Tips to pass the ACCA AFM Exams. P4

How to pass ACCA AFM

Discover effective strategies to pass ACCA AFM. Enhance your preparation and maximize your chances of success in the exam

One of the reasons the ACCA Advanced Financial management (AFM) is a challenging exam is that the overall pitch of the syllabus is at a master's level or a postgraduate level.

The pass rates for the AFM exams range between 36% to 42%

So it is expected that you will be able to perform various calculations and give serious value-adding advice as expected of a senior financial advisor.

So although this builds on financial management, which you may have done earlier in your studies, it's very different. It expects much more from you, and the syllabus will contain little. That's completely new but will take things you've studied before to a much higher level.

What skills are tested in the AFM exams?

AFM tests you on the following four professional sills

1. Communication
2. Analysis and evaluation
3. Scepticism
4. Commercial Acumen

What foundational knowledge is required for the AFM exams?

You must have a good foundation in financial management—paper from the skill level. AFM builds on the assumption that you have strong knowledge of the basic calculations, learning materials and concepts from the Financial management paper. Strong knowledge in FM would imply an easy 30-35% mark already built in your AFM paper.

The ACCA examination regularly points out that the students who are unsuccessful in the exam fail because they don't have some of the basic capabilities that come forward from FM. Like being able to inflate cash flows, deal with capital allowances, taxation payable etc. For example, the following topics get covered in more detail from the FM paper to AFM.

• Investment appraisal: Students would have learnt concepts of net present value, internal rate of return & sensitivity testing.

• Treasury management: In FM, students learn the basics of currency and interest rate risk. In AFM, the concepts are built in more detail, where you got to be able to use derivative products to be able to use against risk exposures.

Before attempting the AFM, students must brush up on their knowledge from the Financial Management papers.

How different is the AFM paper from the FM

One of the significant differences at the strategic professional level is the expectation that you will be able to apply your knowledge to a given scenario. So when you're doing the FM exam, there will be specific requirements regarding what the examiner wants you to do. While in the AFM, the needs of the question leave it up to you to decide what techniques are appropriate for you to come up with calculations. 

In AFM, you're advising a company, so instead of asking you to calculate NPV, you might be asked to evaluate a scenario. Then, it's up to you to decide which evaluation technique might be most appropriate.

 The other difference you will find at the AFM level is that they use case studies or scenario-based questions. You will be required to answer using various appropriate techniques and justify them.

Five essential tips to pass ACCA AFM

• From Sep 2022 exams, 20 per cent of the marks are available for demonstrating professional skills. Focus on this area to score high
• Don't only treat it as a maths exam; nearly 50% of your marks are for explaining concepts. Focus equally on both numerical and explanation elements of the exam
• Time management is critical. Practice a minimum of 50 questions prior to the exam dates.
• Refrain from doing question spotting from prior exams. Go through the entire syllabus.
• Refer to the AFM technical articles and practice from ACCA-approved books before the exams.

Which are the best study resources for the AFM exams?

We recommend the following critical study resources.

1. ACCA AFM Technical articles. These are written by the ACCA exam teams and are a handy revision guide.
2. Examining team guidance reports: This gives you feedback on mistakes that students make in prior exams.
3. AFM Online course: Take the AFM online course from BPP. These powerful pre-recorded lectures from BPP UK Faculty give you complete syllabus coverage, revision lectures and CBE software with a mock exam to practice.
4. AFM past papers: Practice these for revision and time management.