Advanced Financial Management (AFM)

Advanced
Financial
Management
(AFM)
Syllabus and study guide

September 2021 to June 2022

Designed to help with planning study and to provide

detailed information on what could be assessed in any
examination session

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 Advanced Financial Management (AFM)

Contents
1. Intellectual levels .....................................3
2. Learning hours and education recognition
...................................................................3
3. The structure of ACCA qualification ........4
4. Guide to ACCA examination structure and
delivery mode .............................................5
5. Guide to ACCA examination assessment 7
6. Relational diagram linking Advanced
Financial Management (AFM) with other
exams .........................................................8
7. Approach to examining the syllabus ........8
8. Introduction to the syllabus......................9
9. Main capabilities ...................................10
10. The syllabus ........................................11
11. Detailed study guide............................12
12. Summary of changes to Advanced
Financial Management (AFM) ...................19

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 Advanced Financial Management (AFM)

1. Intellectual levels 2. Learning hours and

education recognition
The syllabus is designed to progressively
broaden and deepen the knowledge, skills
The ACCA qualification does not prescribe
and professional values demonstrated by
or recommend any particular number of
the student on their way through the
learning hours for examinations because
qualification.
study and learning patterns and styles vary
greatly between people and organisations.
The specific capabilities within the detailed
This also recognises the wide diversity of
syllabuses and study guides are assessed at
personal, professional and educational
one of three intellectual or cognitive levels:
circumstances in which ACCA students find
themselves.
Level 1: Knowledge and
comprehension
As a member of the International Federation
Level 2: Application and analysis
of Accountants, ACCA seeks to enhance the
Level 3: Synthesis and evaluation
education recognition of its qualification on
both national and international education
Very broadly, these intellectual levels relate
frameworks, and with educational authorities
to the three cognitive levels at which the
and partners globally. In doing so, ACCA
Applied Knowledge, the Applied Skills and
aims to ensure that its qualification is
the Strategic Professional exams are
recognised and valued by governments,
assessed.
regulatory authorities and employers across
all sectors. To this end, ACCA qualification
Each subject area in the detailed study
is currently recognised on the education
guide included in this document is given a 1,
frameworks in several countries. Please
2, or 3 superscript, denoting intellectual
refer to your national education framework
level, marked at the end of each relevant
regulator for further information.
learning outcome. This gives an indication of
the intellectual depth at which an area could
Each syllabus is organised into main subject
be assessed within the examination.
area headings which are further broken
However, while level 1 broadly equates with
down to provide greater detail on each area.
Applied Knowledge, level 2 equates to
Applied Skills and level 3 to Strategic
Professional, some lower level skills can
continue to be assessed as the student
progresses through each level. This reflects
that at each stage of study there will be a
requirement to broaden, as well as deepen
capabilities. It is also possible that
occasionally some higher level capabilities
may be assessed at lower levels.

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 Advanced Financial Management (AFM)

3. The structure of ACCA qualification

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 Advanced Financial Management (AFM)

4. Guide to ACCA Strategic Professional

Strategic Business Leader is ACCA’s case
examination structure and study examination at Strategic Professional
delivery mode and is examined as a closed book exam of
four hours, including reading, planning and
reflection time which can be used flexibly
The pass mark for all ACCA Qualification within the examination. There is no pre-seen
examinations is 50%. information and all exam related material,
including case information and exhibits are
The structure and delivery mode of available within the examination. Strategic
examinations varies. Business Leader is an exam based on one
main business scenario which involves
Applied Knowledge candidates completing several tasks within
The Applied Knowledge examinations which additional material may be introduced.
contain 100% compulsory questions to All questions are compulsory and each
encourage candidates to study across the examination will contain a total of 80
breadth of each syllabus. These are technical marks and 20 Professional Skills
assessed by a two-hour computer based marks.
examination.
The other Strategic Professional exams are
Applied Skills all of three hours and 15 minutes duration.
The Corporate and Business Law exam is a All contain two sections and all questions
two-hour computer-based objective test are compulsory. These exams all contain
examination for English and Global. four professional marks.

