Perhaps this blog title is quite unbelievable as I did not score 100% in FAR but I did get a pretty decent 79. That being said, I was very confident I did well following this exam. I believe I have learnt a great revision strategy to do very well in this exam and secure a pass in FAR. This is exactly what I am going to share with you. The step up from Certificate Level is massive and I found this exam to be quite overwhelming initially. Hopefully after reading this article you gain a much better understanding of what you need to do to pass FAR and feel much more at ease.
What is the FAR Exam Actually Like?
In order to pass FAR, you will of course need to have a basic understanding of the exam. I have already provided a breakdown of this exam here but I will provide a short recap if you are unfamiliar with this exam. Below are the key points to be aware of for this exam:
|Duration||3 hours, yes 3 hours! This is the longest ACA Professional Level exam. With most ACA exams though, you are likely to feel time pressured.|
|Pre-Requisite||Certificate Level Accounting or even this fantastic Accounting for Beginners book!|
|Key Examinable Areas||Preparing single entity financial statements, explanation of accounting treatments and preparing group consolidated financial statements. The marks for these sections may vary slightly.|
|Open Book||Partially. You are only allowed to take in the permitted texts with you which are the accounting standards.|
|Exam Options||International Financial Reporting Standards (IFRS) or UK Generally Accepted Accounting Principles (UK GAAP). Your employer will decide which exam you sit based on your clients, mine was IFRS. IFRS and UK GAAP are essentially financial reporting frameworks/accounting standards.|
|Pass Rate||As per https://jagsjourney.blog/2021/01/21/icaew-aca-exam-difficulty the pass rate is c.80%|
As always, it is worth checking if you qualify for any credits for prior learning/exemptions. You can find out more here. That being said, I think good FAR knowledge is critical to the ACA qualification. It is essential in my current role as an external auditor and it will help with future exams, such as those Advanced Level exams.
Pass FAR by Understanding the Exam Structure
The exam structure is very important to be familiar with to pass FAR. The tips that I provide will be heavily based on this. The thing that I loved about Financial Reporting and Accounting is that the structure from exam to exam does not vary too much. The predictability of the exam really helps to understand exactly what you need to do to do well in this exam and get that 100%, or at least pass FAR.
I have mentioned it briefly in the section above but the key examinable areas for FAR are:
- Single company financial statements – 60%
- Accounting and reporting concepts and ethics – 10%
- Consolidated financial statements – 30%
Question 1 for the exam will always be the preparation of single entity financial statements. This could either be a combination of or only the statement or profit or loss (and other comprehensive income), the statement of financial position or even additionally the statement of changes in equity. You will either be given draft financial statements or trial balance and will need to make certain adjustments to pull this together. This question could also ask for the preparation of a note to the financial statements too or could ask for demonstrations of clearing suspense accounts.
Question 2 I believe ties in very nicely with question 1. This is because the same accounting standards that would come up to prepare the single entity financial statements could be examined separately in question 2. This question tends to be the “explain” type of question where you will need to demonstrate your understanding with supporting calculations. A common question is also setting out adjustments in the form of journal entries.
This question I think is the more random question and is harder to predict. You may be given single or mixed topics where extracts and calculations are likely to be needed. Looking at the recent past papers, question 3 tends to examine the consolidated statement of cash flows. However, other questions could come up such as preparing notes to the accounts or extracts from accounts showing revised figures.
The final question is the preparation of consolidated financial statements. This will either be the consolidated statement of profit or loss, the consolidated statement of financial position, possibly the consolidated statement of changes in equity or a mixture of these. The consolidated statements are all to be derived from individual financial statements factoring in the additional information. It essentially examines all things consolidation excluding the consolidated statement of cash flows.
Scattered throughout the exam will also be the concepts, ethics and UK GAAP questions. Please note, I did sit the IFRS exam so a common question would be asking the general difference between the two or more specifically for certain financial reporting treatments. I assume the UK GAAP version of the exam would then also have IFRS questions similar to this.
