FSA: Vignette Predictions

  1. Defined Pension Plan - underlying economic liability - levels of conservatism 2. Translation of foreign subsidiary into parent presentation - monetary/nonmonetary 3. Disclosure Adjustments/Earnings Quality - persistence of earnings - cash vs accrual accounting - Compare contrast earnings quality vs peer - Explain warning signs I don’t think there will be a vignette on Intercorporate investments because it seems to have been amended several times recently by the FASB

well given that the default FSA rules for this year’s exam are in IFRS, this should not stop the intercorporate investments. Regardless, even if rules are changed they go with whatever was in the curriculum. There will definitely be an intercorporate investment section, it is one of the biggest topics in FSA.

what’s this? - levels of conservatism

niraj_a Wrote: ------------------------------------------------------- > what’s this? > > - levels of conservatism Assumptions - discount rate, wage growth rate, expected return on plan assets

They say that it is the rule to go with the curriculum but I truly don’t think they want a situation where an answer on the test is only correct because of an outdated book. Pensions and plan assumptions have become much more relevant in 2008 because of the market and Earnings quality/adjustments is one of the most important things in an analysis of a company

aaah yes, coo coo

The topic area volume for FSA is 15% - 25%. Each 5% amounts to 1 vignette. FSA has 3 study sessions. That means at the very least, there will be 1 from each of the SS. SS#5 Intercorporate Investments Variable Interest Entities, Intercompany Debt, Consolidated Cash Flows, and Other Issues SS#6 Employee Compensation: Post-Retirement and Share-Based Multinational Operations The Lessons we Learn SS#7 Evaluating Financial Reporting Quality Analysis of Financial Statements: A Synthesis

FSA is probably the MOST predictable of all topics in terms of item sets. chances are there will be 4 sets. multinationals pensions intercorporates adjustments now, will a VIE/SPE q or employee stock option one pop up in pensions/multinats, sure maybe 1 or 2 q’s. but FSA- those are the 4 big topics. learn them, live them, love them, because they all will show up. unfortunately, equity which is also a huge chunk of this test- there are a million different sets they could do and some BIG stuff won’t show up. FSA, for better or worse whether you love or hate it, is at least quite predictable. this won’t be the left field topic for saturday.

^^ Alot of people are predicting free cash flow equity valuation models will show up this year because they were completely absent last year. Thankfully, those aren’t too hard.

Totally agree. Plus it’s the smallest book (300 pages) volume wise and highest weightage.