For the format and structure of the From 2020, Strategic Professional exams
Corporate and Business Law or Taxation became available by computer based
variant exams, refer to the ‘Approach to examination. More detail regarding what
examining the syllabus’ section of the delivery mode is available in your market will
relevant syllabus and study guide. be on the ACCA global website.

The other Applied Skills examinations With Applied Knowledge and Applied Skills
(PM, TX-UK, FR, AA, and FM) contain a mix exams assessed by computer based exam,
of objective and longer type questions with a ACCA is committed to continuing on its
duration of three hours for 100 marks. These journey to assess all exams within the ACCA
are assessed by a three hour computer- Qualification using this delivery mode.
based exam. Prior to the start of each exam
there will be time allocated for students to be The question types used at Strategic
informed of the exam instructions. Professional require students to effectively
mimic what they would do in the workplace.
The longer (constructed response) question These exams offer ACCA the opportunity to
types used in the Applied Skills exams focus on the application of knowledge to
(excluding Corporate and Business Law) scenarios, using a range of tools including
require students to effectively mimic what word processor, spreadsheets and
they do in the workplace. Students will need presentation slides - not only enabling
to use a range of digital skills and students to demonstrate their technical and
demonstrate their ability to use spread professional skills but also their use of the
sheets and word processing tools in technology available to today’s accountants.
producing their answers, just as they would
use these tools in the workplace. These
assessment methods allow ACCA to focus
on testing students’ technical and application
skills, rather than, for example, their ability to
perform simple calculations.

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 Advanced Financial Management (AFM)

Time management
ACCA encourages students to take time to
read questions carefully and to plan answers
but once the exam time has started, there
are no additional restrictions as to when
candidates may start producing their
answer.

Time should be taken to ensure that all the

information and exam requirements are
properly read and understood.

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 Advanced Financial Management (AFM)

exams falling in the period 1 June 2021 to

31 March 2022 will examine the Finance Act
5. Guide to ACCA 2020 and any examinable legislation which
examination assessment is passed outside of the Finance Act before
31 May 2020.
ACCA reserves the right to examine any For additional guidance on the examinability
learning outcome contained within the study of specific tax rules and the depth in which
guide. This includes knowledge, techniques, they are likely to be examined, reference
principles, theories, and concepts as should be made to the relevant Finance Act
specified. For the financial accounting, audit article written by the examining team and
and assurance, law and tax exams except published on the ACCA website.
where indicated otherwise, ACCA will
publish examinable documents once a year None of the current or impending devolved
to indicate exactly what regulations and taxes for Scotland, Wales, and Northern
legislation could potentially be assessed Ireland is, or will be, examinable.
within identified examination sessions.
Additional clarification regarding the
impact of the UK leaving the European
For most examinations (not tax), regulations
Union (EU)
issued or legislation passed on or before
31 August annually, will be examinable from For exams in the period 1 June 2021 to 31
1 September of the following year to 31 March 2022, it will be assumed that the EU
August of the year after that. Please refer to acquisition rules continue to apply.
the examinable documents for the exam
(where relevant) for further information.

Regulations issued or legislation passed in

accordance with the above dates may be
examinable even if the effective date is in
the future.

The term issued or passed relates to when

regulation or legislation has been formally
approved.

The term effective relates to when regulation

or legislation must be applied to an entity’s
transactions and business practices.

The study guide offers more detailed

guidance on the depth and level at which the
examinable documents will be examined.
The study guide should therefore be read in
conjunction with the examinable documents
list.

For UK tax exams, examinations falling

within the period 1 June to 31 March will
generally examine the Finance Act which
was passed in the previous year. Therefore,

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 Advanced Financial Management (AFM)

6. Relational diagram linking Advanced Financial

Management (AFM) with other exams

This diagram shows links between this exam and other exams preceding or following it.
Some exams are directly underpinned by other exams such as Advanced Financial
Management with Financial Management. This diagram indicates where students are
expected to have underpinning knowledge and where it would be useful to review previous
learning before undertaking study.

7. Approach to examining the syllabus

The Advanced Financial Management exam builds upon the skills and knowledge examined
in the Financial Management exam. At this stage candidates will be expected to
demonstrate an integrated knowledge of the subject and an ability to relate their technical
understanding of the subject to issues of strategic importance to the organisation. The study
guide specifies the wide range of contextual understanding that is required to achieve a
satisfactory standard at this level.

