In this tutor interview series, we chat with ACCA P7 tutor Lincoln Miles and get his advice on what you need to do to pass Advanced Audit and Assurance.
If you want to know how to pass ACCA Advanced Audit and Assurance (formerly P7), speak to Lincoln Miles. Our Advanced Audit and Assurance course author, Lincoln, has an exceptional track record both in industry and as a training specialist.
Previously an auditor with PricewaterhouseCoopers, Lincoln has also spent a decade authoring professional accountancy courses and advising auditors on the practical application of auditing standards. He’s also been an examination marker for the ACCA, so it’s fair to say he knows what you need to do to pass.
We caught up with Lincoln and asked him what ACCA Advanced Audit and Assurance entails, the common mistakes to avoid, and some top tips on exam technique.
Introducing…. How to Pass ACCA P7 with Lincoln Miles
Learnsignal: Lincoln, hi! Thanks for being with us today. Shall we crack on with it? The best place to start is probably an overview; what do you think?
Lincoln: Sure. So ACCA P7 is titled Advanced Audit and Assurance. This is a subject students have covered several times throughout the ACCA, but it’s differentiated by its higher-level perspective.
ACCA P7 asks students to look at broader issues. It’s a bigger picture paper.
Learnsignal: Which paper does it follow on from?
Lincoln: ACCA P7 is the advanced version of F8.
Imagine an audit team with an Audit Junior, an Audit Manager and an Audit Partner. F8 is asking, ‘If I was an audit junior, what is the audit work I’d do?’. ACCA P7 asks, ‘If I was an audit manager or partner, what would I have to do?”
In other words, you’re not just auditing specific situations. You’re working from a higher managerial level – how do you manage clients, and what are the broader issues at play?
What would I have to do if I was an audit manager or partner? That’s the key question ACCA P7 is answering.
Students should come out of ACCA P7 and be able to do an audit from end to end. It’s a very practical paper.
Learnsignal: Can you talk us through the syllabus, please, Lincoln?
Lincoln: Certainly. There’s a clear logic to the ACCA P7 syllabus. It’s broken into 7 areas, A to G, and there’s a journey throughout.
(Source) The ACCA P7 Syllabus
The first area looks at the Regulatory Environment, which covers some vital audit requirements and standards. The ethical codes, some of the quality control standards, and how you should accept and continue appointments.
It’s setting the regulatory framework on the basis that if you follow the regulations correctly, you will do your job perfectly and arrive at the correct audit opinion.
There’s a clear logic to the ACCA P7 syllabus; it’s a journey
Then you’re looking at how you plan an audit, which is about spotting key risk areas. It’s a risk-focussed approach. For example, where is there a risk of misstatement in the financial accounts?
You can work out high-risk areas depending on people’s strategic goals. It’s almost a nod to human nature – recognising areas where a company might overstate or understate because that serves their strategic purpose.
For instance, where there’s high competition, a company might overstate profits. Or, where a company is going for expansion, they might risk overstating their assets to support that expansion.
It’s about looking at how decisions have been made throughout the company you’re auditing. Evaluating the assumptions on which the client has exercised professional judgement.
Learnsignal: So it’s strategically focussed?
Lincoln: Very much so. As a senior auditor, a critical part of your role is to understand your client’s strategy and look at how that impacts the financial accounts.
A critical part of your role is to understand your client’s strategy and how that impacts the financial accounts.
Then once you’ve worked out the key risk areas, you have to identify what you need to do to respond to those risks. That’s why I say the ACCA P7 syllabus is a journey because it mirrors the process you’ll follow as an auditor.
Essentially the auditor is working towards producing a report that goes to the shareholders saying that the accounts give an accurate and fair view.
So now you’re thinking, ‘Right, OK, which areas do I need to look at based on the identified risks? How do I do it? Which evidence do I need?’ It’s about identifying and responding to risk.
Then there’s reporting. If you find something wrong, how do you report that to the client in a positive way that adds value to the client’s business? How do you break it down? How should you deliver your report?
Learnsignal: Is it forward-looking? Do auditors make recommendations?
Lincoln: It is forward-looking because you’re trying to improve the business year-on-year. Typically you’ll have a three-year audit contract, so you’re aiming to not have to do the same things each year. In your first year, you’d hope to improve weaknesses by recommending better controls, and then there’s much less work for you to do in years 2 and 3.
