Exam guides: the inside track on… Principles of Taxation, Law and Management Information

The facts

Sitting: on demand
Duration: 1.5 hours
Pass mark: 55%
Format: 40 multiple-choice questions (80%); two scenario-based questions on: income tax and NIC; and corporation tax (10% each)

Syllabus breakdown:

• Objectives, types of tax and ethics 10%
• Administration of taxation 20%
• Income tax and national insurance contributions 26%
• Capital gains tax and chargeable gains for companies 10%
• Corporation tax 14%
• VAT 20%

The inside track

From Georgia Cottis, Globaltraining, Cyprus

As long as you’ve prepared well, Principles of Taxation is a very doable exam. Although there is a lot of detailed knowledge required with the various tax rules, the questions themselves can be quite straightforward, and there’s a lot of information in the tax tables, which you will have available in the exam. It’s also computational, which I find students tend to prefer to the more theoretical topics.

One of the key roles of the chartered accountant is to be a tax adviser – and it’s an area where you will be most in demand by clients, to ensure compliance or to advise them in their planning. It’s also a topic you will immediately go and apply in the workplace from day one, so it’s very important to have a good grasp of it. More than 50% of the Tax Compliance module at the ACA Professional Level is actually Principles of Taxation, so if you don’t grasp it at this level, you could struggle further on.

Time is not usually an issue in this exam, which is a combination of multiple choice and two longer, scenario-based questions. The long-form questions were only introduced a few years back, and I believe it was a very positive change – there are lots of easy marks you can pick up there, and they’re good preparation for Tax Compliance. I usually advise students to start with the longer questions, as they can help boost your confidence. As with every topic, when it comes to multiple choice there are the difficult ones and the easy ones. Don’t get stuck on a difficult multiple-choice question – just flag it and move on.

It’s really important that you get through all the study manual chapters and get the breadth of knowledge – on the day of the exam, you may get a difficult question on an area you think you know well, and if you’re not prepared for something else that could offset it, you’re more likely to fail. With topics that students tend to find more difficult – usually administration issues and the opening year rules, in my experience – I always try to teach them first thing in the morning. Approaching them with a fresh mind can make a big difference. 

Then it’s all about question practice. If you’ve managed to go through all the questions in the workbook, you should be very well prepared. My other tip is that if you’re going to be following Principles of Taxation with Tax Compliance, then take them as close together as possible, otherwise all that detail and knowledge will go to waste.

Talking of detail, watch out for the silly mistakes that can come with rushing and not reading the question properly. For example, you might be asked what is the net income, or what is the taxable income? It’s easy to not notice the difference and pick the wrong answer – and both options will no doubt be in there. So take your time, and focus.

The facts

Sitting: on demand
Duration: 1.5 hours
Pass mark: 55%
Format: 50 multiple-choice questions (2 marks each)

Syllabus breakdown:

• The impact of civil law on business and professional services 35%
• Company and insolvency law 40%
• The impact of criminal law on business and professional services 10%
• The impact of law in the professional context 15%

The inside track

From Martin Johnson, Paradigm Shift Financial Training

For many students, a narrative-based subject such as Law can seem quite challenging at first. They may also not be able to see how it applies from day one as easily as some of the other topics, but it’s information they’re going to need later on. A lot of what we study comes up indirectly in other exams – things like confidentiality, data protection rules, the roles of directors and so on.

Law is a self-study module for many students, and there is so much to learn, particularly as there are no calculations. It’s easy to feel a bit overwhelmed by the volume of content, especially if you’re not working with a tutor. Typically, students who have come straight from university will take the learning materials and start making notes – that doesn’t work because you end up just writing the text out again, and there are so many little nuances in Law that you need to remember. It will also take up valuable time that would be better spent on question practice. 

My advice is to use different revision techniques for different types of information – that might be lists, mind maps or getting someone to test you. Go through the learning materials and look for different types of information – you’ve got the statute law (what the text actually says), the case law (how the judges have interpreted it), and the dates and deadlines (the numbers) – and try revising each one in a different way. We get our students to list out all the dates and deadlines, for example – that’s very examinable knowledge, particularly in multiple choice, where the examiners need to test things that are clearly right or wrong, rather than being a matter of debate or uncertainty. Work with the information, and think like an examiner: how can they test this area in a clearly right/wrong, multiple-choice format?

This exam will test your ability to memorise a lot of information, as well as improve your verbal reasoning skills – you need to look carefully at the definitions and qualifications, because that can make a difference to the answer. Watch out for plausible answers that are very similar to each other: a question might ask whether a particular legal deadline is 7, 10 or 14 days, for example, and all the options will be there, so it’s easy to start doubting yourself. 

The good news is that most students don’t have a problem completing the Law exam in the allotted time. If you do finish early, don’t overthink it – have a look back at a couple of questions, but don’t rework them all or you’ll probably end up changing a right answer to a wrong one.

The facts

Sitting: on demand
Duration: 1.5 hours
Pass mark: 55%
Format: 32 multiple-choice questions (80%); one scenario-based question on: costing and pricing; budgeting and forecasting; performance management; or management decision making (20%)

Syllabus breakdown:

• Costing and pricing (25%)
• Budgeting and forecasting (25%)
• Performance management and management information operations (25%)
• Management decision-making (25%)

The inside track

From Michalis Elpidorou, Globaltraining, Cyprus

I would say Management Information is without doubt the most challenging of the ICAEW CFAB and Certificate Level exams. In my experience, students find it more difficult to pass this exam than any other at this level. It tests not just their ability to memorise information, but also their critical thinking, analytical and decision-making skills – and students who have just come out of school or university are not well-equipped for this yet.

This is not a straightforward exam; it has a lot of tricks, and you need to have a very good knowledge of the areas that are going to be tested. These areas will be important later – in Financial Management at the ACA Professional Level and Strategic Business Management at the ACA Advanced Level, as well as in practice – so it is important to get a thorough understanding here. 

While the four topic areas have the same weighting, the exam you end up sitting on the day will not necessarily be divided equally, so make sure you have covered the whole syllabus. There are areas that require particular attention: with costing and pricing, you need to clearly understand how fixed overheads are determined, and how to use marginal and absorption costing methods. One of the areas students tend to struggle with is variance analysis, as there are various ways to calculate it and you have to choose the most appropriate. Put the time and effort in to understand it thoroughly, as this is an area that is frequently tested. 

The exam itself is not particularly time pressured, but it’s important to find the approach that works for you. Students who feel confident with the longer, scenario-based question often prefer to start there. With the multiple choice, start with the more straightforward, theoretical questions. If you have a problem with one question, don’t spend too long on it – flag it and move on to the ones you do know. Timing is crucial: you should allocate 18 minutes for the longer question, for example, and stick to it. Other than that, the most important thing is to read the question very, very carefully – not once, not twice, but at least three times – to make sure you understand the requirements.

Always do practice questions under strict exam conditions, and test your approach as well as your knowledge. Success lies in a combination of your exam technique, and a thorough understanding of the basic principles – this is what sets apart those students who score the highest marks. Superficial knowledge – being able to solve the question without thinking about why – is not enough. 

Read our article on the ICAEW CFAB and Certificate Level Accounting, Assurance, and Business, Technology and Finance exams here. 

You can find resources for all the Certificate Level exams here and ICAEW CFAB here. Remember that marks feedback is available in the event of a failed exam – find it under the ‘Examinations’ tab of your online training file.