Examination Structure

The syllabus is assessed by a three-hour 15 minutes examination.

Section A

Section A will always be a single 50 mark case study, which will contain four professional
marks in which candidates are required produce a business document such as a report or a
briefing paper for the board of directors.

Candidates should understand that they will be expected to undertake calculations, draw
comparison against relevant information where appropriate, analyse the results and offer
recommendations or conclusions as required.

Financial managers are required to look across a range of issues which affect an
organisation and its finances, so candidates should expect to see the case study focus on a
range of issues from at least two syllabus sections from A - E. These will vary depending on
the business context of the case study.

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 Advanced Financial Management (AFM)

Section B

Section B will consist of two compulsory 25 mark questions. All section B questions will be
scenario based and contain a combination of calculation and narrative marks. There will not
be any wholly narrative questions.

All topics and syllabus sections will be examinable in either section A or section B of the
exam, but every exam will have question(s) which have a focus on syllabus sections B and
E.

Total 100 marks

8. Introduction to the syllabus

The aim of the syllabus is to apply relevant knowledge, skills and exercise professional
judgement as expected of a senior financial executive or advisor, in taking or recommending
decisions relating to the financial management of an organisation in private and public
sectors.

This syllabus develops upon the core financial management knowledge and skills covered in
the Financial Management syllabus and prepares candidates to advise management and/or
clients on complex strategic financial management issues facing an organisation.

The syllabus starts by exploring the role and responsibility of a senior executive or advisor in
meeting competing needs of stakeholders within the business environment of multinationals.
The syllabus then re-examines investment and financing decisions, with the emphasis
moving towards the strategic consequences of making such decisions in a domestic, as well
as international, context. Candidates are then expected to develop further advisory skills in
planning strategic acquisitions and mergers and corporate re-organisations.

The next part of the syllabus re-examines, in the broadest sense, the existence of risks in
business and the sophisticated strategies which are employed in order to manage such
risks. It builds on what candidates would have covered in the Financial Management
syllabus.

Section F of the syllabus contains outcomes relating to the demonstration of appropriate

digital and employability skills in preparing for and taking the AFM examination. This
includes being able to access and open exhibits, requirements and response options from
different sources and being able to use the relevant functionality and technology to prepare
and present response options in a professional manner. These skills are specifically
developed by practicing and preparing for the AFM exam, using the learning support content
for computer-based exams available via the practice platform and the ACCA website and will
need to be demonstrated during the live exam.

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 Advanced Financial Management (AFM)

9. Main capabilities

On successful completion of this exam, candidates should be able to:

A Explain and evaluate the role and responsibility of the senior financial executive or
advisor in meeting conflicting needs of stakeholders and recognise the role of
international financial institutions in the financial management of multinationals

B Evaluate potential investment decisions and assessing their financial and strategic
consequences, both domestically and internationally

C Assess and plan acquisitions and mergers as an alternative growth strategy

D Evaluate and advise on alternative corporate re-organisation strategies

E Apply and evaluate alternative advanced treasury and risk management

Techniques

F Apply employability and technology skills

This diagram illustrates the flows and links between the main capabilities of the syllabus and
should be used as an aid to planning teaching and learning in a structured way.

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 Advanced Financial Management (AFM)

10. The syllabus 2. Business re-organisation

A Role of senior financial adviser in the E Treasury and advanced risk

multinational organisation management techniques

1. The role and responsibility of senior 1. The role of the treasury function in
financial executive/advisor multinationals

2. Financial strategy formulation 2. The use of financial derivatives to hedge

against forex risk
3. Ethical and governance issues
3. The use of financial derivatives to hedge
4. Management of international trade and against interest rate risk
finance F Employability and technology skills

