Updated: Aug 19, 2019
This artile is about June 2018 ACCA exam pass rates and examiners’ comments. If you would like to read the latest ACCA attempt examiners’ comments and guidance, please click HERE for details.
ACCA released an announcement on June 2018 exam pass rates for each paper.
It is great to have 5,090 students are becoming ACCA affiliates after ACCA June 2018 exam. Congratulations to all of them.
June 2018 exam marked the following –
An end of two professional module papers, P1 Governance, Risk and Ethics and P3 Business Analysis;
An end of optional questions in all professional module papers, all questions will become compulsory from September 2018;
CBE extends to Bangladesh and Saudi Arabia.
In terms of ACCA pass rates, June 2018 session results are encouraging as we find a lot of papers pass rates are better than prior attempts.
However, it does not mean we are satisfied since there are still many areas to be improved.
Let’s start the sharing of what examiners tell you need to pay attention in next exam!
Skills Module Pass Rates
F5 and F8 are two challenging papers in Skills Module. It can be seen from the low pass rates.
ACCA F5 pass rate gets worse than prior attempt and it is the lowest in recent 5 sittings.
ACCA F8 pass rate is slightly better than March 2018 attempt but I cannot say it is good.
Half of students joining F6 (UK) and F7 exam passed the exams and 48% of students attempting F9 also passed.
ACCA F5 – A difficult paper to pass
ACCA F5 June 2018 pass rate is only 38%!
It is very discouraging while less than 40 out of 100 candidates in the exam room can pass.
Similar to other Skills Module papers, ACCA F5 has 3 sections while Section A is objective test questions, Section B is case based objective test questions and Section C is constructed response questions.
In June 2018, 2 areas in Section A are found difficult to a lot of students, they are –
Calculation of material yield variance;
Behavioural aspects of performance management.
In Section B, it tests your knowledge on a number of topics in more detail than Section A.
It covers the whole syllabus and you need to read the case scenario and requirements very careful.
In June 2018 exam, the following topics are seen in Section B –
For Section C, five areas are presented in the questions and their common problems in June 2018 session are –
Performance management: Some candidates did not structure their answers to meet requirements and some found ROI calculation is challenging.
Risk and uncertainty: Unclear of costs can be both fixed and variable costs.
Relevant costing: Many candidates used financial accounting principles to value inventory rather than using relevant cost principles.
Budgeting: The calculations failed to increase material cost to allow for an increase in activity and failed to inflate the overhead costs.
Transfer pricing: Weak in calculating minimum transfer price.
You can refer the following published paper questions to have better preparation of ACCA PM exam in future –
Performance management – Sports Co from September / December 2017.
Transfer pricing – Portable Garage (PG Co) from March / June 2018.
One last point for you to note is to make sure you understand how to use the spreadsheet functionality available.
Only simple functionalities are fine, for example, you should know how to use the “sum” function to calculate the total amount instead of typing the number.
Detailed examiner’s report can be found: https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/f5/examinersreports/f5-examreport-j18.pdf
ACCA F8 – Tailor your answers to specific requirements
40% of students pass ACCA F8 in June 2018 attempt which is similar to previous sittings.
The paper is different from other Skills Module paper while 70% of the total marks are from written questions.
One of the keys to pass it is to practice ALL questions so that you familiarize all types of questions and you know how to apply your knowledge in answering questions.
Examiner highlights the following areas in Section A in which you should pay special attention on –
Professional ethics and application of ACCA’s Code of Ethics and Conduct
The level of assurance provided by review engagements
Substantive testing including testing on revenue, trade receivables and tangible assets
Audit finalization and the final review; and
It is also noted that “Level of assurance” and “Going concern” are two most difficult areas to students.
In Section B, five areas are seen which are –
Audit framework and regulation
Planning and risk assessment
Review and reporting
In Audit framework and regulation, examiners usually asks students to identify issues in the scenario and suggest recommendations on those issues.
However, it is often to see answers on saying objectives instead of recommendations.
Remember, recommendations must be an action.
You can check a past paper question “Hurling Co” from March / June 2017 on this topic.
The most common question in Planning and risk assessment is to identify and explain an entity’s audit risk as well as auditor’s response to each risk identified.
Examiner expects you can identify and explain 6 to 8 risks and exposures.
The problem in internal control question is many students failed to score many marks in knowledge requirements.
Audit evidence is the most challenging area in ACCA Audit & Assurance exam.
A lot of recent sittings questions on audit evidence are on substantive testing but many answers show incorrect substantive procedures or test of controls.
In addition, the answers should be tailored to specific requirements in the scenario.
