F5 and P5 wider reading: regression analysis

All qualified finance professionals should understand (at least basic) statistics, especially those working more in the management accounting realm. The ACCA study guides for F5 Performance Management and P5 Advanced Performance Management reflect this.

Now, ACCA and CIMA syllabuses differ significantly in some areas (especially the amount of coverage of financial accounting, audit, and tax) but there is a fair deal of overlap when it comes to the management papers. So reading CIMA resources on regression analysis can benefit you in your preparation for your ACCA exams.

Wider reading
Fundamentals of business mathematics
The use of regression analysis in management accounting

There are also some worthwhile videos on YouTube covering regression analysis in managerial accounting. See below.

Wider watching
Managerial accounting regression analysis

P3 wider watching: Porter's five forces explained by Harvard Business Review

Are you an ACCA P3 Business Analysis candidate? If so, you absolutely need to know Michael Porter's Five Forces inside out if you want to be well prepared for the exam. Thankfully, the business and academic leaders at Harvard Business Review have put together a concise video on the topic - this should be considered required watching in your examination preparation.

Watch HBR's Explainer: Porter's Five Forces. 

P3 and P5 wider reading: strategy, innovation, and the business cycle

Candidates preparing for either P3 Business Analysis or P5 Advanced Performance Management need to know a thing or two about strategy and innovation to be well prepared and perform well on the exams. I've come across a good article by Jill Lepore that heavily references both the work of Michael Porter and Clayton Christensen (if you are studying for these exams and don't know these names yet, it is time to start studying more). Find the article here: The disruption machine: what the gospel of innovation gets wrong.

A useful exercise that you can do is to print out the article, and as you are reading through it, annotate it with concepts you've picked up during your P3 and P5 studies. Treat it like an ACCA script. That will give you good preparation for the scenario questions in the exams. 

P6 wider reading: patent box readings

P6 Advanced Taxation (UK variant) is likely to feature questions examining the new patent box rules in upcoming sittings. As it is a new relief that companies can take advantage of, it is highly topical and examinable, and may come up for anything ranging from 2 to 8 marks on the examination in either a scenario on corporation tax or a smaller Part B question.

Knowing how the relief is computed is important and will probably feature for the bulk of the marks, but, especially if it is a lengthier requirement, being able to write about the patent box rules and advantages will be important. To do that, it is recommended you read the following.

Wider reading
HMRC's patent box page
A blog post from PwC on patent box

P5 advice: The truth about P5 Advanced Performance Management

The ACCA optional paper P5 Advanced Performance Management is considered by many of those who attempt it as the ACCA's most difficult and, indeed, unfair paper. The question requirements can seem unclear, the time pressure to read the lengthy scenarios is very high, and the pass rates are abysmally low, even by ACCA standards. Many students get stuck on this paper, failing several times before finally eking out a pass, or before deciding to switch optional papers altogether. So far, this paper has slowed down a lot of would-be ACCA members, representing a major hurdle to achieving full membership.

If you are as yet undecided, the introductory paragraph might put you off studying P5. But if you are interested in the topic and are emboldened by the fact that people do in fact pass this paper, it's still worth considering. This post helps demystify P5.

1. You need to think on your feet
All of the optional level papers are meant to be set at Master's level, meaning rote memorisation of the models/concepts introduced in tuition is not enough. This is even more true of P5 than it is of, say, tax, where you can pick up marks for memorising a few rules/allowances/rates/dates. Good luck trying that with P5 - it won't work!

In the exam hall, you need to quickly assess whether the models you've learned will be of use for a given requirement or if the answer requires general knowledge and common sense. Candidates are often overly tempted to use a model because it seems 'safe', but using an inappropriate model instead of using appropriate common sense will more times than not result in a poorly written answer. It goes without saying, but question practice is needed to know when models should be used - enough question practice should make the decision second nature on exam day.

2. You need to write confidently and competently
P5 is a paper that places a premium on expressing one's ideas clearly, again more so than the other optional papers. Being a strong reader and writer helps. Naturally and regrettably, this puts non-native English speakers at a disadvantage. The speculation is that the low pass rates for P5 are lower in non-English speaking countries than they are in, say, the United Kingdom. I hate to advise non-native speakers to avoid doing this paper, but it is definitely important to self-assess one's confidence in English. Results in papers F4, F8, P1 and P3 might help give a picture at whether you are strong in communicating in English.

3. Experience in management reporting helps
If you currently or have worked in a role in which you produce reports for management, you will be at an advantage. Don't take this experience for granted! Too often, candidates forget to ask themselves: "If I were a senior manager, what type of information would I like to receive in relation to this scenario? Which type of report would be useful to me to help me make an executive decision?" These sorts of questions need to be running through the P5 candidate's head at all times, so naturally it helps if the candidate has made a habit of asking themselves the same questions in the performance of their job duties. 

P3 wider reading: IT resources

Information Technology (IT) is a crucial part of the ACCA P3 Business Analysis syllabus, and indeed is a part of business in general that is growing exponentially. A lack of comfort in this area will hurt you on exam day and in your career. Today's accountants and finance analysts already use IT heavily in their day-to-day work, and the leaders in the C-suite have to approach IT as something that can give their business a strategic advantage.