5. Strategic business and financial planning 1. Use computer technology to efficiently

for multinational organisations access and manipulate relevant
information.
6. Dividend policy in multinationals and
transfer pricing 2. Work on relevant response options,
using available functions and
B Advanced investment appraisal technology, as would be required in the
workplace.
1. Discounted cash flow techniques
3. Navigate windows and computer
2. Application of option pricing theory in screens to create and amend responses
investment decisions to exam requirements, using the
appropriate tools.
3. Impact of financing on investment
decisions and adjusted present values 4. Present data and information effectively,
using the appropriate tools.
4. Valuation and the use of free cash flows

5. International investment and financing

decisions

C Acquisitions and mergers

1. Acquisitions and mergers versus other

growth strategies

2. Valuation for acquisitions and mergers

3. Regulatory framework and processes

4. Financing acquisitions and mergers

D Corporate reconstruction and re-

organisation

1. Financial reconstruction

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 Advanced Financial Management (AFM)

e) Assess the organisation’s exposure to

11. Detailed study guide business and financial risk including
operational, reputational, political,
economic, regulatory and fiscal risk.[3]
A Role of the senior financial
adviser in the multinational f) Develop a framework for risk
organisation management, comparing and contrasting
risk mitigation, hedging and
1. The role and responsibility of senior diversification strategies.[3]
financial executive/advisor
g) Establish capital investment monitoring
a) Develop strategies for the achievement and risk management systems.[3]
of the organisational goals in line with its
agreed policy framework.[3] h) Advise on the impact of behavioural
finance on financial strategies /
b) Recommend strategies for the securities prices and why they may not
management of the financial resources follow the conventional financial
of the organisation such that they are theories.[3]
utilised in an efficient, effective and
transparent way.[3] 3. Ethical and governance issues

c) Advise the board of directors or a) Assess the ethical dimension within

management of the organisation in business issues and decisions and
setting the financial goals of the advise on best practice in the financial
business and in its financial policy management of the organisation.[3]
development with particular reference
to:[3] b) Demonstrate an understanding of the
i) Investment selection and capital interconnectedness of the ethics of good
resource allocation business practice between all of the
ii) Minimising the cost of capital functional areas of the organisation.[2]
iii) Distribution and retention policy
iv) Communicating financial policy c) Recommend, within specified problem
and corporate goals to internal domains, appropriate strategies for the
and external stakeholders resolution of stakeholder conflict and
v) Financial planning and control advise on alternative approaches that
vi) The management of risk. may be adopted.[3]

2. Financial strategy formulation d) Recommend an ethical framework for

the development of an organisation’s
a) Assess organisational performance financial policies and a system for the
using methods such as ratios and assessment of its ethical impact upon
trends.[3] the financial management of the
organisation.[3]
b) Recommend the optimum capital mix
and structure within a specified business e) Explore the areas within the ethical
context and capital asset structure.[3] framework of the organisation which may
be undermined by agency effects and/or
c) Recommend appropriate distribution and stakeholder conflicts and establish
retention policy.[3] strategies for dealing with them.[3]

d) Explain the theoretical and practical f) Establish an ethical financial policy for
rationale for the management of the financial management of the
risk.[3] organisation which is grounded in good
governance, the highest standards of

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 Advanced Financial Management (AFM)

