ACCA Strategic Business Reporting (SBR) Exam: Key Insights from the Examiner’s Report

The ACCA Strategic Business Reporting (SBR) exam requires a blend of technical expertise and practical application of IFRS standards. In the March/June 2024 SBR Examiner’s Report, several key themes emerged that can help candidates prepare more effectively for future exams.

1. Key Takeaways from the Examiner’s Report

The Examiner’s Report for the March/June 2024 SBR exam highlighted several areas where candidates performed well and areas needing improvement:

• Strong Technical Knowledge: Many candidates demonstrated a solid understanding of IFRS standards such as IAS 21, IFRS 15, IAS 36, and IFRS 5. However, it was noted that while candidates understood the principles, they often struggled to apply them effectively in complex scenarios. Candidates are encouraged to practice more scenario-based questions to strengthen their ability to apply standards in different contexts.
  • IAS 21 (The Effects of Changes in Foreign Exchange Rates): Candidates showed understanding of functional currency concepts but struggled with applying these concepts in consolidation exercises. Practice applying IAS 21 to real-world scenarios involving currency translation differences is recommended.
  • IFRS 15 (Revenue from Contracts with Customers): While candidates could recall the five-step model, they often missed crucial details when applying it to specific contract scenarios. Understanding performance obligations and the timing of revenue recognition is crucial.
  • IAS 36 (Impairment of Assets): Candidates demonstrated knowledge of the impairment indicators but had difficulty with calculating value in use, especially in estimating future cash flows and choosing an appropriate discount rate. Practice in calculating impairment, especially in varying economic contexts, is needed.
  • IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations): Understanding of classification and measurement requirements was good, but candidates struggled with presenting discontinued operations in financial statements. A more focused approach to understanding presentation requirements is advised.
• Spreadsheet Challenges: Candidates struggled with spreadsheet response formats, highlighting the importance of practice with adjustments to financial statements. Specifically:
  • Accuracy in Adjustments: Many candidates made calculation errors or failed to input adjustments correctly. To improve accuracy, candidates should practice inputting multiple adjustments into pre-populated spreadsheets to become comfortable with the mechanics.
  • Using Journal Entries as Tools: Candidates are encouraged to use journal entries to systematically process corrections before making adjustments in the spreadsheet. This approach helps in ensuring double-entry accuracy and understanding the impact of adjustments on different financial statement elements.
  • Common Errors: Misplacement of figures and incorrect formulas were common issues. Practicing spreadsheet tasks under timed conditions can help reduce such errors and build confidence.
• Time Management Issues: Many candidates failed to allocate enough time to Question 4, suggesting a need for better time management. Key recommendations include:
  • Allocate Time Based on Marks: Candidates should convert marks into minutes to determine how much time to spend on each part of the question. For example, a 10-mark question should take approximately 18 minutes.
  • Avoid Spending Too Long on Early Questions: Many candidates spent excessive time on early questions, leaving insufficient time for later ones. Prioritise completing all questions with adequate depth rather than perfecting one answer.
  • Practice Under Exam Conditions: Time management can be improved by practicing full-length mock exams under timed conditions. This helps candidates get used to the pressure of the exam environment and improves pacing.

2. Non-Technical Skills Are Essential

To succeed in the SBR exam, candidates must go beyond technical knowledge. Non-technical skills, such as time management and concise answer construction, are crucial:

• Time Management: Allocate time proportionally to marks for each question, ensuring all are attempted. Convert marks into minutes and stick to this time allocation.
• Answer the Question Asked: Focus on the specific requirements and avoid irrelevant information or rote-learned content. Read the question carefully and plan your answer before starting.
• Concise and Clear Responses: Avoid excessive verbosity. Spend a few minutes structuring your answer to make it clear and focused.

To develop these skills, students should incorporate regular practice into their study routine. This includes completing mock exams under timed conditions to simulate the real exam environment. Mock exams help improve time management by training candidates to allocate time effectively across all questions. After completing a mock exam, reviewing answers is crucial—focus on identifying where time was spent inefficiently or where responses lacked clarity. By repeating this process, students can refine their approach, improve pacing, and enhance the quality of their answers.

3. Spreadsheet Proficiency Is Key

Many candidates struggled with using pre-populated spreadsheets for financial statement adjustments. To improve in this area:

• Practice Spreadsheet Adjustments: Familiarise yourself with making adjustments in a spreadsheet format, ensuring accuracy in financial statements.
• Utilise Journal Entries: Use journal entries as a systematic tool to process corrections, which helps ensure the accuracy of adjustments and balances the entries.

