Exams

Yes, the e-assessment will be different, but as long as you embrace those differences and practise on the e-assessment platform, it won't be any more difficult, says Philip Nicolls. Looking back over recent months, the scale and pace of change are just astonishing. All of us have learned new disciplines, skills and employed new tools in both our work and personal lives. Professional accountancy exams have changed, as well, and Institutes around the world have moved quickly to e-assessment as we adjust to a world with COVID-19.  Fortunately, Chartered Accountants Ireland candidates have a range of resources to assist with this unexpected transition. Your starting point should be the e-assessment pages on the website. Make sure that your hardware and software meet the necessary requirements and that you understand what will happen on the day of the assessment. You will find the frequently asked questions helpful in this regard. You will also find video tutorials walking you through the e-assessment platform, as well as a link to the practice papers. Once you understand the big picture, it's time to focus on the detail of the assessments themselves and how you plan your preparations. New terminology The structure of each exam is unchanged, however, as we move to e-assessment, some of the terminology changes to that used on the e-assessment platform. Most noticeably, each individual requirement is numbered as a Question.  For example, the CAP 1 financial accounting practice paper in its original form as the summer 2019 paper, question one had four requirements, a) to d). In the e-assessment platform, this becomes Part One with four requirements, Question 1 – Question 4. This is particularly important when it comes to choosing your optional questions in Section B, where, for the financial accounting paper, you must answer any two of three parts. The introduction to the assessment clearly lays out how many questions are in each part and the heading on each individual question will clearly indicate to which part it belongs. This will become more intuitive as you practise more papers on the e-assessment platform. Stay engaged During the CAP 1 e-assessment pilot, there was a strong correlation between candidates' engagement with the online examination resources and their performance on the actual exam. Recognise that the value in the practice papers is not primarily the technical accounting aspects. Rather, it is your opportunity to develop familiarity and enhance your skills working in the e-assessment platform.  In preparation for the main summer exams, candidates are allowed up to five attempts at each practice paper – that's up to 76 hours of e-assessment time for a candidate! Use the opportunity to practise navigating around the assessment, structuring your answer and using tables.  Some aspects will be down to personal preference. How do you prefer to view the resources on screen? Do you find it easier to expand your answer to full screen as you are working, or see the narrative, requirement and answer on-screen at the same time? It's good to figure these preferences out beforehand. Exam technique Back in the March issue of Accountancy Ireland Extra, we considered how exam technique is largely unchanged in the move from paper-based assessment to e-assessment. You still need to read the question carefully, and answer the specific requirement, manage your time, show your workings, etc. Of course, there are some differences, and I would recommend that as you prepare for your exams by practising past papers, you create your answer using a word processor rather than a handwritten script.  You should also note that, for CAP 2 and FAE, reading time has been amalgamated into the overall time. You might adjust your approach to the past papers slightly to take advantage of this. Final thoughts As you move into a period of intensive study, take some time to reflect. Make sure that you have the e-assessment practicalities covered off. Recognise that there are some different skills to practice and be deliberate in how you adjust your exam preparations.  Good luck with your summer exams, but remember the immortal words of golfer, Gary Player: "The more I practice, the luckier I get."