probity and is fully aligned with the to the free movement of capital; and the
ethical principles of the Association.[3] international regulations on money
laundering.[2]
g) Assess the impact on sustainability and
environmental issues arising from g) Demonstrate an awareness of new
alternative organisational business and developments in the macroeconomic
financial decisions.[3] environment, assessing their impact
upon the organisation, and advising on
h) Assess and advise on the impact of the appropriate response to those
investment and financing strategies and developments both internally and
decisions on the organisation’s externally.[2]
stakeholders, from an integrated
reporting and governance perspective.[2] 5. Strategic business and financial
planning for multinationals
4. Management of international trade
and finance a) Advise on the development of a financial
planning framework for a multinational
a) Advise on the theory and practice of free organisation taking into account:[3]
trade and the management of barriers to i) Compliance with national regulatory
trade.[3] requirements (for example the London
Stock Exchange admission
b) Demonstrate an up to date requirements)
understanding of the major trade ii) The mobility of capital across borders
agreements and common markets and, and national limitations on remittances
on the basis of contemporary and transfer pricing
iii) The pattern of economic and other risk
circumstances, advise on their policies
exposures in the different national
and strategic implications for a given
markets
business.[3]
iv) Agency issues in the central
coordination of overseas operations and
c) Discuss how the actions of the World
the balancing of local financial
Trade Organisation, the International
autonomy with effective central
Monetary Fund, The World Bank and
control.
Central Banks can affect a multinational
organisation.[2]
6. Dividend policy in multinationals and
transfer pricing
d) Discuss the role of international financial
institutions within the context of a
a) Determine a corporation’s dividend
globalised economy, with particular
capacity and its policy given:[3]
attention to (the Fed, Bank of England,
i) The corporation’s short- and long-
European Central Bank and the Bank of
term reinvestment strategy
Japan).[2]
ii) The impact of capital reconstruction
programmes such as share
e) Discuss the role of the international
repurchase agreements and new
financial markets with respect to the
capital issues on free cash flow to
management of global debt, the financial
equity.
development of the emerging economies
iii) The availability and timing of central
and the maintenance of global financial
remittances
stability.[2]
iv) The corporate tax regime within
the host jurisdiction.
f) Discuss the significance to the
organisation, of latest developments in
b) Advise, in the context of a specified
the world financial markets such as the
capital investment programme, on an
causes and impact of the recent financial
organisation’s current and projected
crisis; growth and impact of dark pool
dividend capacity.[3]
trading systems; the removal of barriers

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 Advanced Financial Management (AFM)

c) Develop organisational policy on the modified internal rate of return) and

transfer pricing of goods and services advise on a project’s return margin.
across international borders and be able Discuss the relative merits of NPV and
to determine the most appropriate IRR.[3]
transfer pricing strategy in a given
situation reflecting local regulations and 2. Application of option pricing theory in
tax regimes.[3] investment decisions

a) Apply the Black-Scholes Option Pricing

B Advanced investment (BSOP) model to financial product
appraisal valuation and to asset valuation:[3]
i) Determine and discuss, using
1. Discounted cash flow techniques published data, the five principal
drivers of option value (value of
a) Evaluate the potential value added to an the underlying, exercise price,
organisation arising from a specified time to expiry, volatility and the
capital investment project or portfolio risk-free rate)
using the net present value (NPV) ii) Discuss the underlying
model.[3] assumptions, structure,
Project modelling should include explicit application and limitations of the
treatment and discussion of: BSOP model.
i) Inflation and specific price
variation b) Evaluate embedded real options within a
ii) Taxation including tax allowable project, classifying them into one of the
depreciation and tax exhaustion real option archetypes.[3]
iii) Single period and multi-period
capital rationing. Multi-period capital c) Assess, calculate and advise on the
rationing to include the value of options to delay, expand,
formulation of programming redeploy and withdraw using the BSOP
methods and the interpretation of model.[3]
their output
iv) Probability analysis and
3. Impact of financing on investment
sensitivity analysis when
decisions and adjusted present
adjusting for risk and uncertainty
values
in investment appraisal
v) Risk adjusted discount rates
a) Identify and assess the appropriateness
vi) Project duration as a measure of
of the range of sources of finance
risk.
available to an organisation including
equity, debt, hybrids, lease finance,
b) Outline the application of Monte Carlo
venture capital, business angel finance,
simulation to investment appraisal.[2]
private equity, asset securitisation and
Candidates will not be expected to
sale, Islamic finance and initial coin
undertake simulations in an examination
offerings. Including assessment on the
context but will be expected to
financial position, financial risk and the
demonstrate an understanding of:
value of an organisation.[3]
i) The significance of the
simulation output and the
b) Discuss the role of, and developments
assessment of the likelihood of
in, Islamic financing as a growing
project success
source of finance for organisations;
ii) The measurement and
explaining the rationale for its use, and
interpretation of project value at
identifying its benefits and
risk.
deficiencies.[2]
c) Establish the potential economic return
(using internal rate of return (IRR) and