Review and reporting requires an understanding of subsequent events and going concern can inform the conclusion from audit work.
The question is usually scenario based and the performance in June 2018 is satisfactory.
One thing to highlight is a number of students made mistakes in materiality calculation.
To understand more on auditor report and ISAs, “Airsoft Co” from March / June 2017 is a good example.
Detailed examiner’s report can be found: https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/f8/examinersreports/f8-examreport-j18.pdf
ACCA F9 – Improvement in the most difficult area
ACCA F9 June 2018 pass rate is 48% which is at similar level as previous sittings.
It is glad to see F9 pass rate is stable at around 48% while improvement in risk management area, which the most difficult part, is noted in this session.
Numeric questions are usually scored higher marks while discursive questions are still challenging to some exam sitters.
Section A consists of 15 objective questions (20 questions for CBE in which 5 of them are seeded questions) covering the whole syllabus.
Two difficult questions are presented which one of them is numerical and tests understanding of a forward rate agreement.
Another question that students find its difficult is a question testing knowledge of the difference between overcapitalization and overtrading.
Section B consists of 3 scenarios and 5 objective questions for each scenario.
It is special in June 2018 examiner comments as only three areas are highlighted in Section B, which are investment appraisal, business valuation and risk management.
I don’t see comments on financial management function this time which was often found in the past.
Questions on investment appraisal in Section B are mainly in capital rationing and special investment decisions such as lease vs buy decisions.
Some students still find these areas are challenging.
In regard to business valuation, some students find it’s difficult in price earnings ratio calculation while they are not familiar with the formula used.
A big good news in ACCA F9 June 2018 attempt is an improvement in risk management question performance.
More students are now having better understanding of risk management derivatives.
However, you should keep in mind hedging methods, interest rate parity and lead payments are still areas that many students cannot do well.
Section C consists of 2 constructed response questions requiring students to display deeper knowledge of topics in working capital management, investment appraisal and business finance.
In general, students perform better in calculated-based questions than discursive questions.
Here are the highlights on the questions drawn mainly from the syllabus areas of:
Management of inventories, account receivables and accounts payable and cash
Determining working capital needs and funding strategies
Allowing for inflation and taxation in DCF
Adjusting for risk and uncertainty in investment appraisal
Specific investment decisions
Sources of and raising business finance
Estimating the cost of capital
Common mistakes in working capital management questions are incomplete understanding of how to calculate accounting ratios and comments on them, weak in comparing early settlement discounts and using factors, lack of understanding in cash management models and confusion between working capital financing policies and working capital management.
Many good answers are found on investment appraisal questions requiring NPV calculations.
Some errors are spotted such as adjusting revenue and costs with inflation, assigning tax-related cash flows to incorrect time-periods and including incremental fixed costs in relevant cash flows.
You need to be careful on calculating sensitivity of NPV to a change in key variables, such as sales volume or discount rate.
A good example on this topic is “Pelta Co” from September / December 2017 can help you to understand the investment appraisal techniques required.
Business finance consists of two topics in this sitting, the first one is sources of and raising business finance and another one is estimating cost of capital.
Some students are not aware the difference between operating lease and finance lease so they cannot comment on it as well.
Cost of capital calculations answers are well done and only some errors in interpolation method on cost of debt estimation and wrongly used book values instead of market value.
Detailed examiner’s report can be found:
ACCA F7 – One of the highest pass rate papers in Skills Module (excluding ACCA F4)
ACCA F7 pass rate in June 2018 attempt is 50% which is one of the highest among all papers in Skills Module (except ACCA F4).
Performance is good but it’s found some areas improved in prior sittings get worse in June 2018, e.g. preparation of single entity financial statements.
Section A consists of objective questions and 2 specific questions that caused difficulty in June 2018 are –
How to calculate both the amount of the deferred tax provision and how it should be adjusted in the statement of profit or loss;
The impact of non-controlling interests (NCI) of a mid-year acquisition, the write-off of goodwill and the additional depreciation required.
Deferred tax calculation and NCI are usually found as difficult questions to most of students. You need to take care of them in your ACCA Financial Reporting paper preparation.
Section B consists of three scenarios and 5 objective questions each are based.
General speaking, the test on certain topic is in some depth as compared to Section A.
In June 2018, the following topics were weak:
Provisions and contingencies
Change in accounting policies
Examiner suggests some tips to you on Section B:
Read the case through in its entirety without looking at the questions associated with it, then read it through again;
Each case is designed to take about 18 minutes to work through and if you completed much shorter than 18 minutes, it is likely you are not thinking the subject matter in sufficient depth.
