two sections. Section A consisted of a 50-mark compulsory question. Section B consisted of two compulsory questions of 25 marks each. All three questions in this examination contained a mixture of computational and discursive elements.

On the whole, the examination results were better compared to previous sittings.

Question 1 is a 50-mark compulsory question on Management Buy-in (MBIs). Four parts are required as follows:

  • Distinguish between management buy-out (MBOs) and management buy-in (MBIs);

  • Explain what portfolio restructuring and organizational restructuring involve, and possible reasons why a change in the type of shareholders may have made a company change its business focus;

  • Estimate the value of a combined company, with different valuation methods;

  • Distinguish between an IPO and a reverse takeover.

Many students cannot share the synergy benefits between two companies’ shares and not able to evaluate the reactions of two companies’ shareholders to the acquisition offers.

Question 2 is about financial derivatives and divided into three parts. Part a is about options and futures while students performed well. Part b asks over-the-counter options, forwards and exchange-traded derivatives while many students achieved pass. Part c requires students to explain the mark-to-market process using the initial and maintenance margins. It is found not many students answer it well with inadequate illustration needed.

Question 3 asks students to undertake an adjusted present value (APV) computation and conclude on whether to undertake the project in part (a) and then discuss the long-term finance policy and factors causing a change to this in part (b).

Base NPV calculations have no problem to many students and the calculations related to the financing side effects proved more challenging.

Detailed examiner’s report can be found:

https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/p4/examinersreports/afm-examreport-d18.pdf


ACCA APM (was P5) – Overall performance is stable

In December 2018 attempt, Advanced Performance Management (APM) pass rate maintains at 33% which is the same as in September session.

Since September attempt, there have been no choice of questions in APM and the examiner found a number of students may have been caught out by this, having not prepared to answer questions across the whole syllabus.

In addition, some students showed MA or PM approach in attempting APM while they can only get very limited scores that cannot pass it.

There are three APM exam tips suggested by examiner, which are –

  1. Grasp all basic knowledge;

  2. Good and professional answer will go beyond the mere repetition of how a technique works and focus on specific environment;

  3. Capable of analyzing and evaluating the situation in the scenario using required technical knowledge.

Question 1 required candidates to consider issues of performance reporting and benchmarking at a listed engineering, manufacturing company. Generally, this question is fairly well done.

The parts are done well by many students are –

  • Evaluation of performance reporting system;

  • Assessment of criticism on a customer survey;

  • Discussion of benchmarking methods

Surprisingly, many students cannot perform well in benchmarking three divisions with calculations. Another common problem is poor commentary on metrics and results.

Question 2 dealt with issues of performance measurement and management at a parcel delivery business. Students are generally doing well in discussing performance pyramid and measures assisting operational performance management.

However, it is obvious that not many students are able to answer six sigma approach to quality improvement.

Question 3 is the worst answered in the whole paper. It examined the risks associated with a foreign expansion opportunity for a technology manufacturer.

The only part that done well is discussion of PEST analysis. However, students are not well prepared to identify appropriate, external scenarios for the maximin and maximax methods, including calculations and discussions of it.

Detailed examiner’s report can be found:

https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/p5/examinersreports/apm-examreport-d18.pdf


ACCA AAA (was P7) – Lowest pass rate in all Strategic Professional papers

ACCA AAA December 2018 pass rate is 31%, very closed to September attempt, which is the lowest one in Strategic Professional module.

The exam is in two sections; Section A consisted of a 50-mark question, and Section B which consisted of two questions of 25-marks each. All questions are compulsory.

I always consider AAA is the most challenging paper in ACCA professional exam. The knowledge demanded is from Audit & Assurance (AA) to Strategic Business Reporting (SBR).

The majority of marks derive from the application and understanding of that knowledge rather than the knowledge itself.

In other words, you are required to answer the questions by addressing the scenario presented to pass.

To better prepare for the exam, you are not only studying text books and past exams but also need to read through a series of technical and exam articles on ACCA website.

Question 1 is a 50-mark question consisting of 5 requirements, as follows:

  1. Evaluate the business risks in planning company’s audit;

  2. Evaluate the risks of material misstatement in audit strategy and plan;

  3. Design audit procedures of grant received from government;

  4. Evaluate matters in accepting an engagement;

  5. Discuss audit review of financial statements could have uncovered the fraud

Common mistakes here are on the 4th requirement on evaluating matters in accepting an engagement. While many candidates were able to state some of the areas to be considered in ISQC 1 but most did not apply these to the scenario at all and made generic comments that did not demonstrate the skills required to evaluate the situation.

Question 2 is a 25-mark question consisting 2 parts covering the going concern assessment for a non-listed client and was set at the completion stage of the audit.

Part a asks for evaluation of matters which cast doubt on a client’s ability to continue as a going concern.

Part b requires an explanation of the audit evidence which would be needed with respect to the forecast.

Finally part (c) required an explanation on why the directors may wish to exclude disclosures relating to going concern uncertainties and the possible implications on the auditor’s report.

Common problems are:

  • performed very poorly on the auditor’s report implications;

  • wrongly stated that the directors omitting a required disclosure would not constitute a material misstatement.

Question 3 is a 25-mark question on money laundering and ethics at an existing audit client. Part a asks two things while many students did well in discussion of auti-money laundering policies and procedures, but they didn’t perform well in evaluating there were indicators of money laundering by the client or its staff.

Part b requires a discussion of the ethical and professional issues arising at the client. It’s poorly done as expected. From past experience, ethical question in AAA is one of the most challenging question. Candidates are still not demonstrating the understanding of ethical issues or how to describe them sufficiently to attain marks.

Detailed examiner’s report can be found:

https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/p7/examinersreports/aaa-examreport-d18.pdf


Conclusion

December 2018 session is the second exam on new ACCA professional qualification exam, especially in strategic professional module.

In Applied Skills Module, ACCA PM (Performance Management) and AA (Audit & Assurance) are still two challenging papers for pass.

It is suggested to have an understanding of the relation between each papers so that you can prepare better in your next exam. For example, what are the required basic knowledge assumed before taking ACCA PM?

Link: https://www.gotitpass.com/single-post/2018/07/30/ACCA-Qualification-Guides-in-planning-your-exam-to-be-qualified-faster

In Strategic Professional Module, I am glad to see the pass rate of SBL is improving. However, I also worry SBR which has no significant improvement.

Given the focus in Strategic Professional Module is to apply your knowledge (both in this module or the basic knowledge from Applied Skills Module), you are suggested to better plan your schedule to take exam right after what you did in prior module.

It helps to improve your chance to pass.

Our relational diagram helps you a lot in planning your steps to be qualified as ACCA member/affiliate.

If you have any questions or comments, just send me email at info@gotitpass.com and I will answer you shortly.

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