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 Advanced Financial Management (AFM)

c) Calculate the cost of capital of an j) Assess the impact of a significant capital

organisation, including the cost of equity investment project upon the reported
and cost of debt, based on the range of financial position and performance of
equity and debt sources of finance. the organisation taking into account
Discuss the appropriateness of using alternative financing strategies.[3]
the cost of capital to establish project
and organisational value, and discuss 4. Valuation and the use of free cash
its relationship to such value.[3] flows

d) Calculate and evaluate project specific a) Apply asset based, income based and
cost of equity and cost of capital, cash flow based models to value equity.
including their impact on the overall cost Apply appropriate models, including term
of capital of an organisation. structure of interest rates, the yield curve
Demonstrate detailed knowledge of and credit spreads, to value corporate
business and financial risk, the capital debt.[3]
asset pricing model and the relationship
between equity and asset betas.[3] b) Forecast an organisation’s free cash flow
and its free cash flow to equity (pre and
e) Assess an organisation’s debt exposure post capital reinvestment).[3]
to interest rate changes using the
simple Macaulay duration and modified c) Advise on the value of an organisation
duration methods.[3] using its free cash flow and free cash
flow to equity under alternative horizon
f) Discuss the benefits and limitations of and growth assumptions.[3]
duration including the impact of
convexity.[3] d) Explain the use of the BSOP model to
estimate the value of equity of an
g) Assess the organisation’s exposure to organisation and discuss the implications
credit risk, including:[3] of the model for a change in the value of
v) Explain the role of, and the risk equity.[2]
assessment models used by the
principal rating agencies e) Explain the role of BSOP model in the
vi) Estimate the likely credit spread over assessment of default risk, the value of
risk free debt and its potential recoverability. [2]
vii)Estimate the organisation’s current
cost of debt capital using the 5. International investment and
appropriate term structure of interest financing decisions
rates and the credit spread.
a) Assess the impact upon the value of a
h) Assess the impact of financing and project of alternative exchange rate
capital structure upon the organisation assumptions.[3]
with respect to:[3]
i) Modigliani and Miller propositions, b) Forecast project or organisation free
before and after tax cash flows in any specified currency and
ii) Static trade-off theory determine the project’s net present value
iii) Pecking order propositions or organisation value under differing
iv) Agency effects. exchange rate, fiscal and transaction
cost assumptions.[2]
i) Apply the adjusted present value
technique to the appraisal of investment c) Evaluate the significance of exchange
decisions that entail significant controls for a given investment decision
alterations in the financial structure of and strategies for dealing with restricted
the organisation, including their fiscal remittance.[3]
and transactions cost implications.[3]

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 Advanced Financial Management (AFM)

d) Assess the impact of a project upon an ii) Market based models

organisation’s exposure to translation, iii) Cash flow models, including free
transaction and economic risk.[3] cash flows.
Taking into account the changes in the
e) Assess and advise on the costs and risk profile and risk exposure of the
benefits of alternative sources of finance acquirer and the target entities
available within the international equity
and bond markets.[3] d) Apply appropriate methods, such as:
risk-adjusted cost of capital, adjusted net
present values and changing price-
C Acquisitions and mergers earnings multipliers resulting from the
acquisition or merger, to the valuation
1. Acquisitions and mergers versus
process where appropriate.[3]
other growth strategies
e) Demonstrate an understanding of the
a) Discuss the arguments for and against
procedure for valuing high growth start-
the use of acquisitions and mergers as a
ups.[2]
method of corporate expansion.[2]
3. Regulatory framework and processes
b) Evaluate the corporate and competitive
nature of a given acquisition proposal.[3]
a) Demonstrate an understanding of the
principal factors influencing the
c) Advise upon the criteria for choosing an
development of the regulatory framework
appropriate target for acquisition.[3]
for mergers and acquisitions globally
and, in particular, be able to compare
d) Compare the various explanations for
and contrast the shareholder versus the
the high failure rate of acquisitions in
stakeholder models of regulation.[2]
enhancing shareholder value.[3]
b) Identify the main regulatory issues which
e) Evaluate, from a given context, the
are likely to arise in the context of a
potential for synergy separately
given offer and
classified as:[3]
i) assess whether the offer is likely
i) Revenue synergy
to be in the shareholders’ best
ii) Cost synergy
interests
iii) Financial synergy.
ii) advise the directors of a target
entity on the most appropriate
f) Evaluate the use of the reverse takeover
defence if a specific offer is to be
as a method of acquisition and as a way
treated as hostile.[3]
of obtaining a stock market listing:[3]
4. Financing acquisitions and mergers
2. Valuation for acquisitions and
mergers
a) Compare the various sources of
financing available for a proposed cash-
a) Discuss the problem of overvaluation.[2]
based acquisition.[3]
b) Estimate the potential near-term and
b) Evaluate the advantages and
continuing growth levels of a
disadvantages of a financial offer for a
corporation’s earnings using both
given acquisition proposal using pure or
internal and external measures.[3]
mixed mode financing and recommend
the most appropriate offer to be made.[3]
c) Discuss, assess and advise on the value
created from an acquisition or merger of
c) Assess the impact of a given financial
both quoted and unquoted entities using
offer on the reported financial position
models such as:[3]
and performance of the acquirer.[3]
i) ’Book value-plus’ models

