If you want to know how to pass ACCA P7, speak to Lincoln Miles. Our ACCA P7 course author, Lincoln has an exceptional track record both in industry and as a training specialist.
Previously an Auditor with PricewaterhouseCoopers, Lincoln has also spent a decade authoring professional accountancy courses and advising auditors on practical application of auditing standards. He’s also been an examination marker for the ACCA, so it’s fair to say he knows what you need to do to pass.
We caught up with Lincoln and asked him what ACCA P7 entails, the common mistakes to avoid, and for some top tips on exam technique.
Introducing…. How to Pass ACCA P7 With Lincoln Miles
LS: Lincoln, hi! Thanks for being with us today. Shall we crack on with it? The best place to start is probably with an overview; what do you think?
L.M: Sure. So ACCA P7 is titled Advanced Audit and Assurance. This is a subject students have covered a number of times throughout the ACCA, but it’s differentiated by its higher-level perspective.
ACCA P7 asks students to look at wider issues. It’s a bigger picture paper.
LS: Which paper does it follow on from?
L.M: ACCA P7 is the advanced version of F8.
Read more: ACCA F8 Tutor Interview: How to Pass ACCA F8
Imagine an audit team, with an Audit Junior, an Audit Manager and an Audit Partner. F8 is asking, ‘If I was an audit junior, what is the audit work I’d do?’. ACCA P7 is asking, ‘If I was an audit manager or partner, then what would I have to do?”
In other words, you’re not just auditing specific situations. You’re working from a higher managerial level – how do you manage clients, what are the wider issues at play?
If I was an audit manager or partner, then what would I have to do? That’s the key question ACCA P7 is answering.
Students should come out of ACCA P7 and be able to do an audit from end-to-end. It’s a very practical paper.
LS: Can you talk us through the syllabus please Lincoln?
There’s a clear logic to the ACCA P7 syllabus. It’s broken into 7 areas, A to G and there’s a journey throughout.
(Source) The ACCA P7 Syllabus
The first area looks at the Regulatory Environment, which covers some of the key audit requirements and standards. The ethical codes; some of the quality control standards; how you should accept and continue appointments.
It’s setting the regulatory framework on the basis that if you follow the regulations properly, you will do your job properly and arrive at the correct audit opinion.
There’s a clear logic to the ACCA P7 syllabus; it’s a journey
Then you’re looking at how you plan an audit, which is about spotting key risk areas. It’s a risk-focussed approach. For example, where is there a risk of misstatement in the financial accounts?
You can work out high-risk areas depending on people’s strategic goals. It’s a nod to human nature almost – recognising areas where a company might overstate or understate because that serves their strategic purpose.
For instance, where there’s a high amount of competition, a company might overstate profits. Or where a company is going for expansion, they might be at risk of overstating their assets to support that expansion.
It’s about looking at the way decisions have been made throughout the company you’re auditing. Evaluating the assumptions on which the client has exercised professional judgement.
LS: So it’s strategically focussed?
L.M: Very much so. As a senior auditor, a critical part of your role is to understand the strategy your client is following and look at how that impacts the financial accounts.
A critical part of your role is to understand the strategy your client is following and look at how that impacts the financial accounts.
Then once you’ve worked out what the key risk areas are, you have to identify what you need to do to respond to those risks. That’s why I say the ACCA P7 syllabus is a journey, because it mirrors the process you’ll follow as an auditor.
Essentially the auditor is working towards producing a report that goes to the shareholders saying that the accounts give a true and fair view.
So now you’re thinking, ‘right, OK, which areas do I need to look at based on the risks I identified? How do I do it? Which evidence do I need?’ It’s about identifying and responding to risk.
Then there’s reporting. If you find something wrong, how do you report that to the client in a positive way that adds value to the client’s business? How do you break it down? How should you deliver your report?
LS: Is it forward-looking? Do auditors make recommendations?
L.M: It is forward-looking in the sense that you’re trying to improve the business year-on-year.
Typically you’ll have a three-year audit contract, so you’re aiming to not have to do the same things each year. Your first year you’d hope to improve weaknesses by recommending better controls, and then there’s much less work for you to do in year 2 and 3.
And that of course is a commercial consideration. If you have to invest less time as you move forwards, you make more profit on your time. P7 is very practical, rather than purely theoretical.
As an external auditor, you have to balance compliance with commercial considerations
To pass ACCA P7 you need to be able to put yourself in the shoes of an auditor, and that does include commercial awareness.