John Munnelly, Exams and Syllabus Development Executive at Chartered Accountants Ireland, provides some practical guidance for the new e-assessments and an overview of the suite of articles developed in conjunction with leading educators and examiners at FAE to provide a helpful package of resources for FAE candidates.  Much has changed in the last four months. Some things haven't gone so well (haircuts, home DIY projects) and other things have shown how brilliantly people can adapt to new situations, and how resilient we all are. That includes the Chartered Accountants Ireland FAE candidates. And, while there are some changes ahead of you when it comes to your exams, it's nothing some adjustments and planning can't solve. Here is some advice on preparation and further article to assist you in your studies. Typing versus writing I did my leaving certificate 30 years ago. In my final year at school, the nuns on the teaching staff called all students to a meeting and insisted that we learn to type. To their credit, they asserted that typing would be the medium of written communication in the future. We undertook the Pitman Typing Exams and, when going to college, I could touch type at a certified speed of 60 words per minute.  I will admit that, back then, I did not appreciate this incredible skill as my fingers ached from typing on old heavy carriage typewriters! Fast forward to today, and I hardly write at all. I keep a notebook, but that is to sketch words, ideas, and phrases but rarely anything longer than a few sentences.  Let us have a moment of honesty: nobody writes too much of anything anymore, with the exception of written examinations. If I can share one insight from being in the RDS examination hall on FAE examination days: on day three, candidates walk out looking like they have gone through a defence forces ultimate hell week challenge. The physical toll that pressured, highspeed writing causes is incredible. Not to mention that handwriting is reduced to barely legible scrawl.  As employees, you type reports, memos, emails and instant messages. We all have smart devices and some of us can type faster on that than we can speak. Then, as candidates, you must go back to the pen. The physiology of building up muscles in our fingers to hold a pen for up to four hours a time is not something that is natural to candidates.  Over the course of the publication of Accountancy Ireland Extra, we have spoken at length about practising exam indicators under exam conditions. Aside from trying to get candidates to think at the speed they need to operate in order process thought and structure responses and develop the brevity required to successfully answer indicators at FAE, the secondary purpose is to exercise the hand so candidates are actually match fit – able to write with a pen at that sustained intensity for four hours and 30 minutes.   The move to online assessment has created a great opportunity for candidates and here is why: the vast majority of candidates can type faster than they can write. The slowest typists among you can type at least 20% faster than the fastest hand writers in the room. With no impact on the exam duration this summer, this move can only work in candidates’ favour, allowing them to frame their responses. I would still advise candidates to sketch with a pen, capturing those initial instincts as they read through the papers.  Let’s do a quick test: set a timer to one minute and type the pangram  “the quick brown fox jumps over a lazy dog” repeatedly until the timer expires. Then repeat the process using pen and paper.  The difference (and there will be one) is your time advantage.  Candidates can exploit this time advantage by practising indicators under present exam conditions of 30 minute per indicator (or 22 – 24 minutes once you have planned out your response). You will get appreciably faster at typing and structuring your thoughts as you practice. This will result in less of the backspace or delete button on exam day.  Do not forget about formatting, though! Programme of contents  With all the change that we have endured over the past few months, the executive thought it might be useful to put together a number of articles across the entire FAE syllabus. The avengers assembled! Every utterance by examiners was transcribed and is documented here, some within this magazine and some easily found online. It is hoped that you will find this series useful to your studies.  Final Admitting Examination Paul Monahan, Lead Educator at FAE, spoke with the FAE examiner about topic areas one, two and three of the new FAE Core Syllabus. These articles are as follows:  FAE Core Topic Area 1:  Avoiding the pitfalls in your financial reporting indicators FAE Core Topic Area 2:  Words of wisdom from the FAE core examiner – strategic management and leadership  FAE Core Topic Area 3:  What you need to know about DAAIET John Munnelly spoke to Derek Guilfoyle, DHL Supply Chain IT Director for Ireland, about how DHL has used technology as part of their digital acceleration strategy. This article can be found here: The real world adoption of Topic Area 3.  Yvonne McCafferty, Risk Management Educator for Topic Area 4, provides some final thoughts on the syllabus and offers some useful approaches for candidates. You can read here: The business impact of Covid-19. FAE electives For the electives, we facilitated conversations between lead educators, examiners and examining teams and have documented the output of these conversations. There is always something to be learned from an examiner who has seen thousands of FAE candidate scripts.  The full list of articles for the FAE electives are as follows: FAE advisory elective:  A conversation with the FAE elective advisory examiners FAE audit elective:  Achieving the ISA mindset FAE financial services module – business lending:  Elective overview part one: business lending credit risk assessment FAE financial services:  Crucial insights from the FAE financial services examiner FAE public sector: The impact of COVID-19 on the public sector FAE tax ROI and NI:  Tax exam and prep: advice from the tax examiners FAE tax NI elective: International taxation: Northern Ireland perspective FAE tax ROI elective: International taxation: Republic of Ireland perspective Finally, to borrow a mantra from Sean Arthur, FAE Tax Educator, to his students: “Read the indicator and reread the indicator. What question or questions do I have to answer for the indicator? As they progress through their answer, I advise them to ask themselves: Am I answering the question, am I answering the question, am I answering the question? Am I using the facts, am I using the facts, am I using the facts? Am I using the figures, am I using the figures, am I using the figures?” It has all the hallmarks of a club classic! Enjoy the series of articles and every success in your subsequent preparations.