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 Advanced Financial Management (AFM)

D Corporate reconstruction and iii) The source of basis risk and how
re-organisation it can be minimised.
iv) Risks such as delta, gamma, vega,
1. Financial reconstruction rho and theta, and how these can be
managed.
a) Assess an organisational situation
and determine whether a financial 2. The use of financial derivatives to
reconstruction is an appropriate hedge against forex risk
strategy for a given business
situation.[3] a) Assess the impact on an organisation to
exposure in translation, transaction and
b) Assess the likely response of the economic risks and how these can be
capital market and/or individual managed.[3]
suppliers of capital to any
reconstruction scheme and the impact b) Evaluate, for a given hedging
their response is likely to have upon the requirement, which of the following is the
value of the organisation.[3] most appropriate strategy, given the
nature of the underlying position and the
2. Business re-organisation risk exposure:[3]
i) The use of the forward exchange
a) Recommend, with reasons, strategies for market and the creation of a money
unbundling parts of a quoted company.[3] market hedge
ii) Synthetic foreign exchange
b) Evaluate the likely financial and other agreements (SAFEs)
benefits of unbundling.[3] iii) Exchange-traded currency futures
contracts
c) Advise on the financial issues relating to iv) Currency swaps
a management buy-out and buy-in.[3] v) FOREX swaps
vi) Currency options.
E Treasury and advanced risk
c) Advise on the use of bilateral and
management techniques multilateral netting and matching as tools
for minimising FOREX transactions costs
1. The role of the treasury function in and the management of market barriers
multinationals to the free movement of capital and
other remittances.[3]
a) Discuss the role of the treasury
management function within:[3] 3. The use of financial derivatives to
i) The short term management of hedge against interest rate risk
the organisation’s financial
resources a) Evaluate, for a given hedging
ii) The longer term maximisation of requirement, which of the following is the
corporate value most appropriate given the nature of the
iii) The management of risk underlying position and the risk
exposure. exposure:[3]
i) Forward Rate Agreements (FRAs)
b) Discuss the operations of the derivatives ii) Interest rate futures
market, including:[3] iii) Interest rate swaps
i) The relative advantages and iv) Interest rate options (including
disadvantages of exchange traded collars).
versus OTC agreements
ii) Key features, such as standard
contracts, tick sizes, margin
requirements and margin trading

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 Advanced Financial Management (AFM)

F Employability and technology

skills

1. Use computer technology to

efficiently access and manipulate
relevant information

2. Work on relevant response options,

using available functions and
technology, as would be required in
the workplace

3. Navigate windows and computer

screens to create and amend
responses to exam requirements,
using the appropriate tools

4. Present data and information

effectively, using the appropriate
tools

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 Advanced Financial Management (AFM)

12. Summary of changes to Advanced Financial

Management (AFM)

ACCA periodically reviews its qualification syllabuses so that they fully meet the needs of
stakeholders such as employers, students, regulatory and advisory bodies and learning
providers.

The main changes which have been made to the syllabus are summarised in the table
below.

Table of amendments

Section and Syllabus content Rationale

subject area

F1-F4 Employability and To reflect the outcomes and

technology skills section demonstrable skills required
added for the AFM examination,
using the available
technology.

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