Section C questions are mainly drawn from the areas of:
Preparation single entity financial statements
Analysis of consolidated financial statements
Preparation of consolidated financial statements
Analysis of single entity financial statements
Easy marks are usually found in “Preparation single entity financial statements” but the performance in June 2018 is not as good as in previous sittings.
Three most challenging technical topics for some students are -
1) Professional fee incurred on a financial instrument;
2) Deferred tax relating to a revaluation;
3) Entries in respect of leases (IFRS 16).
“Analysis of consolidated financial statements” usually asks students for minor calculations, adjustments and ratios, followed by commentary.
In June 2018 attempt, goodwill calculation are done well but some students cannot work correctly on adjustments such as intra-group sales.
Accounting ratios are done well but a number of students do not show workings in CBE.
It is worrying as they cannot score any partial marks if their answers are not correct.
Very limited or zero commentary on analysis results very low mark.
Preparation of consolidated financial statements are done well by candidates.
Two common errors found in June 2018 attempt:
Forgot to unwind the discount in relation to any deferred consideration that was payable for a subsidiary;
The omission of the profit split between the parent’s shareholders and the non-controlling interest.
The most disappointing area in ACCA Financial Reporting June 2018 attempt is Analysis of single entity financial statements.
Ratios calculation is often done well but in recent sittings, net asset turnover and interest cover are surprisingly difficult for a number of candidates.
Next, many ratios calculations have no workings to support the answer. It is hard for marker to score any partial marks if the answer is wrong.
The highest scoring candidates used headings, a sensible summary and comments on ratios.
In addition, they refer to the narrative information from the scenario in answering the questions.
Detailed examiner’s report can be found:
Professional Module Pass Rates
P1 Governance, Risk and Ethics and P3 Business Analysis pass rates meet historical average while 54% of students participating P1 pass the exam and 52% of students passing P3.
These two exams will be replaced by a new and innovative case study, Strategic Business Leader, which examines technical, ethical and professional skills in a real-life scenario.
P2 Corporate Reporting remains at around 50% pass rate.
The option papers pass rates are varied. P4 Advanced Financial Management and P6 Advanced Taxation are better than P5 Advanced Performance Management and P7 Advanced Audit & Assurance.
ACCA P4 – Highest pass rate among option papers
P4 pass rates remain at around 40% for 2 consecutive attempts which is the highest among option papers.
It shows that more and more students are now aware of how to prepare and do in the exam.
If you score good marks in ACCA Financial Management (ACCA F9), I highly recommend you to take ACCA Advanced Financial Management (ACCA P4) as one of your optional papers.
Main weaknesses found in June 2018 –
Lack of detailed knowledge of the whole syllabus
Spent too much time in carrying out relatively simple calculation tasks
Losing professional marks due to poor answer structure
Writing in bullet point
Not taking balance approach between calculations and discursive narrative questions
Question 1 is a 50-mark compulsory question. It asks to work on present value computations and real options. It also questions on the consequences of employing soft capital rationing and possible sources of additional finance.
Many candidates cannot do well in the following –
How real options could add to NPV;
Lack of in depth discussion on the use of appropriate discount rate for financing of phase two project.
Question 2 is about business valuation. It asks the advantages and problems with the acquisition, undertake valuation based on free cash flows and using valuation methods such as P/E ratio and asset.
Many candidates could not re-gear the asset beta in discount rate calculation, and many responses on valuation method are too general and lacked discursive depth.
Question 3 asks about dividend capacity and level of dividends required from subsidiary to meet company’s dividend policy.
Common errors are mainly from finding dividend capacity and fails to recognize agency issues between shareholders and company’s directors.
Question 4 requires candidates to consider the impact of an interest rate hedge using futures and options contracts. It also asks specific issues using derivatives to undertake hedging activity.
Two topics are found difficult to candidates,
1) explain how uncertainty in option pricing is measured and discuss influences on the level of uncertainty;
2) explain a swaption and demonstrate how it could work.
Detailed examiner’s report can be found:
ACCA P5 – Pass rate improved but not enough
ACCA P5 pass rate is usually at the bottom of all papers.
Even it is slightly improved in June 2018 session, it is not good enough as it stands at 35% which is lower than P4 and P6.
The most common problem is not answering the requirement.
Many answers provide the definition of “jargon” terms, probably it is the approach to answer ACCA F2 or F5, but that’s not enough to pass ACCA P5.