Sitting with both tax examiners for a virtual coffee, John Munnelly asked them: what separates candidates who pass comfortably from those who are less successful?  From the perspective of both the Northern Ireland (NI) and Republic of Ireland (ROI) tax examiners, the best candidates display several recurring and common traits in their scripts. They have distilled them below into three key issues they feel will contribute to the successful completion of the paper. Preparation NI examiner: Year on year, the best scripts demonstrate a high level of preparation. It is not just about having the materials and texts at your disposal in the exam – having these sufficiently referenced and tabbed is key. Time is a valuable commodity in any exam and with an open-book exam, in particular, you need to use your time answering the indicators rather than trying to find a particular topic in your notes or in a book. Candidates can organise their materials in different ways, but with tax, it would be beneficial to have the various tax heads and reliefs colour coded throughout your textbooks and past papers for quick reference during the exam. ROI examiner: I would add to that by saying it is always important to remember that the competency statement is your guide for all that is examinable. It would be useful to have a copy of this referenced so that you can easily access relevant material once you have identified what issues each indicator is examining. This will save time whether the issue is one that is commonly examined or if it is a topic that has not been examined before, as you will be able to find relevant materials quickly. Planning ROI examiner: The quality of a script is often evidenced by the quality of the plan provided by the candidate. In past sittings, candidates who took appropriate time to fully plan their answer to each indicator generally scored better. A plan will help to process the information in the simulations, help to identify what issues need to be addressed and will provide a structure for your answer. Each simulation will have four distinct indicators and each indicator should be considered and answered separately. There can be multi-facets to each indicator, so you should plan for each one individually. Identify the tax heads that need to be addressed and consider all reliefs that may be applicable. Be sure to consider any VAT and stamp duty implications even where these are not the primary focus of an indicator – credit is given for correct consideration of all relevant taxes. NI examiner: Your plan should also consider the amount of time you should allocate to each indicator part. Each indicator on the paper carries equal weighting and you should plan to give sufficient time to answering each indicator. As examiners, we collaborate on developing each indicator element, e.g. degree of computation, complexity of an issue or variety of relevant taxes. We know that some calculations are demanding, but we also know that practised candidates will get through the indicator elements and give themselves the greatest scoring opportunities. Planning the indicator (there is reading time available to do this) is a learned and valuable skill.  Details matter ROI examiner and NI examiner: Over the past number of exam sittings, the examiners’ reports and articles related to the FAE tax elective papers have stressed the importance of considering the conditions when discussing any specific tax relief, election, or exemption. It is not enough to state that a certain relief may apply, and scripts should consider the facts presented in the simulations and discuss all the reliefs, etc., which may be appropriate. The conditions for any relief discussed should be given and it should be clearly stated where each condition is fulfilled. Credit will be not be given for just identifying a particular relief, but candidates can go a long way towards earning full credit for clearly demonstrating why the relief will apply given the facts of the simulation. Final remarks The FAE tax elective paper will test your tax knowledge and how you can apply this in practical situations, but if you prepare fully, plan well and provide full detail in your scripts, you will give yourself the best chance to pass the exam in August. Good luck in your studies and in the exam. 

