ACCA P2 Corporate reporting

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, it’s 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.

Tipquestion 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.  Student’s 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 scenario’s 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!

Tipbe 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 2013’s exam required a discussion regarding the high volume of disclosure in annual reports.  December 2012’s 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.

Tipread articles!  Websites such as and 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.

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