ACCA P1 Tutor Interview: How To Pass ACCA P1

Need to pass ACCA P1? Chartered Accountant Alan Lewin has decades of experience as an author, tutor, trainer and examiner for the ACCA.

He’s worked with Deloitte and Kaplan for many years, and has now joined the LearnSignal team where he authors our online course material for ACCA P1.

We sat down with Alan and picked his brains. Here goes.

 

Introducing… ACCA P1 Tutor Alan Lewin

 

ACCA P1 Tutor Alan Lewin

 

LS: Alan, hi! Thanks for being here.

 

A.L: Hi, hello! No problem, more than happy to chat.

 

LS: So, ACCA P1. Shall we start with an overview?

 

A.L: Sure. ACCA P1 is about Governance, Risk and Ethics, from a business-level perspective. By that I mean, students will focus on how the business operates, business ethics and the risks to the business. P7 is about the people in practice, but ACCA P1 is all about the business itself.

Governance is how the company is run: how the ship is steered. Risk refers to the risks that might stop a business from meeting their objectives…

 

LS: The number one business objective is to operate profitably and ethically, right?

 

A.L: Yes, if you’re looking at a for-profit. A not-for-profit will have other objectives. But yes, unless otherwise specified, your business objective is to operate profitably and ethically, so you can pay your shareholders and so on.

The risks are things that might stop you from doing that. For example, those risks might come in the supply chain, from a lack of cash, from poor internal systems, etc.

That’s what I mean by business perspective – you’re not just looking at accounting level risks. It’s not just about the numbers, but about the broader business as a whole.

 

ACCA P1 takes a broad, business-level perspective

 

Imagine Starbucks wants to expand into a new market. A business risk might be that there isn’t the demand in that market, so they won’t be profitable.

Another could be that they have a complex supply chain. If they source coffee beans from Guatemala, for example, that could be a business risk. Complications could mean you don’t get the coffee beans you need on time to sell coffee, which will stop you being as profitable. You get the idea!

 

LS: And where do Ethics fit in?

 

A.L: The classic example recently is Volkswagen, with the emissions scandal. Business ethics is about whether you’re making the right, ethical, decisions throughout the business. Are your products to the right standards? Do you have the business structures to produce products to those standards?

 

LS: Does the ACCA P1 syllabus mirror these three parts?

 

A.L:  If you look at the relational diagram of the syllabus [below], you’ll see it’s actually split into four parts.

 

ACCA P1 Syllabus

(Source) ACCA P1 syllabus

 

Governance is part A, then you’ve got Internal Control and Review as part B. Then Risk is broken into parts C and D, and Ethics is E.

 

LS: What is internal control and review about?

 

A.L:  This is about applying internal controls to mitigate and manage risk. The company recognises that things might go wrong, and puts a control system in place to try and stop that from happening.

 

LS: We wrote about F8 Audit and Assurance recently, where risk and control comes up a lot. Is this different?

 

A.L: Yes. If you’re at audit, the internal control will be a detailed financial control system – that’s where F8 comes in. But ACCA P1 is more wide-ranging; it’s not purely financial. It covers everything that might go wrong.

To pass ACCA P1 students need to know the material in ACCA F8, and then more about the things that might go wrong in the wider context of the business.

 

Read more: ACCA F8 Tutor Interview: How to Pass ACCA F8

 

Let’s use the same example, with coffee beans in Guatemala. The company might recognise that there is a risk inherent in their supply chain, and they might have delays.

An internal control could be having additional stock stored somewhere else. If delays happen in Guatemala they can then turn elsewhere and avoid the delay.

 

LS: OK, that makes sense. Thank you.

Let’s go through each section of the syllabus, because that’s really helpful. What do students actually have to know for each section? What do questions look like?

 

A.L: Let’s start with section A. To pass ACCA P1 Governance, students have to know the principles of good corporate governance. This is an international paper, but it takes the UK governance code as the baseline.

You’ll be expected to assess a company within those guidelines, to see if they are operating in line with the rules.

There’s a lot of learning involved here. Students have to know what all the corporate governance codes are, and be able to assess if companies are sticking to them.

You also have to know what the impact is on the company if they’re not sticking to the rules, and recommend relevant changes. That’s business common sense really.

 

The VW scandal is a classic example of poor corporate governance

 

For example, look at the VW scandal. If the directors know there is a problem with one of their products and chose not to do anything about it, they’re not acting in accordance with the codes, and they’re not acting ethically.

 

VW Scandal ACCA P1

(Source) The VW scandal: poor corporate governance in action

 

The impact on the business is that this information will likely come out eventually, as it did. Consumer trust is broken, VW’s reputation is damaged and ultimately VW lose money. The recommendation is to disclose the problem and be transparent about trying to fix it.

Your answers should follow this same format: make your point, explain the consequence, and then make a recommendation.

Although ACCA P1 is a narrative paper, your answers can be a little formulaic. There are normally about 2 marks available for each point. If you stick to the formula and make your point fully, and you have enough points to make because you know the syllabus well, you’ll pass ACCA P1.

 

LS: Great, thanks Alan. We’ve looked at section B, so let’s move onto sections C and D. Risk. What do students need to know?

 

A.L: Sections B, C and D are all closely related. You have to be able to identify the risk in order to recommend appropriate internal controls.

First you need to be able to identify risks, from bigger picture strategic risks down to smaller operational risks.

Take Tesco, for example. Strategic risks might be store location or store size, whether they’re selling the right products in the right areas. Operational risks could be… not having enough stock of burgers and charcoal on a sunny weekend, when lots of people might want to BBQ.

