Overview of Advanced Level exams

In this series of Advanced Level exam resources, we have developed a number of guides and webinars covering the Advanced Level itself as well as the individual exams; Corporate Reporting, Strategic Business Management and the Case Study exam.

The Advanced Level exams sit at the top of the ACA qualification, they are the final “hurdle” before becoming a qualified accountant. They therefore represent a significant and appropriate challenge. All three exams are designed to replicate typical “real life” situations that qualified accountants may find themselves in, they require you to provide accurate, precise, credible and commercially relevant advice. They are thus a test of analysis, judgement and communication, not just a test of knowledge and technical skills.

Although all of the content from prior exams is deemed knowledge at Advanced Level it is not and end in itself. Technical content from Certificate and Professional Level is just the foundation for further work in the Advanced Level exams.

Although the Advanced Level exams have similarities in terms of the skills they test, there are differences in terms of the subjects they focus on.

The Corporate Reporting and Strategic Business Management exams test your understanding and strategic decision-making at a senior level. They present real-life scenarios, with increased complexity and implications compared to Professional Level. The 3.5 hour exams are longer and more complex than Professional Level. Strategic Business Management is a “self-contained” exam (there is no advance information), Corporate Reporting contains an advance information which forms the context for one of the Corporate Reporting questions. The focus of Corporate Reporting is on an organisations’ published accounts so draws principally on Financial Accounting and Reporting and Audit and Assurance at Professional Level. Strategic Business Management is focussed on internal decision making and business decisions so draws mainly on Financial Management and Business Strategy and Technology. There is however significant overlap between the two exams. A key challenge of both Strategic Business Management and Corporate Reporting is that there is no mark allocation given to individual sub-requirements, which forces you to decide how to manage your time and effort.

The aim of the Strategic Business Management exam is: “to enable students to demonstrate quantitative and qualitative skills, in order to make realistic business recommendations in complex scenarios.” The two questions are typically based upon a business at a point of ‘strategic transition’ such as acquiring another business, launching a new product, selling a division and so on. Each question will then consider this issue from a number of views such as: the strategic benefits and risks, a financial aspect such as a valuation, how risk can be mitigated such as through due diligence, the impact on the business’s financing culminating in an overall recommendation.

The Corporate Reporting exam requires the candidate to achieve three things. Firstly, to demonstrate technical knowledge of the accounting standards and the ability to apply that knowledge to the practical scenario in the question. Secondly, through journals to show the impact of adjustments on financial statements. Thirdly, through providing explanations, to demonstrate the ability to communicate complex and technical matters to those without a technical background - a key skill of a strategic business partner. The challenge for the candidate is to provide an answer that is balanced across all three. In 2021 the Corporate Reporting exam changed to include a short advance information issued a number of weeks before the exam, which relates to one of the questions, the advance information includes both financial and narrative information about the business. In the exam you are then required to use data analytics software to interrogate new data and build on your analysis of the advance information.

The Case Study exam is a four hour exam and tests all the knowledge, skills and experience you have gained in your studies and work roles so far. It presents a complex business issue which challenges your ability to problem solve, identify the ethical implications, and provide an effective solution. Case Study is somewhat different to all the earlier exams, there is a long advance information document issued six weeks before the exam which enables students to get to know the organisation. The exam then contains further information and sets the specific requirements. You must submit a professional format report in response which must include an executive summary. The report must be evenly balanced across the requirements and executive summary. Failure to submit any one element will normally lead to a fail, regardless of the strength of the other sections.

The Advanced Level exams can be taken in July and November. They are fully open book replicating a real-life scenario where technical and other resources would be to hand.

The ACA qualification is built around a hierarchy of skills that are tested across all exams.

At Certificate Level the focus is on the acquisition of knowledge and basic techniques. Therefore marks are predominantly for Assimilating and using information (AUI) and relatively straightforward analysis and calculations (Structuring problems and solutions or SPS). For instance in Business Technology and Finance students will be tested on the content of academic business models such as Porters 5-forces. At Professional Level the focus moves to applying complex techniques to a situation, i.e. predominantly SPS and a small element of Applying judgement (AJ). For instance Business Strategy and Technology may require students to analyse an organisation using the 5-forces model (SPS) and consider the impact of those forces on its profitability (AJ).

At Advanced Level the full range of these skills is tested. In Corporate Reporting and Strategic Business Management you will need to choose which theories, techniques or regulations are relevant (AUI), to apply them accurately to a scenario (SPS), to consider the implications of the results and any assumptions and shortcomings (AJ) before drawing the analysis together into an overall recommendation (C&R).

In Case Study students’ scripts are marked against a specially constructed marking grid. This includes particular points from each of the four skills, it is difficult to score well unless you spread your work across the skills. The examiner says in the introduction to each exam, “all four skills areas will be assessed under each of the four elements of your report. Accordingly, not demonstrating your judgement or failing to include appropriate conclusions and/or recommendations in each element of your report will affect your chances of success.”