As an external auditor, you’re always balancing compliance with the commercial consideration of making a profit. Obviously you’d never choose to make a profit at the cost of compliance though. These are things you’d take into account when managing existing clients vs. taking new clients, and so on.
LS: Is ACCA P7 all from the perspective of an external auditor?
L.M: A large chunk is, but the syllabus then goes on to talk about other audit services. There are many – internal audit, social and environmental audits, forensic audit, prospective financial audit, group audit and assurance.
Students won’t come out of ACCA P7 and be an expert on corporate social responsibility audit, for instance, but they will know enough. The point is to know what skills you need for which jobs, and know when you’ll need to escalate outside the team and bring more people in.
To pass ACCA P7 you need to know which skills you have, and which you need to seek from outside the team. You’re not expected to know everything.
And again, there’s a commercial consideration here. Bringing specialist skills into the audit team has a cost attached, but not doing so could be an ethical risk….
As a senior auditor, these are the things you always have to take into account. To pass ACCA P7 you have to show your business mentality as well as your hands-on audit skill.
LS: What’s the actual ACCA P7 paper like?
L.M: The whole exam is very narrative. You might have to calculate a couple of basic ratios, but the dominant skill you need to pass ACCA P7 is narrative. That’s why many students find ACCA P7 challenging – many students aren’t used to writing long-form.
(Source) ACCA P7 students often struggle because they’re not used to writing long narrative
The paper has two sections, Section A and Section B. Section A has two compulsory questions, one worth 35 marks and the other worth 25 marks. On Section B students can choose two out of three questions, all of which are worth 20 marks.
There are also 4 professional marks available on the paper, which comes down to the professionalism of your paper. How you write, how you structure your answers, your spelling, your grammar and so on.
The questions are scenario based, so to pass ACCA P7 you have to go well beyond regurgitating knowledge!
LS: How can students answer ACCA P7 scenario questions well?
L.M: The word I like to use is ‘decode’. You have to decode the scenario to work out how to best apply your knowledge. If you have good knowledge of the syllabus, you can usually spot why you’ve been given the information you have and prioritise the important parts.
LS: Prioritise? Is everything you’re told in a question relevant?
L.M: Well, everything is there for a reason. You won’t get ‘red herrings’ so to speak, but you will have areas that aren’t as important. To pass ACCA P7 you need to focus on the right areas – the high-risk material areas rather than the areas which might not have much consequence.
When you’re reading through the question, you should be able to spot which bits of information will give your answer most mileage.
One of the biggest reasons ACCA P7 students fall down is that they can’t think of enough ideas to earn the marks they need.
You have some large mark narrative questions on this paper. One of the biggest reasons students fall down is that they run out of ideas for their answer. You need to be able to spot what they’re asking you, and then generate enough ideas to pick up sufficient marks to pass.
If you want to pass ACCA P7, the secret is being able to make the scenario work for you. Students should challenge every piece of information you’re given to come up with ideas for your answer.
Your syllabus knowledge allows you to understand the information and know why it might be relevant.
In that sense, the better you know the syllabus the better you’re going to do – but simply knowing the syllabus isn’t enough. You also have to think in the right way, make decisions in the right way, and write compelling reports on that decision-making process. Those are the primary skills you need to pass ACCA P7.
LS: What are the biggest mistakes students make on ACCA P7?
L.M: As with most of the ACCA Professional Papers, time-management is a real issue. ACCA P7 is so narrative, and most students aren’t practised at writing long-form. Also many students are taking the paper in their second language.
The result is that many students struggle to communicate concisely, so everything takes more time and they end up running out of time.
L.S: And how can students improve their writing ability?
L.M: Do more written question practice! On the numerical papers, people tend to practice a lot because it feels easier and more manageable. Then it comes to big writing-based papers like ACCA P7 and no one likes practising because it takes a long time.
The more you practice though, the more likely you are to pass ACCA P7 – it is that simple!
Think about how you structure your answers. Clear and concise is key! You should plan every answer first, so you know what you’re going to say. A good rule of thumb is to spend a third of the exam time planning, and two thirds writing – planning really does make a huge difference.
Work out how many points you need to get the available marks, and ensure each point follows the PER technique – Point, Example, Relate. For example, if you want 10 marks, I advise students to deliver 10 short, sharp points of three or four lines each.
To pass ACCA P7, make sure you follow the Point, Explain, Relate format.