I call this section the easy marks because you should be able to score at least 55% of this 10% of the exam. That is assuming you do not neglect this section and leave it to the end. There is never too much to this area and practicing enough ethics questions should give you the confidence that you should be able to score highly here. Always call the ICAEW helpline!
Revision Strategy to Pass FAR
The best bit of advice I could give you is to practice one consolidation question a day or as frequently as possible. I will repeat this as I think strategy is key for passing FAR: “a consolidation a day keeps the resit away”. This is something my tutor said to me that stuck with me. I genuinely could not agree more. This is exactly what I did and would highly recommend doing so. If you can nail this part of the paper or at least score highly, that is up to 30% of the paper in the bag. You will be well on your way to pass FAR.
What I loved about the final question of the exam as that paper to paper there were not too many surprises. Consolidations consist of many steps but once you practice frequently, it should become second nature. You will get quicker too which will help for exam timing which I will come onto shortly. Additionally, nailing this now will definitely help you when you come to study Corporate Reporting (CR). Admittedly I did forget the majority of this but it did come back to me.
I would then also recommend getting through as many ICAEW Question Bank questions as you possibly can to pass FAR. Read how I would go about this here in the second section.
You can do well on these explain questions because similarly to other exams, there are more marks available than the maximum marks. Do not leave practicing these until the last minute because the writing is a bit of a skill. Ensure to brush up on your wording as you go along. I actually liked these questions because getting good at answering these questions will help you understand the content more. Recap the content whenever you find you do not understand a standard. This should help with potential adjustments in the single entity questions and so these questions actually fit together quite nicely.
FAR Exam Passing Tips – Permitted Texts
For the explain questions try to make use of your open book for the extra narrative. Kaplan did provide a highlighting guide so I had tabbed mine up and highlighted the text beforehand. This allowed me to quickly grab some good narrative. If you do not have such a guide, I would recommend going through the key standards and seeing what is worth pulling out such as basic rules as in IAS 37 or IFRS 5. Using the permitted texts made my answers seem more ‘professional‘ and ensured they were in line with the standards. Stating the standard name such as IAS 16 apparently gives the examiner a better impression.
I will also add, for single entity question 1, what is good about this one is that you can really pick up method marks here. Do not waste time writing out parts of the financial statement that are not needed. Make sure you read the question first and then get started. I personally would quickly write out the relevant, required statements and then start working through the adjustments. Then fill in your statements in all the necessary places as you go along. Remember to show your workings!
With the majority of ACA exams, there will be the time pressure that comes with it. FAR is the longest Professional exam with a duration of 3 hours. You will be amazed at how quickly 3 hours can go! There are 1.8 minutes per mark in this exam. It is critical to your success in this exam that you do stick to this timing. It is very easy to get caught up these questions and trying to perfect your answers. However, this is not the way forward for this exam. You need to know when to cut your losses, take your marks and move on.
This is how I would go about timing:
On the first page of the exam, it states the number of marks for each question. Multiply each of these by 1.8. Then convert these to real timings you can stick to. See this example below where I have assumed the timer still counts down as it did during my exams.
Remember, the consolidation question is at the end and you need to get to this to nail that 30%. You therefore cannot afford to cut into this time. You can of course complete the exam in any order. However, I have always followed the order of the exam besides Corporate Reporting (CR) where I jumped around and did almost fail! Do just ensure to stick to your timings and you will be fine!
ICAEW Exam Software
I would always recommend practicing questions in the ICAEW exam software. This software is always changing. I was involved with the software testing and have really seen the evolution of this. You do not want to be in the position where you are ready to pass FAR but slip up because you are unfamiliar with the software. You can download the blank exam practice software here.
Pass FAR – Wrap Up
FAR if you do give it the time it needs, you could do really well even with one month. Try to get through as much of the Question Bank as possible. Ensure to really debrief your answers and spend time on learning from your mistakes. As stated, this exam I found does not have too many surprises. I do think FAR is an exam where you really do need to put in the time to understand the logic behind what is going on. Once things start to make sense it really does all come together quite nicely. Although it may click late as it did for me, you should definitely be able to get 55% if you put in the work.
Good luck with your exam and let me know how you get on. If you found this blog helpful, join my journey for more!