PQ magazine is for part qualified accountants.
Read the latest web issue here – if you like what you see sign up today
Master the Certificate level
We focus on the Accounting and Assurance exams. Here Philippa Hood and Charlotte Lewis explain all you need to know to help you best prepare for success in the exam hall
For most students, accounting is likely to be one of the first exams you sit, and what a good place to start. By the end of the qualification you will have learned a whole lot more about the world of business than just accounting, but the skills you learn in this module will stay with you throughout the qualification, and most likely your whole career.
This exam has 25 questions: 24 objective test questions, which are multiple choice, multi-part multiple-choice or multiple-response questions, and one scenario-based question. For the scenario-based question you will be given either extracts from financial statements and asked to prepare a statement of profit or loss and statement of financial position, or a statement of cash flows.
In the exam, the scenario-based question will be presented first, but you can answer in any order. You might like to consider answering all the objective test questions before making a start on the scenario-based question. It is very easy to overrun if you attempt the scenario-based question first, not leaving enough time to attempt the objective test questions. The examiner wants to see that you have a good understanding across the whole syllabus, so try not to get too bogged down on one particular question/topic you are finding difficult.
This module introduces you to three types of business: sole traders, partnerships and companies. The majority of accounting is the same for each of these, although you will look at a few differences, too. One of the underlying concepts that will be fundamental in your career as an accountant is debits and credits – how we actually get from a transaction occurring in our business to it being recorded in our financial statements. These can seem difficult to get your head around, but stick with it and soon enough they will be like a second language.
The key to your success in this exam is question practice – work through the question bank twice.
Top tip: The bookkeeping and accounts preparation program is a fantastic tool to help you gain experience of recording and preparing financial information. What’s more, it is designed to complement the Accounting module. Access it at icaew.com/bookkeeping
Assurance may not be as time-pressured as other Certificate Level exams, but it’s not to be underestimated. Answers are not always black and white and therefore a pause and a second thought is often required due to its subjective nature.
Compiled of 50 multiple-choice, multi-part multiple-choice or multiple-response questions, worth two marks each, there is a strong focus on ‘gathering evidence on an assurance engagement’, representing 35% of the parts. Regarding style of exam question, sometimes a multi-part multiple-choice question will be split into parts, all sections need to be answered correctly to pick up the full marks per question.
Passing the the exam will require two things: initial understanding of key concepts, and the ability to retain detailed knowledge of those concepts.
A particular key concept students find tough is ‘internal controls’, representing 25% of the syllabus. This includes identifying a business risk, a control activity, then subsequently how that control is monitored by management and tested by the auditor. To make this conceptually easier for students to digest practical scenarios in business can be used to illustrate how this operates. For example, consider the business risk of a local restaurant, dealing in a large amount of cash transactions:
• Business risk – surplus cash on premises.
• Control activity – frequent banking, cash secured via physical locks with limited access to staff.
• Monitor control – log daily bank drops, review access codes to secure area.
• Audit risk – ‘cash at bank’ figure in the financial statement is materially incorrect.
Retaining detailed knowledge can be broken down and become more manageable using memorable acronyms. For example, threats to the auditors independence can be remembered via the acronym MASSIF – management, advocacy, self-interest, self-review, intimidation, and familiarity.
Overall, success will largely be down to adequate question practice from the question bank. A thorough review of question bank answers from all chapters will give students a good grasp of the type and class of standard they should expect. In addition, the knowledge that students do gain in Assurance, they will need to retain and build on in Audit and Assurance at the Professional Level.
Before a Certificate Level exam go to icaew.com/examresources to download the syllabus and access the exam resources.
• Philippa Hood and Charlotte Lewis are ACA tutors with Kaplan Financial
Reproduced with the permission of ICAEW, this article was first published in Vital (October 2016). Vital is the quarterly magazine for ACA students. © ICAEW 2017. icaew.com/vital
Subscribe to RSS