Early engagement with the Interim Assessment is the foundation for success at the FAE elective.
As the FAE Interim Assessment now enters its second year, a clear statistic is emerging: success at the Interim Assessment is a strong predictor of a candidate’s result in their chosen elective later in the year. In plain English, that means early engagement with studies and materials will put most prospective FAE candidates on course for success. In this article, we are going to revisit some of the key messages from the April 2016 Interim Assessment Report.
Before you answer, understand the issue being asked
Examiners found that not answering the issue being examined was a major problem for candidates in April 2016. Candidates assumed they understood the instructions and dived into answering with, perhaps, pre-prepared material, or even transcribed text from previous cases. The examiners recommend that candidates slow their reading down as they approach an issue.
Candidates are asked to be forensic in their assessment of the requirement. There is a natural tendency to start formulating an answer as soon an issue is found. Take extra time to fully identify all the facets of the requirement.
Always make a recommendation
Examiners also noted that many candidates did not provide commentary on their calculations. They do understand candidates’ reluctance to commit to a specific response for fear of coming down on the wrong side. However, this could suggest the candidate lacks the confidence to make a decision.
Remember, in each of the elective scenarios, the candidate is asked to step into the role of the character in the simulation. At FAE, it is not enough to simply perform the calculations. The calculations should just serve as the starting point, providing you with insights to shape your discussion and, ultimately, your recommendation. Make a recommendation! The examiners expect it.
Audit
The examiner noted that a number of candidates missed a clear request from the case to draft an agenda. Here is the requirement from the April 2016 Audit Interim Assessment that caused some problems: “I would be grateful if you could review this information and draft an agenda for the planning meeting with our audit team outlining under each agenda item the main issues we will need to discuss.”
As previously mentioned, candidates are reminded to read and re-read the requirements, ensuring that they have not missed any aspect.
Examiners also noted that candidates who merely reproduce lists of points without making any attempt to link back to the specifics of the case will not score any credit. For example, candidates listed that some audit tests should be carried out, such as the following:
“Test cut-off;
Review aging;
Test NRV.”
Candidates merely stating the above without providing an explanation as to why this test is relevant will not score credit. The candidate is expected to clearly demonstrate that they understand the tests they are suggesting and explain how they will be carried out in this specific case.
Advanced performance management
The examiner has noted that, on the whole, candidates score reasonably well on the calculative elements of the papers. They are pleased to see adoption of the investment appraisal template that is used by the examiner in the solutions provided. Adoption of this template provides candidates with a structured approach to investment appraisal.
The examiner wishes to specifically point out that taxation on cash flows is always one year in arrears unless the scenario specifically states otherwise.
The examiner has seen some improvements on commentary on calculations. However, there is room for improvement. Where a candidate has performed a calculation, they should pause and get a sense of what the calculation is saying to them. There are a number of points that can always be made about any calculation; the examiner rewards the candidates who link their arguments back to the facts of the case. In other words, move beyond the obvious.
Advanced taxation
The examiners acknowledge that candidates performed well in the April 2016 Tax Interim Assessments. However, they wish to guard against complacency. With that in mind, the examiners remind all candidates to ensure they have covered all of the examinable topics for Interim Assessment.
- Tax NI: transfers of assets at undervalue by a close company to a participator was poorly answered.
- Tax ROI: cash extraction methods is an important area and candidates should consider tax implications from many viewpoints.
What next?
Candidates should ensure that they download a copy of Competency Statement for 2016/17. There is specific guidance in each elective identifying what is examinable for Interim Assessment.
The Interim Assessment is 90 minutes in duration, inclusive of reading time. There are three issues to be identified and answered. Candidates should download the 2016 Interim Assessments and the December 2016 repeat Interim Assessment papers. [To see the papers, sign into the student centre.] This allows candidates to familiarise themselves with the paper and review the examiner’s commentary.
It’s not too late
There are eight weeks to the Interim Assessment examinations. There is still time to put a study plan in place. The key to success is to make steady progress through the materials, ensuring that you understand every topic completely before moving onto the next. There is no better way to test your knowledge than practising exam-style questions under exam conditions. For example, if the Interim Assessment is 90 minutes long and there are three issues to answer, candidates should practise a topic by setting a time limit of 30 minutes per question to see if you can construct an answer as you would during the actual exam. Doing this more and more will ensure confidence and a winning approach.