4. Apply Knowledge, Don’t Just Recite

A key theme in the Examiner’s Report was the importance of applying knowledge rather than merely recalling definitions:

• Go Beyond Definitions: Candidates are expected to apply accounting principles to specific scenarios rather than simply state definitions.
• Develop Arguments: Explain not just what accounting treatment is used but why it is appropriate for the given scenario.

5. Critical Analysis and Ethical Reasoning

The SBR exam includes questions that require critical analysis and ethical reasoning:

• Provide Balanced Arguments: When assessing disclosures or decisions, present both strengths and weaknesses. This approach shows a deeper understanding of the scenario.
• Ethical Principles: Go beyond defining ethical principles. Instead, analyse how these principles are breached or upheld within the context provided. Avoid general business discussions and focus strictly on ethical considerations.

6. Specific Question Insights

The report provided detailed feedback on specific questions, such as:

• Question 1 (Peony Co): Candidates struggled with applying IAS 21 to adjust the consolidated financial statements. Practicing spreadsheet skills and using journal entries can help improve accuracy.
• Question 2 (Abasi Co): While many demonstrated a good grasp of IFRS standards, candidates struggled with ethical reasoning, often repeating information rather than providing a clear analysis.
• Question 3 (Jobon Co): The main challenge was the misapplication of IAS 10, especially regarding non-adjusting events. Candidates should focus on developing arguments fully, explaining the reasoning behind their chosen accounting treatments.
• Question 4 (Maple Co): Candidates grasped the importance of disclosures but often failed to provide critical assessments. Instead of summarising, candidates should balance their arguments, noting both useful aspects and missing elements.

7. Time Management Tips

The Examiner’s Report repeatedly emphasized the importance of time management:

• Convert Marks into Minutes: Allocate time based on the marks available for each question and stick to it to ensure all tasks are completed.
• Avoid Overwriting: Writing excessively about familiar topics wastes time and does not earn extra marks. Keep answers concise and directly relevant to the question.

8. Practice Ethical Awareness and Application

Ethical issues are integral to the SBR exam. Candidates are expected to:

• Identify Ethical Dilemmas: Avoid merely defining ethical issues. Instead, apply ethical reasoning to specific scenarios provided in the questions.
• Link to ACCA Code of Ethics: When discussing ethical breaches, refer to the ACCA Code of Ethics and explain how the actions described breach specific principles.

Conclusion

The SBR exam requires a combination of technical IFRS knowledge, practical application, critical thinking, and ethical awareness. Candidates must focus on using the provided information effectively, managing their time well, and crafting well-structured answers that directly address the task requirements. Use these insights from the March/June 2024 Examiner’s Report to guide your preparation and improve your performance in future SBR exams.

FAQ: Common Questions About the SBR Exam

Q1: How can I effectively manage my time during the SBR exam?

A1: Time management is crucial. Convert the marks for each question into minutes to determine how much time to allocate to each part. For example, if a question is worth 20 marks, you should spend roughly 36 minutes on it. Practice full-length mock exams under timed conditions to get used to pacing and reduce anxiety during the real exam.

Q2: What can I do to improve my spreadsheet skills for the SBR exam?

A2: Practice using spreadsheets to make adjustments to financial statements. Familiarise yourself with using pre-populated spreadsheets, as accuracy is key. Use journal entries to systematically process corrections before inputting them into the spreadsheet. This will help in ensuring double-entry accuracy and understanding the impact of each adjustment.

Q3: How do I improve my ability to apply IFRS standards rather than just recalling definitions?

A3: Focus on scenario-based practice questions. When studying a specific standard, apply it to various examples to understand how it works in different situations. Explain not only what the accounting treatment is but why it is appropriate in that context. Developing this habit will help you answer questions with a deeper level of understanding.

Q4: What are some strategies to improve ethical reasoning in the exam?

A4: Go beyond simply defining ethical principles. Analyse how ethical principles are breached or upheld in the given scenario, and always link your response to the ACCA Code of Ethics. Practice answering ethical dilemmas by evaluating the actions of key stakeholders and clearly stating the ethical implications.

Q5: How can I ensure my answers are concise and relevant?

A5: Spend a few minutes planning your answer before you start writing. Identify the key points you need to cover, and make sure each one directly addresses the requirements of the question. Avoid including rote-learned content that is not directly applicable. Practicing with past exam questions and reviewing model answers can help you understand how to stay focused.

Q6: What should I do if I struggle with critical analysis in disclosures?

A6: When asked to critically assess disclosures, provide balanced arguments that consider both the strengths and weaknesses of the information. Think from an investor’s perspective—what would be useful, and what might be lacking? Practice this type of analysis with annual reports and disclosure notes to gain confidence.