It can therefore be clearly seen that Advanced Level students have left behind the stage where simple repetition of learned facts will achieve an exam pass. However these are still accountancy exams. You need a solid body of technical understanding to base your analysis on. The focus, and therefore most of the marks, are for adding value, for analysing a situation using suitable tools, considering the implications and making a commercially credible recommendation. You are in the position of a professional adviser and you need to produce the sort of advice expected that would be expected from that person.

You should not forget that these three exams are the pinnacle of the ACA. Although there is less emphases (and marks) on pure technical elements, they are still accountancy exams, you still need to demonstrate knowledge and the ability to apply technical concepts accurately. However whereas in earlier exams these elements were an end in themselves, at Advanced Level they form the foundation for subsequent analysis and marks. You should use the early days and weeks of your studies to re-familiarise yourself with the technical content of feeder subjects, either using the workbook or returning to your earlier studies (whether Professional Level exams or university courses if you have exemptions).

It has already been noted that Advanced Level is principally a test of these higher skills and so you should expect that question practise is more vital than ever. The Corporate Reporting and Strategic Business Management examiners assume all of the question banks have been attempted!

Question practise, or past exams for Case Study, should form the majority of a your study time. These should be done in the correct time with answers written/typed out in full. You should not skimp on questions debrief, this should take almost as long as the question attempt.

Debriefing an Advanced Level question can represent a challenge for students. With a complex numerical question such as a consolidated set of accounts or a net present value question, there is a “right answer”. However at Advanced Level there are a range of reasonable approaches and points. The model answers are often extremely long (including many potential points that could be made. They are much longer than a typical good student answer. You should also look at the examiner’s comments on student answers, he refers to the approach taken by strong and weak students. After debriefing an answer you should keep notes of where they need to improve.

The Advanced Level exams are intended to emulate “real life” and are therefore much less predictable than earlier exams, there is no point attempting to “question spot”. The examiner may include unusual or non-standard elements that force students to flex their approach, they can’t just follow a template as at Professional Level. For instance:

• The examiner may set a question in an unusual scenario such as a corporate governance question that is set in a charity where the normal Corporate Governance Code does not apply.
• The examiner may include non-standard elements in a calculation such as a discounted cash flow question with a moving foreign currency rate that must be incorporated. These sort of questions require you to demonstrate a high level of understanding and skill where use the principles of a theory or legislation but adjust their approach to fit a new circumstance.
• You may need to make assumptions, or use simple ‘rules of thumb’. This does not mean “making things up”, but for instance a recent Strategic Business Management exam assumed that a business’s non-current liabilities would be largely debt so included them in a gearing ratio.
• Explaining accounting concepts such as accounting for leases or methods of hedging to non-accountants. This is difficult, you need a really clear understanding of the principles and the ability to explain without using complex financial language.
• Considering linkages or “knock-on” implications. (eg, if you take over a business you need to know how to value it [Financial Management], what are the strategic pros/cons [Business Strategy and Technology], what is the impact of consolidating a new set of accounts [Corporate Reporting/Financial Accounting and Reporting], could you perform some due diligence to reduce risk [Audit and Assurance], how would the acquisition be financed [Financial Management] – all followed by an overall recommendation.

A key part of giving valuable and credible advice to a client is the need to build up that advice in a structured and balanced way. Only Case Study specifically requires a report format, but all the three Advanced Level exams award marks across all the four skills. It is common for students to spend far too long on calculations and not enough on subsequent discussion, or even miss key requirements such as the executive summary in Case Study or a final firm recommendation.

After some very time pressured exams at Professional Level, it could be argued that there is a little more time to think at Advanced Level. You should take advantage of this to carefully read the exam and plan answers. The Case Study examiner often notes that some of the best scripts are of only average length. It’s not how much is written but what is written.

The three Advanced Level exams are the final hurdle to achieving the ACA qualification. They are challenging and require significant commitment to pass. If you are taking all three at the same time the challenge is that much harder. None of the three exams are “easier”, you should not be tempted to skimp on one. Students sometimes do less work on Case Study as it has less technical content. This is one of the reasons why Case Study then has a lower pass rate than the other Advanced Level exams as these students do not give themselves enough time to practise the skills required.

The length of Advanced Level exams and questions, especially Case Study, means that you will need to spend longer blocks of time on a subject. There are no 20 mark questions that you can attempt in 30 minutes as there were at Professional Level, you need to spend one to two hours or more attempting and debriefing a question. It is therefore useful for you to allocate whole evenings in the week to a subject or blocks of half a day at the weekend.

An ICAEW Chartered Accountant would be expected to be aware of commercial issues, and this is the case when studying for Advanced Level exams. The examiner won’t expect students to “name drop” real company details, but at Advanced Level he will expect an awareness of current commercial issues such as a recession, the increasing importance of green issues and so on. Keeping up with financial news from a good newspaper or website and Insights from the ICAEW will help you do this and also give examples of how financial issues can be communicated in a professional way.

Finally you should remember that the three Advanced Level exams are commercial exams set in “real life” situations. In each exam you are taking on the role of a financial advisor giving advice. Their output needs to be credible and professional – or simply would a client would be prepared to pay for it?