And that, of course, is a commercial consideration. If you have to invest less time as you move forwards, you make more profit on your time. P7 is very practical rather than purely theoretical.
As an external auditor, you have to balance compliance with commercial considerations.
To pass ACCA P7, you need to be able to put yourself in the shoes of an auditor, and that does include commercial awareness.
As an external auditor, you always balance compliance with the commercial consideration of making a profit. Obviously, you’d never choose to make a profit at the cost of compliance, though. These are things you’d consider when managing existing clients vs taking new clients, etc.
Learnsignal: Is ACCA P7 all from the perspective of an external auditor?
Lincoln: A large chunk is, but the syllabus then goes on to talk about other audit services. There are many – internal audits, social and environmental audits, forensic audits, prospective financial audits, group audits, and assurance.
For instance, students won’t come out of ACCA P7 and be experts on corporate social responsibility audits, but they will know enough. Knowing what skills you need for which jobs and when you’ll need to escalate outside the team and bring more people in.
To pass ACCA P7, you need to know which skills you have and which you need to seek from outside the team. You’re not expected to know everything.
And again, there’s a commercial consideration here. Bringing specialist skills into the audit team has a cost attached but not doing so could be an ethical risk….
As a senior auditor, these are the things you always have to take into account. To pass ACCA P7, you have to show your business mentality and hands-on audit skills.
Learnsignal: What’s the actual ACCA P7 paper like?
Lincoln: The whole exam is very narrative. You might have to calculate a couple of basic ratios, but the dominant skill you need to pass ACCA P7 is narrative. That’s why many students find ACCA P7 challenging – many students aren’t used to writing long-form.
ACCA P7 students often struggle because they’re not used to writing a lengthy narrative
The paper has two sections, Section A and Section B. Section A have two compulsory questions, one worth 35 marks and the other worth 25 marks. In Section B, students can choose two out of three questions, all of which are worth 20 marks.
There are also 4 professional marks available on the paper, which comes down to the professionalism of your writing. How you write, structure your answers, spelling, grammar, etc. The questions are scenario-based, so to pass ACCA P7, you have to go well beyond regurgitating knowledge!
Learnsignal: How can students answer ACCA P7 scenario questions well?
Lincoln: The word I like to use is ‘decode’. You have to decode the scenario to work out how to best apply your knowledge. If you know the syllabus well, you can usually spot why you’ve been given the information and prioritise the important parts.
Learnsignal: Prioritise? Is everything you’re told in a question relevant?
Lincoln: Well, everything is there for a reason. You won’t get ‘red herrings’, so to speak, but you will have areas that aren’t as important. To pass ACCA P7, you need to focus on the right areas – the high-risk material areas rather than the areas which might not have much consequence.
When you’re reading through the question, you should be able to spot which bits of information will give your answer the most mileage.
One of the biggest reasons ACCA P7 students fall down is that they can’t think of enough ideas to earn their desired marks.
You have some large mark narrative questions on this paper. One of the biggest reasons students fall down is that they run out of ideas for their answers. You need to spot what they’re asking you and generate enough ideas to pick up sufficient marks to pass.
If you want to pass ACCA P7, the secret is being able to make the scenario work for you. Students should challenge every piece of information they’re given to develop ideas for their answers.
Your syllabus knowledge allows you to understand the information and know why it might be relevant.
In that sense, the better you know the syllabus, the better you will do, but simply knowing the syllabus isn’t enough. You also have to think in the right way, make decisions correctly, and write compelling reports on that decision-making process. Those are the primary skills you need to pass ACCA P7.
Learnsignal: What are the biggest mistakes students make on ACCA P7?
Lincoln: As with most ACCA Professional Papers, time management is a real issue. ACCA P7 is narrative, and most students aren’t practised at writing long-form. Also, many students are taking the paper in their second language.
The result is that many students struggle to communicate concisely, so everything takes more time, and they end up running out of time.
Learnsignal: And how can students improve their writing ability?
Lincoln: Do more written question practice! People practice a lot on numerical papers because it feels easier and more manageable. Then it comes to significant writing-based papers like ACCA P7, and no one likes practising because it takes a long time.
The more you practice, though, the more likely you are to pass ACCA P7 – it is that simple!
Think about how you structure your answers. Clear and concise is key! You should plan every solution first, so you know what you’re going to say. A good rule of thumb is to spend a third of the exam time planning and two-thirds writing – planning really does make a huge difference.
