This article explains why so many students fail SBR and offers advice on how students should prepare for the exam. Written by an exam prize winner and SBR tutor who has a 98% student pass rate, this is a must read for any student about to start preparing for the SBR exam.
Of the compulsory ACCA exams, SBR is the paper students find most challenging and pass rates reflect this by frequently being below 50%. There are several reasons for poor performance in SBR, but the most overwhelming reason is that students do not know the SBR technical content is sufficient depth to be able to answer the challenging, yet very predictable, SBR exam questions.
I coach between 4-8 students for every SBR exam sitting and by developing their technical knowledge and exam technique skills, I have maintained a 98% student pass rate (i.e. nearly all students who have attended all their scheduled classes and completed homework tasks have passed SBR). As the vast majority of my students have failed SBR on a previous attempt with other tuition providers, I have been able to identify the skills they lacked during their previous attempts.
A recurring weakness is that too many students do not have adequate Financial Reporting knowledge. Financial Reporting is a pre-requisite to SBR as both examine your financial reporting skills. The impact of a lack of Financial Reporting knowledge is twofold; firstly, students will lose easy marks when material covered at Financial Reporting comes up in the SBR exam e.g. PPE and secondly, they lack the foundation knowledge on which to build the advanced SBR content. In order to circumvent this, I have included my recommended list of Financial Reporting pre-work at the bottom of the article.
Even when students are completely up to speed with the assumed Financial Reporting knowledge, there is still a long way to go before they are at the standard required to pass this advanced exam. In terms of the SBR content, it is absolutely crucial that students are competent in application of group accounting concepts. A question on group accounting is guaranteed to be the compulsory question on the paper so inadequate preparation here is going to make it impossible to pass the exam. Students need to be comfortable in dealing with complex group scenarios when preparing consolidated financial statements (including the cash flow statement). Common exam scenarios include an explanation of how to account for step-acquisitions / disposals, foreign subsidiaries, NCI movements, associates / joint ventures and goodwill adjustments. In addition, the examiner is also looking to test the other areas of the SBR syllabus which were not already examined at Financial Reporting, notably share based payments, pensions and deferred tax. I ensure that my students have a deep understanding of all these topics so that they can react to whatever the examiner throws at them on exam day. Having a conceptual awareness of these advanced topics is far better preparation then the ‘this is how to do it if it comes up’ proforma approach taught by large classroom tuition providers.
Once students have deep conceptual understanding of the technical content, attention then needs to be paid to developing exam technique. SBR is a highly time pressured exam and ensuring that you don’t run out of time will enable you to pick up marks across all 4 questions. I coach my students in an exam technique which allows them to answer each style of question as time efficiently as possible whilst still picking up full marks. This is the same technique which resulted in me scoring 88% in the ACA equivalent of SBR (the ICAEW awarded me a prize for this performance).
In summary, the main 3 reasons why students SBR is due to a lack of brought forward Financial Reporting knowledge, inadequate understanding of the SBR content and inefficient exam technique. In order to combat this, your first port of call is to get up to speed with the Financial Reporting content (detailed below)
About the author
Kieran Doe is an ACA and ACCA tutor and Director at ACA Masters. Kieran won multiple prizes for the ACA exams including the ICAEW BBH Professional Stage prize (Financial Accounting and Reporting, Tax, Financial Management, Audit, Business Strategy) and the ICAEW Case Study prize (highest score in the world). Kieran has been tutoring his specialist ACA and ACCA subjects for several years and his student pass rate is considerably higher than other tutors. Kieran’s tuition is based around the learning techniques and exam strategies which enabled him to win prizes for all the exams he teaches.
SBR pre-work – Financial Reporting content
Anybody sitting SBR should complete the following F7 work before even looking at the SBR material;
Accounting for a subsidiary – Be able to calculate and understand the concepts behind Goodwill, NCI, Group Retained earnings, Intra group transactions / unrealised profit.
Be able to prepare a Consolidated Income Statement, Statement of Financial Position and Cash Flow.
PPE / Intangibles – Initial and subsequent measurement.
Accounting for additions, disposals, revaluations, impairments and depreciation.
Revenue – IFRS 15 recognition criteria, ‘bundled’ goods and services, financing arrangements
Provisions – IAS37 recognition criteria, common examples (e.g. dismantling provision, redundancy costs, onerous leases)
IAS1 presentation, IAS2 Inventories, Conceptual Framework.
A good way to revise this material is to read, understand and memorise the key definitions in the relevant standard(s) and then work on the practical application by attempting past exam questions on the subject. For example, if you are revising provisions, then you firstly need to memorise the key recognition elements in IAS37 (i.e. a past event which has led to a constructive/legal obligation which will result in an economic outflow and can be measured reliably). Once you understand what all these terms mean, you should then attempt questions to see their practical application. Past Financial Reporting exam papers on the ACCA website are a good source.