ACCA SBR: What should you bring from FR knowledge to SBR exam

Updated: Sep 5, 2020

ACCA Strategic Business Reporting (SBR) exam was introduced in September 2018. It is an exam in Strategic Professional Module and all students joining SBR exam should have already passed Financial Reporting (FR) exam in Applied Skills Module, or exempted due to taking same level degree course in their universities.


No matter you passed FR exam or were granted exemption by ACCA, you should have the same level of financial reporting knowledge such as understanding different accounting standards and financial statements preparation.



Many students have perception that SBR exam style is more or less than same as FR exam. SBR exam questions should be mainly contributed by numeric questions. For example, you should be asked on how to prepare consolidated financial statements, goodwill calculation or ratios analysis.


However, it is not correct.


The purpose of this article is to share with you what should you bring forward from FR exam knowledge to studying SBR exam, what are the new knowledge in SBR and what should you expect from tutor in providing SBR tuition.


If you will start your SBR studies very soon, this article is helpful in showing how you can spend the time more efficient in studies.



SBR exam builds upon FR knowledge

When you studied Financial Reporting, you should be familiar with basic conceptual and regulatory framework for financial reporting, accounting standards, preparing financial statements and interpretation of financial statements.


Here are the four areas in FR that you can find the same in SBR syllabus –

1. Conceptual and regulatory framework for financial reporting

2. Accounting for transactions in financial statements

3. Analysing and interpreting financial statements

4. Preparation of financial statements


Only regurgitate the contents of Conceptual Framework, accounting standards and aware of preparing financial statements, it’s possible for you to pass FR exam.


However, the same approach in studying FR exam cannot help you to pass SBR exam.

So, what should you know in studying SBR exam?


Stepping up to SBR exam on basic knowledge

In SBR syllabus, it stresses that basic knowledge learnt from Financial Reporting (or your university course in financial reporting if exemption is granted) is important and you are required to demonstrate a deeper understanding of them. Here are the examples showing how deep you need to demonstrate in SBR exam.


In area of Conceptual Framework, you are not only tested on how you understand the judgements, such as going concern assumption and materiality, but also how you can apply the principles or accounting concepts to transactions or events.


You will be required to link up the judgement to the accounting standards and comment whether two are consistent. You will also be asked how the Framework applies on transactions if no existing accounting standards cover.


Probably you are familiar with different accounting standards, for example, IFRS 15 Revenue and IFRS 16 Leases, when you studied Financial Reporting. At SBR, you need to add this knowledge and will be expected to know further details of each standard –

  • You are introduced new accounting standards that are not covered in Financial Reporting, such as those on pensions, share-based payment and joint arrangements.

  • A wider and deeper application of accounting standards you learnt in Financial Reporting; an example is lease accounting which you are not only required to work lessee accounting but also lessor accounting in SBR exam.

You may be asked on why an accounting standard exists and the rationale for the accounting treatment and criticisms of it. You should also prepare for questions asking you on explaining the accounting treatment to different stakeholders and what’s the view from them.



Performing ratio calculations should not be new to many of you. In previous exams, calculating ratios and commenting on the performance are mainly the requirements for questions on ‘analysis and interpretation’.


But in SBR exam, ‘analysis and interpretation’ means different. You will be required to apply your knowledge in a given scenario, explain the issues to specific stakeholders and probably you need to do ‘additional performance measures’.


An example of ‘additional performance measures’ is adjusted revenue or profit and key performance indicators.

Last but not the least, group accounting is still in SBR syllabus while your knowledge learnt in FR is applicable. But it extends to more complex situations such as joint arrangements, step acquisitions, part disposals, foreign currency consolidations and consolidated statements of cash flows.


But you should bear in mind that preparation of a complete consolidated financial statement is unlikely to be seen in SBR exam. The focus is on calculating specified amounts or balances and explaining these calculations and amounts.


More marks are allocated to narrative answer which means you cannot pass SBR exam by simply rote learning on consolidation techniques and computation.


