By Nicholas Ee Herng Wai FCCA, C.A.(M)
Many students have been asking what is the difference between the new ACCA SBR exam paper as compared to the previous P2 Corporate Reporting. Is this merely a change in paper name and exam format?
The answer is YES and NO.
SBR essentially retains the entire syllabus of P2, i.e. it will still cover all the accounting standards (IFRSs/IASs), group accounts (consolidation) and other aspects of corporate reporting.
As far as exam format is concerned, students will no longer have options when attempting questions. SBR will have a total of 4 questions, offering 25 marks each. Therefore, all questions must be attempted and there will be no options as in the previous P2, in which students would choose 2 out of 3 questions in Section B.
So SBR retains the syllabus contents and simply changes the exam format into 4 compulsory questions. No big deal.
For instance, Q1 in P2 will always require the preparation of a consolidated statement of financial position, statement of comprehensive income or statement of cash flows. However, SBR will no longer require the preparation of a full set of group financial statements. Instead, students will be asked to produce some complex workings or extracts from the consolidated financial statements and explain why a particular issue has been accounted for in such a manner.
This means that students need to be critical/analytical and refer to the accounting principles behind the accounting treatment. There is more of a focus on discussion rather than calculation. Students need to be prepared to understand and discuss the appropriateness of an accounting practice.
There is also an increased focus on ethics, requiring students to consider the reporting and ethical implications of some accounting issues presented in a specific scenario.
In essence, it’s the same syllabus as P2 but the accounting principles and concepts are examined in a significantly different perspective.
In the past, students can learn and accept the accounting treatment in accordance with a particular IFRS/IAS and apply it to a given scenario. But in SBR, there is a need to explain why the accounting treatment is such, rather than simply applying it, although the treatment is correct.
SBR is likely to be more challenging than P2, but don’t forget that P2 was referred to as ‘the killer paper’ anyway.
SBR is aiming to restrict rote learning and learned mechanics of applying a standard. Rather, it focuses on a more holistic approach, testing an individual’s ability to apply the principles of the standards and to comment on financial statements, which is very much in line with ACCA’s strategy.