P3 candidates would do well to read more widely on IT so real-life examples are on ready recall in the examination hall. More importantly, to be knowledgeable and conversational on contemporary business IT is an asset that will serve candidates well once they've completed the ACCA qualification.

In terms of IT articles to read ahead of the P3 exam, as always the starting point is the relevant technical article published by the ACCA itself, available here.

Wider reading
For further reading, I would recommend this recent report by Deloitte on technology trends. This is the 2014 edition, notably arguing why Chief Information Officers (CIOs) need to be more like venture capitalists when designing their firms' portfolio of IT solutions. A quick Google search should yield the previous years' editions.

I'd also recommend keeping an eye out for The Economist's Technology Quarterly which is, as you might have guessed, released quarterly.

A familiarity with the business IT issues of the day should help you approach IT-related questions in the P3 exam with confidence. 

ACCA optional papers - best combinations

Throughout the ACCA qualification, candidates have to decide which papers they will attempt at which sitting. But throughout the Fundamental and Essential stages, no real choice is necessary: you may sit a paper in winter or in summer, but ultimately you will have to sit the paper one way or another in order to progress. 

That changes when it comes to the Optional stage, at which point students must choose which two of four papers they will complete. This is an important and often stressful decision for candidates to make, and so it is surprising that nowhere on the web gives a comprehensive review of each combination of Optional exams. What follows, then, is such a review. 

As a reminder, there are four papers to choose from:

1. P4 Advanced Financial Management

2. P5 Advanced Performance Management

3. P6 Advanced Taxation

4. P7 Advanced Audit and Assurance

This means that there are six possible combinations. 

Combination 1: P4 and P5

Ideal for: aspiring management accountants and financial managers

One of the great things about ACCA relative to CIMA is that candidates have the option to specialise at the end of the qualification. This combination allows students to cover the bulk of the meatier areas of the CIMA program without committing to management accounting too early in their qualification.

As a bonus, candidates who complete this combination will be able to...

Combination 2: P4 and P6

Ideal for: aspiring technical specialists

With all due respect to management accountants, after a certain knowledge base is mastered, you can't delve in too much further (this is not to suggest that management accountants and strategy advisors are not important - on the contrary!).

The tax and treasury worlds, however, offer rich opportunities for specialism. Compared to management and statutory accountants, the supply of these professionals is limited and so employees armed with this knowledge have lots of bargaining power. On the other hand, tax and treasury teams often tend to be smaller and niche, so may have fewer direct career paths to managing a large team and having direct reports. 

This paper combination will serve you well if you intend to do an additional qualification after your ACCA journey - there are a number of tax and treasury (or treasury-related) professional qualifications out there, and these papers can help you get exemptions for parts of these. 

This paper combination will also suit candidates who feel more comfortable with computations and calculations (though be aware that there are still considerable descriptive/discursive portions of the papers).

Combination 3: P4 and P7

Ideal for: externally-oriented finance professionals 

What do both financial management and audit have in common? Much of the work financial managers and corporate reporters working with auditors do is externally focused. Treasurers deal with banks and the capital markets; corporate reporters deal with auditors and externally published accounts. If you want to be involved with how your organisation is viewed by and interacts with the outside world, this is a good combination.

If you are going the auditor route, this combination can also give you the necessary knowledge to audit complex areas such as financial instruments, including derivative/hedging instruments. 

During the studying phase, this combination will also allow you to divide your time between a number crunching paper (P4) and a largely discursive paper (P7). 

Combination 4: P5 and P6

Ideal for: those who can't make up their mind

This combination straddles the division between generalist and technical a bit, and would likely make for a well-rounded accountant (rare is the management accountant who truly understands a tax computation). 

Career-wise this should keep the tax door open upon qualification, but also leave you conversant with the management accounts whenever you need to work with them. 

Like the P4/P7 combination, during the studying phase candidates will get a nice mix of number crunching with P6 and discursive practice with P5.

Combination 5: P5 and P7

Ideal for: accountants who are strong writers

Some finance professionals are Excel masters, but most of us have met accountants who seem surprisingly weak in this area. Well, that's because the accountant as Excel guru is a myth - many accountants make their careers in writing-heavy roles, preparing narrative reports for board committees and strategic advisory documents. 

Content-wise P5 and P7 have very little in common, but both will require strong writing and reporting skills so the practice phase of exam prep should help you improve those.

Unfortunately with this combination, there is little to no overlap so you will not get much help for one when studying the other.

Like the P5/P6 combination, these two taken together should make for a well-rounded accountant. 

Combination 6: P6 and P7

Ideal for: the accountant's accountant 

Tax and audit - this is surely the most conventional pairing of optional exams, and indeed, these are the subject areas that the wider public expects you to know when you say you are an accountant.

Like P4/P7, this is a solid combination for those who like dealing with the outside world (namely, the tax authorities and auditors). 

It is worth noting, however, that Paper P3 explicitly added content on management accounting because the ACCA worried that candidates taking P6 and P7 would have no exposure to management accounting at the professional level.

This combination could be said to be the least like CIMA - up to you to decide whether that's a good or bad thing.

Conclusion

There is a dearth of resources on the web helping students select their optional ACCA paper combinations; I hope this helped provide some food for thought.