Reflections on an interim assessment

Jul 01, 2019
There are lessons to be learned with every challenge we undertake, and that’s no different with the FAE advisory interim assessment. John Munnelly goes through the good and bad of the assessment to prepare you for your next FAE advisory challenge.

Looking back on the FAE advisory interim assessment that took place in April, it wasn’t that bad. 258 candidates sat and 161 candidates scored more than 50 marks – that’s 62%. This year’s performance is year-on-year comparable with 2018. The average mark achieved was 47 marks, down slightly on 2018, but it means that candidates are carrying an average of 7% into their final mark. This is a good performance. 

The March 2019 article in Accountancy Ireland Extra contained an interview with the current advisory examiner. In that article, the examiner stressed their personal excitement at the direction of the new advisory syllabus and was eager to visit the new topic areas at the earliest opportunity.  

It should have come to no surprise that the examiner did indeed do this. 

What worked

The interim assessment was based on a couple of dairy companies, drawing from real-world experiences of Glanbia and Kerry Group. The opening issue #1 was a classic ‘why would a company want to expand beyond Ireland’ and, to be fair, candidates did a good job framing their answers. The top answers had tailored their arguments to the specifics of the EU supporting trade. It was the second best-answered issue on the paper. 

Issue #3 asked candidates to comment on the strategic implications of a merger on a firm and to comment on the previous concerns on acquisitions. This was the best-answered issue on the paper, and a test of the new material introduced. It was heartening to see candidates skilfully weave their lecture materials into the facts of the case and score heavily on this issue; in many cases, compensating for poorer general performance at issue #2. There was also evidence of candidates reading the Financial Times as many were able to support their answers with recent merger and acquisition activity that has taken place over the last six months against which this case was framed, so well done. 

What did not work

Issue #2 was a test of the financial elements of the merger. The examiner was trying to see if candidates could work out the extra value the deal would bring through additional combined revenues and cost synergies. While this indicator was the least-well attempted, there was a wide variety of approaches to it which is worthy of comment. 

Some candidates did not approach issue #2 at all, instead investing their efforts into issue #1 and #3. In a minority – and I mean only a handful of cases – this approach paid off. These candidates offered an assumption that the deal did represent an increase in the value of the combined entity and they framed their responses based on this supposition. These candidates scored well by attempting the two issues only.

However, a large number of candidates offered different parts of the calculations and, to be fair, marks were earned where the parts of the calculations showed directionally correct logic, but only a quarter of all candidates who attempted this indicator scored extremely well in it, demonstrating proficiency with the calculations. 

In short, candidates should review the published solution which demonstrates a couple of approaches in the calculations.

What’s next? 

The lead advisory educator, Joe Healy, has prepared some additional exam executive-approved style questions to help candidates practice applying the material from the syllabus as they get to grips with these new topic areas.  The mini case ‘Mullock’ is useful as the scenarios are deliberately framing differing approaches and styles that should easily be identifiable and lend itself to candidates being able to apply material from their study to the facts presented. 

You can find Joe Healy’s question and solutions to the scenario developed here.