And watch your layout. Try and make your answers as easy to read as possible. It’s little things, like leaving a space between each point. The professional marks should be easy to pick up, and can play a critical role in securing you a pass.
LS: Great, thanks Lincoln. What other mistakes do you see students make?
L.M: One of the biggest mistakes students make is confusing common sense understanding and long-term knowledge. A lot of the ACCA P7 seems like common sense, especially because students have covered Audit and Assurance a fair amount before.
I’ve seen plenty of students assume they know the material, and then get into the exam and realise they don’t have the depth of knowledge they think they have. Often students will put in a lack of effort at the beginning, because they think they don’t need to do much work, especially if they did well on F8.
That’s always a mistake, and it’s a real shame. These are professional exams – if you think they’re going to be easy, you’re wrong!
My biggest tip to pass ACCA P7 is to start early. Approach ACCA P7 with the seriousness it deserves, as a professional exam and don’t underestimate it.
My biggest tip to pass ACCA P7 is to start early. A lot of students sit ACCA P7 at the same time as a technical paper. They wind up putting all their effort into the technical paper, and leave ACCA P7 too last minute. Approach ACCA P7 with the seriousness it deserves, as a professional exam!
LS: Good advice, thank you. Are there any other common mistakes ACCA P7 students should avoid?
L.M: Another mistake students make frequently is not using the scenario. Students will often recognise a bit of the syllabus in the question, and take that as a prompt to regurgitate everything they know.
You should read the question carefully and apply your knowledge selectively. Regurgitating the whole syllabus won’t get you the marks you need, and it will take so long you’ll run out of time.
LS: What do prizewinning ACCA P7 scripts look like?
L.M: You’d be surprised, because prizewinning scripts often don’t look like anything ‘special’. They tend not to be the most interesting scripts – but they know how to tick the boxes and move on. It’s almost clinical. Answers will be concise, well written and relate back to the scenario constantly.
LS: A lot of this comes down to exam technique, then. Are there any areas of the syllabus students tend to make mistakes on?
L.M: There tends not to be too many mistakes in terms of getting the syllabus wrong, actually. The mistakes come in with how students study, how they apply their knowledge and how they answer in the exam. Exam technique is everything!
Saying that, you do need a solid knowledge of financial reporting and any weakness here will let you down in the exam. If you know what the rules are to proper financial reporting, you’ll be well on the way to producing a good audit. A refresh of F7 or P2 study notes can really help you pass ACCA P7.
(Source) You need a solid understanding of financial reporting to pass ACCA P7
Some students find the ambiguity of the reporting side difficult too. You’re faced with a lot of grey areas; there aren’t right or wrong answers necessarily. ACCA P7 is testing your ability to give a balanced appraisal; it’s testing your ability to think your way around a situation.
LS: How can students improve?
L.M: Again, this is about exam technique to a large degree. A good way to approach this is to argue both sides of the story, presenting a separate paragraph for each side of the argument.
Good answers will present both sides of the argument
The scenario will likely be leading to one conclusion over another, but you should always consider the counter-argument. Try and argue both sides as much as possible. Audit isn’t precise, and it does come down to professional judgement – that’s what you’re being tested on, not a black-and-white right/wrong answer.
LS: Amazing, thanks Lincoln. One last question for you… As one of the LearnSignal expert author team, you’re obviously a big believer in online learning. Why online learning over traditional learning?
L.M: Because online learning is the future! From a company point of view, online learning is a more flexible option, because your staff don’t need to be away from the business at particular times.
Then from a student point of view, you can be that much more flexible. Online learning providers like LearnSignal help you balance the commitment of studying and working.
Ultimately, you’re more likely to fit everything in and pass your exams if you have the flexibility to study in a way that works for you.
LS: Lincoln, thank you very much indeed.
Lincoln Miles (BA HONS, FCCA, FCMI, FCIS) is Managing Director of Miles Professional Development Ltd. He is a highly respected financial reporting consultant and professional trainer with extensive experience. Previously an Auditor with PricewaterhouseCoopers and a Director with BPP Professional Education, Lincoln has both internal and external audit experience across both commercial and public sector clients.
Lincoln pairs this hands-on experience at the pinnacle of the industry with over 10 years’ experience designing and authoring courses with BPP Professional Education. This experience in mind, Lincoln is perfectly positioned to author the ACCA P7 Advanced Audit and Assurance study materials here at LearnSignal.
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