The FAE audit examiner shares some thoughts on where candidates struggle with the audit elective and a key weakness in candidate scripts. In almost every examiner report on the FAE audit elective, I have commented on a recurring issue being noted in relation to the application of the International Standards on Auditing (ISA) standards. The approach of rewriting the ISA standards directly and generically from the auditing standards book has not, and will not, yield any credit at this level, yet this issue continues to arise. An important competency appears to be missing – the ISA mindset! The ISA standards are effectively the tools of our trade but are really only an enabler for our audits and the important rules to which we adhere. The ability to apply the ISA standards and, ultimately, achieve the ISA mindset is the challenge you must learn to overcome. This mindset is critical for success in this exam but also in your future careers in auditing.  The ISA standards which we know today have a long history. The groundwork for an international set of standards began in the late 1960s. Since then, there have been many developments, with the international framework being adopted as national standards here in Ireland and in the UK.  The ISAs are written in a very technical language and I appreciate that they are not the easiest rules to navigate, often resulting in candidates providing generic blocks of ISA text as an exam answer.  Achieving an ISA mindset To achieve the ISA mindset, you need to understand the ISAs in basic English and be smart in your learning approach. Otherwise, you will struggle. Your lectures will have helped you attain this skill but to complement that learning, here are some further tips to aid your studies: ISA structure- you need to learn the structure of an ISA and how it can be broken down Every ISA standard is effectively split into two parts: the core ISA text with the objective and requirements and the application material. You should never underestimate/ignore the application material – this will break down the core requirements with further guidance and explanations. When reading any ISA, you should always read the referenced application material for that requirement. Split your ISAs into the audit timeline You will see from the list of ISAs that they fall into the three distinct phases of an audit: planning, audit fieldwork and concluding and audit reporting. The groundwork that we complete at the planning stage, in terms of understanding the entity and its environment, drives the audit risk assessment process and the audit activities that follow. Understanding the key activities that happen at each stage is fundamental, and it may help you apply the ISAs if you view them in this phased and logical manner. Not all ISAs are created equal Within the ISA framework, you will soon learn that there are certain ISAs that are fundamental to what we do and are vital for you to understand. These include ISA 240 Fraud, a standard that outlines the auditor’s responsibilities in respect of fraud as part of a financial statement audit; ISA 315 deals with our audit risk assessment process – a continuous activity throughout the audit; and the concluding ISAs such as ISA 560 Subsequent Events, ISA 570 Going Concern and, finally, the Audit Report standards. Common sense approach I often comment that common sense will get you a long way. There are certain ISAs that are easy to follow – ISA 210 that deals with agreeing on the terms of engagement is one example. To answer an exam question on what should be in an audit engagement letter, you should not need to read an ISA for the information. Many of you have already performed this task in your audit training contracts. However, when examined, I see blocks of ISA 210 rewritten which highlights the lack of an ISA mindset. I would encourage you to reflect on your current approach to studying the ISAs, take note of the tips above and think about the experience you are gaining in your training contracts. Best of luck with your studies.

