NEW F8 EXAMINER - WHY STUDENTS FAIL & HOW TO IMPROVE?

Excerpts: I specialise in Audit (F8, P7), Corporate Relations (P1) and Corporate Strategy (P3) papers. With deep interests in ACCA students' future and success, the the following F8 article is meticulously prepared for your close scrutiny and post-mortem on past students weaknesses. I sincerely hope this is constructive and CHANGEstudents study techniques!

NEW F8 EXAMINER
With effect from June 2010 Pami Bahl will be the new F8 examiner. She has jointly produced the December 2009 exam, hence a ‘NEW’ old look to F8 examination style.

To recap, the introduction of the new syllabus in December 2007 presented the opportunity to amend the style of the ‘old’ 2.6 examination, to allow for the longer scenario and to use reading time more effectively. Originally decided to combine this longer form question with the shorter knowledge questions to ensure that the essential audit knowledge was being examined broadly enough. Pami Bahl testified that there is no plan to change from that format.

Okay, lets cut the chase and analyse F8 students weaknesses.

7 SINS OF F8 EXAM ATTEMPTS: WHY STUDENTS FAIL?

Weakness 01: Confusion on audit procedures
I give 2 examples:
Example A:
Section A of 30% as the bulk testing on 2 distinct audit procedures namely tests of control and substantive procedures. Vast majority of students have the confusion is between tests of control and substantive procedures. Thus incorrect answers in not providing the ‘correct’ type ofaudit test within an answer. Please note this is an area that will be examined very regularly.

Example B:
Many students could identify inherent risks present within the scenario, but most students were unable to explain the EFFECT OF RISK on the audit approach.

What is shocking is an alarming number of students interpret the AUDIT PLANNING (done at the beginning of audit process) question and proceed to describe a full going concern review (done at the end of audit process)!

More worryingly, many students stated that the auditor needs to make ADJUSTMENTS to the financial statements.

Gosh! Auditors HAVEN’T even start their audit process yet, students recommend make adjustments? Based on what? There is no working papers yet!

(for more information Audit Risks-based approach (planning) visit:
http://www.accaglobal.com/pubs/students/publications/student_accountant/archive/sa_may08_pine1.pdf )

Weakness 02 : Confusion on audit process
Going concern audit with repeating audit work on the CURRENT financial statements; this is not the case – going concern relates to the FUTURE.

Weakness 03: Confusion of what is Audit Reports
Audit reports have always proved to be difficult for candidates. More understanding is needed between the different types of reports and when these will be used, report

Students lack understanding on how to apply appropriate qualification wordings with specific emphasis on the difference between uncertainty and disagreement

Weakness 04: Confusion between Analytical Substantive Procedures and Substantive Procedures

Worse yet, as mentioned above, there is main confusion over the difference between tests of controls and substantive procedures. Failure to discriminate between the two types of tests and provided lists containing both effectively will sink the entire question.

This is a surprise in that students knowledge of analytical procedures was relatively weak. candidates had difficulty carrying out basic analytical procedures on financial information.

Weakness 05: Ignoring the case study altogether
common misunderstanding and misinterpretation in case study scenarios such as answers. Please note the case study is a GOLD MINE of information. Pami Bahl mentioned to READ (& understand the facts) the case study. Students should see:
(i) Company has good profits and turnover

And yet

(ii) The management mentioned that this is a difficult year.

Clearly this is an inconsistency, thus Analytical Procedure is appropriate measure rather than Tests of Controls.


Weakness 06: Confusion on question requirements and giving ‘tangent’ answers
Students merely answering a ‘related question’. For example, when a decision is needed on going concern, candidates must have a good understanding of the potential impacts on the audit report and the company.

For example:
The question asked what is the impact on audit report pertaining to Going Concern issue.

Students answer the need to
- Read minutes to meetings
- confirm the directors’ view on going concern
- review interim financial statements
while the above procedures are valid but students still have not answer the “IMPACT” on Audit Report i.e. what are the going concern issues and WHY it affects the Audit report.

Clearly, students lack understanding of exam question requirements. Merely writing what they know only guarantees a low marks.

