An introduction to ACCA P2 Corporate reporting

P2 is the follow on paper from F7 Financial reporting. The good news is that the pass rate for P2 is
higher than that of F7 in other words, its easier to pass than F7! The bad news.everything that was
examinable at F7 is still examinable at P2 (with the exception of IAS 11 Construction contracts). This
can present the first hurdle for students as there is often at least one exam sitting between F7 and P2 for
them which means they may have forgotten their F7 knowledge. It is therefore worth digging out your
F7 revision notes prior to studying P2 and refreshing some of your knowledge particularly in the areas
of:
Group accounts;
Conceptual framework; and
Accounting standards such as PPE, intangible assets, impairment, provisions, leases, revenue
and deferred tax and financial instruments
Section A of the exam contains 1 compulsory 50 mark question.
Question 1
Question 1 is comprises 35 marks of preparing group accounts and 15 marks of writing. For 35 marks
you may be asked to prepare a consolidated statement of financial position, consolidated statement of
comprehensive income or a consolidated statement of cash flows. The group structure will be more
advanced compared to F7 and will typically include either a change in the group structure, a complex
group structure or a foreign subsidiary. This means that the question normally contains two
subsidiaries and possibly a third entity too. The question will also test accounting standards. The
parent entity within the group will be facing some accounting issues (normally between 2 and 4) which
you will also have to deal with.
The 15 marks written element is normally made up of two roughly equal elements firstly an
accounting issue i.e. a discussion on a particular topic and then a scenario where you must discuss the
ethical implications.
Tip question 1 is not just groups! You will have accounting standard issues in the question too so be
prepared for this part of the question. The volume of the question can be intimidating, so splitting the
question clearly into these two elements will help to break it down into two smaller and so more
achievable questions. Time management is key you should spend no more than 63 minutes on the
numerical part of the question so that you have 27 minutes to attempt the written parts. Students tend
to score poorly on the ethical part of the question. This is often due to lack of time to write a good
answer rather than lack of knowledge or ability.
Section B of the exam contains 3 x 25 mark questions. Students must choose 2 questions.
Each question in section B contains 2 professional marks for the clarity and quality of presentation.
Questions 2 and 3
Both of these questions tend to focus on accounting standards. However, it is possible that one of the

questions may test another element of the syllabus such as group reorganisations or entity
reconstructions.
The requirement for a question based on accounting standards is along the lines of discuss / advise
how the accounting issues should be dealt with in the financial statements
Accounting standard questions will tend to be made up of several parts (between 2 and 5) and each part
of the question will contain separate scenarios and so test different accounting standards. For example,
part a) may relate to deferred tax, part b) may relate to pensions and part c) may relate to PPE. Having
said that, parts of a question may require you to discuss more than one accounting standard. For
example, in part c) on PPE it may also be appropriate to be discussing impairment and non-current
assets held for sale.
Your answer should be a written answer. Whilst the scenarios may contain some numbers for you to
calculate and include in your discussion, the focus of the answer should be an explanation / discussion.
Indeed, some questions contain no numbers at all!
Tip be open-minded it may be relevant to discuss more than one accounting standard in your
answer for each issue. Whilst some marks can be obtained for demonstrating knowledge of the
accounting standard, most of the marks are awarded for applying this knowledge to the scenario in the
question. Opening phrases such as in this case, the company should. can help you achieve this.
Question 4
Question 4 is referred to as the current issues question. It focuses on a topic that is being discussed in
the accounting profession at the time. For example, June 2013s exam required a discussion regarding
the high volume of disclosure in annual reports. December 2012s exam focused on the recently issued
IFRS 13 Fair value measurement.
Part a) of the question typically requires a general discussion of the topic while part b) demonstrates the
application of the topic to a particular scenario.
To be able to answer question 4 it is vital that students prepare by reading trade press / websites and
relevant articles. This question is not something that can be learnt from a textbook. However, the well
prepared student who has done such additional reading will then find this question relatively straight
forward.
Tip read articles! Websites such as http://www.iasb.co.uk and http://www.iasplus.com can also prove
beneficial as they will contain documents outlining changes in accounting standards and the content of
any exposure drafts.
P2 can be an intimidating paper due to the step-up from F7, particularly in terms of application of
knowledge. However, this is also what makes it easier to pass as there is greater scope to pick up
marks by saying anything that is relevant, sensible and valid.