John Munnelly caught up with Derek Guilfoyle, IT Director at DHL Supply Chain & DGF to understand how the use of data, AI and RPA have made an impact on operations across DHL sites in Europe.  John Munnelly: Last time we spoke, DHL was in the middle of some exciting, interesting projects across data analytics, RPA and blockchain. How did those projects shape up and how are they affecting your operations now? Derek Guilfoyle: DHL’s 2025 strategy is focused on digital acceleration across a number of initiatives like data analytics, robotics, and mobility, for example. We had a number of projects that are now successfully implemented and have helped transform our operations here in Europe. DHL has always led the way with data analysis, how have the new applications and tools helped you? It has moved beyond your spreadsheet analysis days, John! Data analysis and analytics are core tools for many supply chain operations. DHL has developed its own data analysis solutions to be able to view, control and manage operations across a global network. Also, being able to interface seamlessly in real-time with clients’ systems is something DHL developed back in the 1990s.  However, the new data analytics tools and APIs are something that DHL embrace and we use them to empower employees, be that through self-service dashboards, or managers being able to identify anticipated demand peaks and troughs so as to deploy labour. A visualisation shared with a team and the ability to drill through it often means that a new insight comes from an operative working at the coal face. DHL was one of the first to work with robotics in all its forms. How has DHL adopted to new artificial intelligence technology? DHL has been using robotics in a number of formats for years now, from using sorting conveyors, robotic arms for co-pack that evolved to warehouse pallet stacking and wrapping robots that can move certain pallet types to and from any warehouse location. We very much use a human workforce, but the technology has enabled DHL to work smarter, deploying operatives to parts of the business where demand spikes, allowing us to be responsive and adaptive to customer demand.  And what about DHL’s adoption of robotic process automation (RPA)?  We have adopted RPA in a number of ways. We have automated stable, recurring processes. For example, we have deployed RPA routines to reconcile freight deliveries to their cargo manifests.  One of the most interesting use cases of RPA and other AI tools was in human resources. This project centred on creating a repeatable process to automate the recruitment of staff, from the posting of a job advertisement through to hiring and setting up an employee personnel record.    Wow, would you mind taking us through that particular project? When we analysed the volume of work that was done by human resources to recruit a colleague, we discovered that it was largely an online repeatable process that has broadly the same inputs and outputs. So we used process and mapping tools to post the placement of a job advertisement or place a request with a labour contract provider, through to CV scanning, through to online interviews conducted with software that can interpret responses, through to the offering of a position and creation of an employment contract.  Has DHL done much with blockchain as a technology thus far? DHL are aware of it. Some shipping companies are using it and DHL built APIs to interface with such blockchain applications. DHL has been involved in a project or two on behalf of its clients. For example, we helped a client with serialisation on blockchain as that is an important product characteristic for them. The space is still very much in development and while it will lend itself to certain industries over others, we still have excellent applications that remove the necessity for blockchain to be every solution. 

Sean Arthur, lead FAE Taxation ROI Educator and the FAE Tax ROI examiner, discuss topic areas that candidates have recurring difficulties with examinations. One area where FAE candidates have found it particularly challenging is when to apply the international taxation knowledge required in the competency statement to the facts contained within a simulation. Chartered Accountants offering tax advice to clients are often faced with international tax issues. Therefore, an awareness of the OECD model treaty is vital due to the global nature of business and investment. More specifically, as the island of Ireland has two separate tax systems (the Irish and UK tax systems), it is essential that Chartered Accountants have the ability to describe and apply the main provisions of the Ireland UK Double Tax Treaty (Irl/UK DTT). This article is not intended to be a complete guide to the main provisions of the Irl/UK DTT, as such details are contained in the FAE Taxation 3 (ROI) 2019–2020 textbook. It is also worth noting that recently the area of permanent establishments and the double taxation relief available on business profits has been answered well by candidates. Therefore, this article is intended to give a summary of the step by step process which can be used when advising on the tax exposure of an Irish tax resident and domiciled individual who is employed and/or has investments in the UK. The steps are outlined below: Step 1 – Confirm Irish tax residency position If an individual is Irish tax resident and domiciled, then they are assessed to