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Scenario based questions: in with the new

Scenario-based exam questions have been gathering pace for two years. Here the ICAEW looks at how this approach will work with the ACA Certificate Level Principles of Taxation and Management Information modules

December 2015

How can we make studying for the ACA a more seamless experience? How can exams be closer to your work experience? Scenario-based questions are the way. Until now, Principles of Taxation has comprised 50 objective test questions in a variety of formats – multiple choice, multi-part multiple choice, multiple response and numeric entry. However, from January 2016, there will be 42 questions to the exam. It will start with two new scenario-based questions worth 10% each, followed by 40 objective test questions worth 80% in the same format as previously.
The new scenario-based questions test two main syllabus areas – income tax and NIC, and corporation tax. One of the main aims is to replicate what you will find in the workplace as your experience grows, namely computer-based computations.

Complexity of the workings:
Let’s use the corporation tax question as an illustration. In the exam you will be asked to prepare a standard corporation tax computation using a pro forma template set up on screen. Within the question you may need to calculate a figure for, say, adjusted trading profits, capital allowances and/or non-trading loan relationships. These calculations may be worth one, two or possibly even three marks depending on the complexity of the workings required. This will be a multi-part question using the same set of facts.
But not everything is changing. The syllabus and weightings are to stay the same. The pass mark will stay at 55%. Sitting the exam and the time it takes to receive results also stays the same. There are many opportunities to practise the new style of questions. Sample questions that reflect the look and feel of the exam are available at icaew.com/examresources.

ICAEW’s learning materials have been revised to incorporate the new scenario-based questions and approved by the examiner. The study text contains pro formas similar to the real exam, and the question bank contains hundreds of exam-standard questions including an assortment of scenario-based questions.
A scenario style of question will also be introduced to the Management Information assessment from January 2016. One scenario-based question will be worth 20% of the marks, with 32 objective test questions worth the remaining 80%. The scenario-based question will have a series of requirements linked to a single scenario and you will need to enter either calculated data – for example, a cost per unit, a percentage mark-up or a variance – or select from a drop-down menu which requires you to make a choice – for example, whether a calculated figure represents an ‘under’ or ‘over’ absorption of overheads. Only certain areas of the Management Information syllabus are suitable for scenario based questions.
The scenario-based question will be drawn from either:
• Syllabus area 1 – costing and pricing OR
• Syllabus area 2 – performance management
The exam’s remaining questions carry equal marks. The style of objective test questions will stay the same as those already used, namely multiple choice, multi-part multiple choice and multiple response questions. The study materials have been fully updated to reflect the new scenario-based questions. The study manual chapters covering the detailed topics in syllabus areas 1 and 3 have also been updated to include examples. The question bank for 2016 has been updated with 15 scenario-based questions. This, and three sample papers, will give you plenty to prepare you for the exam. Sample questions will also be available within the Management Information exam resources at icaew.com/examresources

As in the Accounting assessment, there are rules to be followed when entering answers to the new scenario-based questions. In particular:
• only whole numbers can be entered – rounding up or down doesn’t matter, as marking allows for both;
• commas may or may not be used as a thousand separator, so 1000 and 1,000 are both acceptable;
• negative values can be entered using either a minus sign or brackets; and
• a zero or a dash must be used where no value is required in a field.

Practise scenario questions:
A specific example of this final point arises when entering cost, price or volume variances in a scenario-based question. The numeric value for a favourable variance is entered in the appropriate data entry field in the favourable variances column, and a zero or a dash in the corresponding adverse variances column. Practising the scenario based questions will make this clear.
If you are planning to take Principles of Taxation and/or Management Information, there will be no parallel running of the assessments in the current format. From 1 January 2016, there will be only one assessment available for each, which will include the new scenario-based questions.
Access support and guidance is available at icaew.com/examresources.

Reproduced with the permission of ICAEW, this article was first published in Vital (October 2015). Vital is the quarterly magazine for ACA students.
© ICAEW 2015 (icaew.com/vital)

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