Then you’ll categorise risks – what type of risk is it? What does it mean? Risk mapping is an important part of ACCA P1. How do you prioritise the risks in terms of likelihood and impact?

 

ACCA P1 Business Risk

(Source) To pass ACCA P1 you need to map and respond to business risks.

 

For example, an earthquake might have a huge impact but low likelihood, depending where you are. On the other hand, supply chain disruption might have a moderate likelihood and a moderate impact. Risk mapping is about determining how bad things really are – then you can recommend controls accordingly.

As with section A, your answers will follow a clear structure. You’ll be given a scenario and you’ll be called on to identify risks, map them, and recommend controls to mitigate them.

 

LS: Finally, section E: Ethics.

 

A.L: Ethics. Yes. Ethics can feel quite strange to a lot of students. It’s very different from other elements of the ACCA.

The way I normally explain ethics to students is this. Imagine you’re driving a car and stopped at a red traffic light. An ambulance comes up behind you and needs to get by. The law says you can’t cut the red, but ethics say you should act.  It’s that grey area. You’re teaching people a set of guidelines on how you should act in certain situations, but there is no right and wrong.

 

Ethics is about teaching people how to make an ethical judgement call. There aren’t right and wrong answers, because ethics depend on the individual situation

 

You can’t say ‘you should always do X’ because there are infinite situations; you have to judge each situation as it arises. That’s what ethics does – it teaches people how to think. It teaches you the thought process when making an ethical decision; it doesn’t teach you what the right ethical decision is.

This section of ACCA P1 is almost like a philosophy paper, not an accounting paper. You’ll learn ethical theories – such as  Kant and Kohlberg. You have to know that different situations have different rules that apply to it.

 

LS: I can see why students find Ethics more difficult! What are the biggest reasons students don’t pass ACCA P1?

 

A.L:  This is the first written paper many students will have done. It can be quite a shock. You have to be able to write in long-form, but many students don’t know how to do that.

Students often don’t structure their answer well, which makes the answer difficult to read. Most people don’t write much now anyway, so suddenly sitting a long paper where you’re writing for hours and hours is difficult. Your hand hurts, you aren’t used to it. You aren’t good at writing to a time limit.

 

LS: Students need to practice more!

 

A.L: Exactly. Get as much practice as you can. You’re unlikely to pass ACCA P1 if you haven’t practised writing, under time-pressure too. Or you could wait until the exams go completely computerised… it will eventually!

 

LS: Why else do students struggle to pass ACCA P1?

 

A.L: One of the biggest problems with ACCA P1 is that it’s a huge syllabus. You need to know a lot. Many students won’t pass ACCA P1 because they just don’t know everything on the syllabus. There’s a lot of learning.

 

LS: Is application important?

 

A.L: Yes, that’s what I was going to add. You need to know a lot of facts to pass ACCA P1, but you also need to use your judgement to apply that knowledge to the scenarios.

 

You need to know a lot of facts to pass ACCA P1, but you also need to use your judgement to apply that knowledge

 

It’s really important to be able to understand what the question is about, and understand which area of knowledge you’re being questioned on. You have to have a lot of knowledge, and you have to be able to pick out which bits are helpful in each instance.

To pass ACCA P1, you have to learn the syllabus really well and then practice it as much as possible. That’s really the only way you can ensure you pass.

 

LS: What does a prizewinning ACCA P1 script look like?

 

A.L: One of the best criteria is clear presentation! It sounds simple, but you’d be surprised how many students’ scripts are very difficult to read. If I can actually read what you’re saying, that’s a good start.

Then it’s about being fairly concise. The best scripts often aren’t the longest. You need to have the deep syllabus knowledge and the writing skill to write a clear, focussed answer.

It comes back to knowing how things are marked. If you’re making one point, there’s generally a maximum of two marks for it. If you write three pages on one point, that’s a complete waste of time because it’s still only worth those two marks.

You’ve got to know the rules of the game!

 

LS: And one last question for you Alan…

 

A.L: I’d just like to add one more thing. One of the best ways to help yourself pass ACCA P1 is to enjoy it!

 

Find something you enjoy about ACCA P1, because if you can make it interesting you’ll be more likely to pass

 

ACCA P1 has a reputation for being boring, but if you have that attitude you won’t fully embrace the course. Find ways to make it interesting; find something you enjoy about it. If you can do that, you’ll be much more likely to pass!

 

LS: Good advice Alan, thank you.

And finally, let’s talk about online learning. You’re one of our tutors at LearnSignal – why do you believe in what we’re doing here?

 

A.L: It’s about accessibility. Before online learning, examiners used to do a world tour every two years. That was often the only time students ever heard from an examiner.

Now online learning means students from all over the world can access a much higher level of information. Tutors like me can make videos, and LearnSignal students from every country can access that. Students aren’t in the dark anymore.

Whatever country you’re from, you can access standardised teaching that is designed to help you pass. You can learn in a way that is optimised for the ACCA, when there might not be that infrastructure or experience local to you.

 

LS: Amazing Alan, thank you for being here!

 

Alan Lewin qualified as chartered accountant in 1982 with Touche Ross (now Deloitte) in Leicester.  In 1985 he left accountancy practice to start a career in lecturing and consultancy, where he worked with Kaplan before moving back to Deloitte’s audit training department. In 1996 he established his own training company.

Alan specialises in writing and teaching auditing, corporate governance, management theories and helping students pass ACCA, CIMA and ICAEW examinations.  He was a CIMA Chief Examiner for 10 years and an ACCA Audit and Assurance Examiner for 5 years.

 

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