Weakness 07: Poor practical industrial knowledge
Many students were unable to suggest suitable analytical procedures and offered a variety of SPURIOUS (unrelated) answers

For example:
Do students know that Managers are NOT paid overtime? They are at the senior executive level. So its is wrong to perform Analytical Review to link:
(i) high overtime claims to
(ii) management’ salaries. The overtime claims relate to general factory workers of clocking in procedures.

Neither is this Analytical Procedure accurate:
(i) benchmarking sales personnel salaries to
(ii) industry average

Clearly, sales personnel performance varies individually, thus their salaries PLUS commission varies by WIDE MARGINS!

Care must be taken in reading and understanding the scenario.

HOW TO STUDY F8?

Rule #1: Understand the knowledge.
Students have good knowledge of ISAs inside out – but lacking in what an audit is and how it is carried out. Knowledge will be tested throughout the examination (most notably in question 2).

Some lists, such as assertions, do need to be memorised, but candidates DO NOT need to know which specific ISA these come from. It is much more important in this exam to know why things are there (as in the assertions) rather than to remember the specific paragraph of the ISA they come from.

Rule #2: Understand the REQUIREMENT VERBS
Different approach to questions that have “list out” and “explain”.


Rule #3: Understand the applications to case studies are PARAMOUNT
Knowledge has to be applied to many of the scenarios in the audit and assurance examination. Again, the requirement verb will help, as‘explain’ and ‘discuss’ are trying to elicit more information from the candidate.

For example:
(i) “Application” means finding the relevant points from the scenario
(ii) “Explaining” means the relevance of those points in the answer.

Please read the examiner’s article on this subject from the April 2008 student accountant:

http://www.accaglobal.com/pubs/students/publications/student_accountant/archive/sa_apr08_lewin.pdf

HOW TO IMPROVE F8 PERFORMANCE?
STEP 1: BY GOLLY, PLEASE PLAN BEFORE YOU SPEW OUT THE ANSWERS
Definitely worth spending a few minutes planning the answer.

(i) This is particularly true of question 1, where there is a substantial scenario to read.

(ii) Use the requirement verbs intelligently to visualise the answer –‘explain’ with a scenario means two marks per point, one for the point in the scenario and one to show why the point is relevant. Say, 12 mark question therefore needs up to six full points to obtain full marks.

(iii) Candidates should make sure they read the scenario properly and apply it to make sure they pick up the required number of points.

I recommend that your plan can be WRITTEN FORMALLY on the answer book, jotted down on the question paper or even be a list of points in your head – the important thing is to plan in the method that best suits you.

Step 2: By JOLLY, please think!
No intention to be cheeky here. I am serious! Students tend to ‘vomit’ out textbook, lecture notes materials!

Please try to think to make sure the reason for each point being relevant is clear. In other words, just step back a little from the plan and make sure you can explain the points – or at least prioritize them into some form of order so that the ‘best’ ones are given first. This will maximise your chances of obtaining marks in the examination.

Step 3: By Dolly, you need to practice writing out the planned answer in full
Unfortunately, too many skip my tests and assignments candidates, thus poorly equipped with too little exam practice before entering the exam hall.

You can NEVER learn how to swim, if you don’t practice,
You can NEVER learn how to drive, if you don’t practice,
You can NEVER learn how to cook, if you don’t practice,
You can NEVER learn how to pass, if you don’t practice F8!

MY OFFER
Attend my class in Kasturi School of Accountancy (Kuala Lumpur) to learn:
i) Avoid 7 deadly sins in F8
ii) Practice exam techniques
iii) Hopefully, as many testified they did, enjoy learning in my class

Hurry, place is not limited but time is!

In other words, learn Pami Bahl examination style and pass. Understand this lady’s forte and why her accounting experience in Price Waterhouse, Coopers &Lybrand, also as a freelance lecturer has a distinct specific style in testing F8 candidates.

How to register?
Visit : http://www.ksacitycampus.com/
- for time table
- for fees
- for location map

Useful articles:
1. Verbs in Questions:
http://www.accaglobal.com/pubs/students/publications/student_accountant/archive/sa_apr08_lewin.pdf

2. Audit Planning:
http://www.accaglobal.com/pubs/students/publications/student_accountant/archive/sa_may08_pine1.pdf

Best wishes.
Marcus Ong – Senior Lecturer