Three key new areas you can’t miss

In an article published by ACCA, it states that –

The approach to reporting taken in SBR is designed to reflect ‘real life’


The new areas, in my opinion, are what you need to know in ‘real life’ so they are regularly updated to meet latest market development.


The first new area you have to explore is current issues. Financial reporting, in real life, is continuously and rapidly changing in the dynamic business environment. IASB amends existing accounting standards to ensure they are up-to-dated and applicable to the modern world.


You are advised to read the latest articles published by ACCA on discussing the latest accounting standards, no matter they are newly published or only Exposure Draft. You will find questions in SBR exam asking on them.


The next new area that you haven’t seen in FR is ethics.


In our article on ACCA Qualification Guides, the Ethics and Professional Skills Module (EPSM) is preferred to be completed before joining SBR exam. You should find several activities in EPSM that deals with ethics are helpful for you to develop the right approach when faced with ethical dilemmas of the type that are likely to appear in SBR exam.


In SBR exam structure, Question 2 in Section A aims to test your knowledge in ethical issues. An example is from September 2018 –


SBR September 2018 Q2b

In this example, it is clear you have to understand well of all ethical issues you learnt from EPSM and SBR study texts so that you are able to identify and understand the ethical principles and apply in this scenario.


The last new area in SBR exam is non-financial reporting.


Hey, why do we need to concern about non-financial reporting in SBR exam?


In SBR syllabus, it includes two non-financial reporting as they form part of corporate reporting. They are sustainability and integrated reporting. In many listed companies’ published annual reports, these reporting are now becoming more important than ever as they provide information to different stakeholders, such as investors, government and general public.


Question 3bii in September 2018 shows you what was asked about integrated reporting <IR> in SBR exam. In addition, you can check our article sharing with you what is <IR>.

SBR September 2018 Q3bii


Exam format

‘Begin with the end in mind’ is my motto to you in preparing any exam. If you understand well on what are required to do in SBR exam, your study is much more efficient than those who start from nowhere.


There are two sections containing two questions in each section in SBR exam, and each of them has different focus or topics –


Section A includes two compulsory scenario-based questions, totalling 50 marks.


Question 1: Will be on group financial statements from Syllabus area D but is also likely some consideration of financial reporting issues from Syllabus area C can be found.


Question 2: Mainly asks for ethical implications and reporting implications of specific events in a given scenario.


Marks for Question 1 are ranged between 30 and 35 and Question 2 marks are from 15 to 20.


Section B comprises two questions (25 marks each), which may be scenario or case-study or essay based and will contain both discursive and computational elements.


Question 3: Based on a modern business scenario and will require the application of accounting standards to those scenarios.


Question 4: Contains any element of the syllabus but is likely to be scenario based and mainly focused on current issues, investor issues or interpretation.


You can find our article sharing on how to study ACCA SBR and the differences between SBR and P2 which are helpful for you in understanding what should be focused.

Choosing SBR tutor

You may consider attending tuition to prepare your SBR exam. With limited tuition hours, what should you expect from the tuition provided?


The ideal tutor is briefly revising technical knowledge learnt from Financial Reporting, but the emphasis should be on teaching new technical material and applying existing and new knowledge.


Most courses and materials, in my view, should build upon existing knowledge rather than re-teach it. In addition, the tuition should guide you on how to apply the knowledge in different scenarios. Ideally, the tutor should demonstrate examples from published corporate report.


Conclusion

I have already shared with you what you should you bring from FR to SBR, and what are new in SBR. As said, SBR approach is designed to reflect ‘real life’. Your success is subject to issues identification, applying the knowledge and writing down in a professional way.


Computation is not as important as what you think. The knowledge in preparing group financial statements are assumed but you are not required to work out a complete consolidated financial statements in SBR exam. What you are required is to explain what you compute.


In short, SBR exam requires you to have ‘real life’ reporting knowledge so your study should not only limit to study text or tutor’s notes, but also extend to current issues (e.g. ACCA articles, IASB publication) and published annual reports by listed corporation.



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