Irish income tax on their worldwide income. An individual will be considered Irish tax resident if they are in Ireland for a total of 183 days or more in a tax year or 280 days or more in a tax year plus the previous tax year taken together (with a minimum of 30 days in each year). Where an individual satisfies the Irish tax residency tests (183/280-day tests) but is not Irish domiciled, then they can avail of the remittance basis of assessment. If an individual is not Irish tax resident as they do not trigger the Irish tax residency tests, then the individual is only charged to Irish income tax on their Irish-sourced income. Step 2 – If an individual is dual resident, consult the tie-breaker clause If an individual is Irish tax resident but spends days in the UK, you may find that the individual will trigger tax residency in the UK also. The Irl/UK DTT does not allow for the concept of dual residence. Article 4 (Fiscal Domicile) in the DTT provides a mechanism for deciding which state is treated as the state of residence. This mechanism is commonly known as the ‘tie-breaker’ clause and it involves the successive application of a number of objective tests, such as establishing where the individual’s permanent home is and where their centre of vital interests is. Step 3 – Consider what type of UK income received (assuming the individual is resident and domiciled in Ireland) UK employment income If an Irish tax resident and domiciled individual has UK employment income, Article 15 of the Ireland UK DTT is relevant.  Article 15 (Employments and Similar) – key points for consideration Employment income/remuneration is taxable in the state of residence of the employee (i.e. Ireland), but it may also be taxable in the source state (where the employer is located, i.e. UK). Remuneration derived by an Irish tax resident individual in respect of an employment exercised in the UK shall be taxable only in Ireland if: (1) the individual is present in the UK for 183 days or less in the fiscal year concerned; (2) the remuneration is paid by, or on behalf of, an employer who is not UK resident; and (3) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the UK. Therefore, if these three conditions are met, the remuneration earned by an Irish tax resident individual will only be taxable in Ireland. No double taxation should arise. Remuneration derived by an Irish tax resident individual in respect of an employment exercised in the UK shall be taxable in the UK and Ireland if the above three conditions are not met in respect of the individual and the employment exercised in the UK. Where the remuneration is taxable in the UK and Ireland, a double tax credit for tax paid in the UK is allowed against the tax liability of the employee in Ireland. The credit for foreign tax in respect of the income cannot exceed the amount of Irish tax attributable to that same income.  When providing tax advice to an Irish tax resident individual who carries out employment duties in the UK, the availability of trans-border worker tax relief should also be considered. This is a valuable tax relief available to individuals employed in treaty countries (such as the UK) who exercise their employment duties in a treaty country. For the relief to be available: the individual must be employed for a continuous period of not less than 13 weeks and must spend at least 1 day a week in Ireland; the employment income must be taxable in the country where the duties are performed; and any foreign tax due on the income must be paid and must not be eligible for repayment. If the individual has no income taxable in Ireland other than the foreign employment, no further Irish tax will be due on the UK employment income. UK rental income If an Irish tax resident and domiciled individual has UK rental income, Article 7 of the Irl/UK DTT is relevant. Article 7 (Income from Immovable Property) – key points for consideration  Rents from property situated in the UK are taxable in the UK. Ireland will also tax UK rents received. A double tax credit for tax paid in the UK is allowed against the tax liability of the landlord in Ireland. The credit for foreign tax in respect of the rental income cannot exceed the amount of Irish tax attributable to that same income.  UK interest income If an Irish tax resident and domiciled individual has UK interest income, Article 12 of the Irl/UK DTT is relevant.  Article 12 (Interest) – key points for consideration All interest is to be taxed in the State of residence only. Interest received from a UK financial institution by an Irish tax resident individual will be taxed in Ireland only.  UK dividend income If an Irish tax resident and domiciled individual receives dividends from a UK company, Article 11 of the Irl/UK DTT is relevant. Article 11 (Dividends) – key points for consideration  Where a UK company pays a dividend to an Irish tax resident, it will not carry a tax credit against any Irish tax payable. An Irish tax resident recipient is subject to Irish income tax only on the UK dividend. It is hoped that FAE candidates will approach an indicator involving the provision of international tax advice by undertaking the above three steps. Steps 1 and 2 are necessary to confirm the Irish tax residency position of the individual while step 3 provides guidance on how to deal with different types of UK income. The information in this article is relevant as at the date of publication 1 July 2020.