Work out how many points you need to get the available marks, and ensure each point follows the PER technique – Point, Example, Relate. For example, if you want 10 marks, I advise students to deliver 10 short, sharp points of three or four lines each.
Follow the Point, Explain, Relate format to pass Advanced Audit and Assurance.
And watch your layout. Try and make your answers as easy to read as possible. It’s little things, like leaving a space between each point. The professional marks should be easy to pick up and play a critical role in securing you a pass.
Learnsignal: Great, thanks, Lincoln. What other mistakes do you see students make?
Lincoln: One of students’ biggest mistakes is confusing common sense understanding and long-term knowledge. A lot of the ACCA P7 seems like common sense, especially because students have covered Audit and Assurance a fair amount before.
I’ve seen plenty of students assume they know the material and then get into the exam and realise they don’t have the depth of knowledge they think they have. Students often lack effort initially because they believe they don’t need to do much work, especially if they did well on F8.
That’s always a mistake, and it’s a real shame. These are professional exams – if you think they will be easy, you’re wrong!
My biggest tip to pass ACCA P7 is to start early. Approach ACCA P7 with the seriousness it deserves as a professional exam, and don’t underestimate it.
My biggest tip to pass ACCA P7 is to start early. Many students sit ACCA P7 at the same time as a technical paper. They wind up putting all their effort into the technical paper and leave ACCA P7 to the last minute. Approach ACCA P7 with the seriousness it deserves as a professional exam!
Learnsignal: Good advice, thank you. Are there any other common mistakes ACCA P7 students should avoid?
Lincoln: Another mistake students make frequently is not using the scenario. Students will often recognise a bit of the syllabus in the question and take that as a prompt to regurgitate everything they know.
You should read the question carefully and apply your knowledge selectively. Regurgitating the whole syllabus won’t get you the marks you need, and it will take so long you’ll run out of time.
Learnsignal: What do prizewinning ACCA P7 scripts look like?
Lincoln: You’d be surprised because prizewinning scripts often don’t look like anything ‘special’. They tend not to be the most exciting scripts – but they know how to tick the boxes and move on. It’s almost clinical. Answers will be concise, well written, and constantly relate to the scenario.
Learnsignal: A lot of this comes down to exam technique, then. Are there any areas of the syllabus students tend to make mistakes on?
Lincoln: There tends not to be too many mistakes in terms of getting the syllabus wrong, actually. The errors come in with how students study, apply their knowledge and answer the exam. Exam technique is everything!
Saying that, you do need a solid knowledge of financial reporting, and any weakness here will let you down in the exam. If you know the rules for proper financial reporting, you’ll be well to produce a good audit. A refresh of F7 or P2 study notes can help you pass ACCA P7.
You need a solid understanding of financial reporting to pass ACCA P7
Some students find the ambiguity of the reporting side difficult too. You’re faced with many grey areas; there aren’t right or wrong answers necessarily. ACCA P7 tests your ability to give a balanced appraisal; it’s testing your ability to think your way around a situation.
Learnsignal: How can students improve?
Lincoln: Again, this is about exam technique to a large degree. An excellent way to approach this is to argue both sides of the story, presenting a separate paragraph for each side of the argument.
Good answers will present both sides of the argument.
The scenario will likely lead to one conclusion over another, but you should always consider the counter-argument. Try and argue both sides as much as possible. The audit isn’t precise, and it does come down to professional judgement – that’s what you’re being tested on, not a black-and-white right/wrong answer.
Learnsignal: Amazing, thanks, Lincoln. One last question for you… As one of the learnsignal expert author team, you’re obviously a big believer in online learning. Why online learning over traditional learning?
Lincoln: Because online learning is the future! From a company point of view, online learning is a more flexible option because your staff don’t need to be away from the business at particular times.
Then from a student’s point of view, you can be that much more flexible. Online learning providers like learnsignal help you balance the commitment of studying and working.
Ultimately, you’re more likely to fit everything in and pass your exams if you have the flexibility to study in a way that works for you.
Learnsignal: Lincoln, thank you very much indeed.
Lincoln Miles was previously an auditor with PricewaterhouseCoopers and a Director with BPP. Lincoln has internal and external audit experience across the commercial and public sectors.
Lincoln is a highly respected financial reporting consultant and professional trainer who has perfectly positioned to author the Advanced Audit and Assurance course.