Examiner suggests 3 keys to pass ACCA P5:
Key#1 – Have a good grasp of the basic knowledge
Key#2 – Performance management is an area which, at an advanced level, is dependent upon situation and environment
Key#3 – Capable of analyzing and evaluating the situation in the scenario using technical knowledge
Question 1 asks performance management issues, the supply chain and the use of Big Data at a clothing retailer.
There are five weaknesses found in this question:
There are four subsidiary critical success factors and very few addressed whether the report measured these factors;
Making the same point repetitively;
Poor in making recommendation for three new performance measures;
Focus on explaining value chain but this cannot address the requirement on simplifying supply chain;
Some candidates answer production process while the question is asking on retail.
Question 2 is the most popular question in Section B and it asks the use of ROI and RI as performance measures for a manufacturer of high technology products.
A number of students don’t know how to calculate ROI and RI correctly, though ROI and RI calculation are in ACCA F2 and ACCA F5 syllabus.
Little or no analysis and evaluation of the result but in ACCA P5, marks are lied balanced between calculations and analysis especially when techniques are assumed prior knowledge such as ROI and RI.
Question 3 asks about application of Argenti A Score model to an architectural consultancy firm.
Many students perform well while they display good understanding on three key facets of the model – Defects, Mistakes, Symptoms.
Question 4 considers the issues of budget setting and variance analysis in a manufacturer of moulded hulls for small boats.
Even many good answers found in budget setting, the majority of students demonstrated a lack of fundamental technical knowledge with regard to undertaking planning and operational variance analysis calculations.
The basic knowledge is covered in ACCA F2 and ACCA F5.
Detailed examiner’s report can be found:
ACCA P7 – Time management problem is more serious than other papers
ACCA P7 June 2018 pass rate is 34%, a bit improving from prior sitting but it’s the lowest in all paper in this session.
There are two keys to be success in ACCA Advanced Audit & Assurance paper:
Good understanding of both ACCA F8 (Audit & Assurance) and ACCA P2 (Corporate Reporting);
Good time management skills through practicing past papers.
Examiner suggests to take P7 right after P2 as a lot of knowledge in Corporate Reporting are useful in P7 exam.
Question 1 asks business risks facing by a construction company and explain the significant risks of material misstatement when planning an audit.
In addition, it asks recommendation of audit procedures and comment on ethical issues with scenario given.
The weakness here is insufficient knowledge of the financial reporting syllabus, i.e. P2 Corporate Reporting.
Question 2 asks comments on the quality control, ethical and professional issues raised following the review of an audit at the completion stage.
It is generally well answered except a number of students failed to understand the audit was at completion stage and suggesting actions such as remove auditor from the team or to use separate teams would no longer be possible in the case.
Question 3 is about financial statement adjustments and consideration of going concern after an accident at a nuclear power station.
As the requirements in this question are quite straightforward, it is well answered with relatively high marks.
Question 4 is centred on the review of a Group of companies and asks to consider matters outlined and to explain what audit evidence would be required.
It is not well answered.
The key issue is many candidates are not familiar with the relevant accounting standards (IFRS 10) so that they did not realise the accounting for the acquisition was incorrect.
Question 5 is a reporting question and divided into
1) discuss benefits and difficulties of communicating key audit matters to users of auditors report and how this addresses the audit expectation gap;
2) appraise an extract from an auditor’s report.
The answers produced are good especially some students had evidently read the relevant article and able to provide the answers straight to point.
Detailed examiner’s report can be found:
June 2018 session is the last exam before a revolutionary change in ACCA exam structure, especially in professional module.
In Skills Module, ACCA F5 (Performance Management) and F8 (Audit & Assurance) are still two challenging papers for pass.
ACCA F5 is linked to ACCA F2 (Management Accounting) so please make sure you are confident to understand all basic knowledge before preparing ACCA F5.
ACCA F8 is not standalone while some basic knowledge in ACCA F7 (Financial Reporting) is needed to pass.
In Professional Module, it is glad to see ACCA P4 (Advanced Financial Management) pass rate is up and stable at current level.
If your score in ACCA F9 is good (say 65 or more), P4 is definitely a good option to you.
ACCA P5 (Advanced Performance Management) and ACCA P7 (Advanced Audit & Assurance) are still two most challenging papers.
You need to understand the examiner expectation on P5 is different from ACCA F5 while more evaluation, analysis and recommendations are needed.
ACCA P7 should be taken right after ACCA P2 (Corporate Reporting) since a lot of accounting standards are required.
Remember that starting from September 2018 session, all questions in Strategic Professional Level are compulsory to answer.
If you have any questions or comments, just leave them below and I try to answer you shortly.
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