An assured approach
Steve Whittenbury provides some tips on handling a key part of the ACA qualification
Audit and Assurance (A&A) has always been a central part of the ACA qualification. Before you take your Advanced Level exams, you will tackle two modules that specifically cover this area, so it’s helpful to know what each one includes and how you can prepare for some of the problem areas where students tend to struggle.
For most students, their first taste of Assurance is at the Professional Stage knowledge level (Certificate Level from July). The main focus here is on introducing the concept of assurance as well as the process and who needs it. You will also be introduced to key systems of internal control found within businesses and consider how best to gather evidence on the operation of such systems. Finally, you will be introduced to ethics, although this runs through the whole ACA like a stick of seaside rock.
Assurance is examined by computer-based assessment (CBA), sometimes one of the first such assessments attempted by ACA students, so getting a pass is at the forefront of many students’ minds. Feedback from ICAEW suggests that eight or nine out of every 10 students taking the Assurance CBA pass first time.
So let’s look at the rules of the game and see what you can do to boost your chances of success:
Make it count
1. You have 90 minutes to complete the CBA
Evidence suggests that there is no real time pressure on the Assurance CBA, so you should be able to consider your answers before you confirm your response. You should practise online to get familiar with the CBA – your training provider may have an online mock, or you could use the sample e-assessment at icaew.com/examresources.
2. Each CBA will test subjects in line with their syllabus weighting
In general, each of the four main syllabus areas takes up around a quarter of the CBA, so you should expect 10 to 15 questions on each area. Selectively revising for the CBA is a recipe for failure; you must focus on every chapter in the learning materials and practise as many questions as you can from the whole syllabus.
3. Questions with more than one requirement need to have all the right answers to score
Every CBA question set is reviewed to see how hard candidates found it (the term “facility” is used) and if the facility of a real CBA question is below average (questions should be tough, but not too tough) the examiner may decide to review how the question is presented or consider amending the dastardly “distracters” – multiple-choice options that represent the most common mistakes made. So although the CBA is fair, you still need to be careful.
4. The pass-mark is 55%
Getting things half-right will not do here; aim to answer all of the questions to give yourself a good chance of success.
Once you’ve mastered the Assurance module, you take this knowledge and apply it to a series of scenarios. A&A is examined over two and a half hours and includes six short-form questions (SFQs) and three longer written test questions (WTQs).
Recent feedback from the examiners focuses on the key syllabus areas and ways in which students could improve. They are as follows:
1. Legal, Ethical and current issues (20% of the syllabus)
A key problem for Assurance candidates is a lack of detailed knowledge in certain key areas. This lack of knowledge can subsequently derail A&A students too – for example, the distinction between ethical requirements for listed and non-listed clients has been highlighted in both modules.
What can you do to learn such things? Fortunately, you don’t have to remember everything. Many technical details are presented in the open book (OB) supplied for the A&A exam – successful use of the OB is not about learning its contents, but being able to navigate it efficiently. Get familiar with the OB now and consider how to use it in the exam.
2. Accepting and managing engagements (15%)
This can be tested in both SFQs and WTQs. Make sure you read the details presented in the scenario carefully – for example, ignoring the fact that your firm has already agreed to accept an engagement makes any answer you supply that includes acceptance issues redundant and could potentially work against you if your script is marginal.
3. Planning assurance engagements (40%)
This is by far the largest WTQ of the A&A exam and offers the most mark-scoring potential, so you should be looking to practise as many past exam examples of this as possible. The most common problem for candidates here is writing vague audit procedures so, if possible, you must clarify what you are suggesting the auditor should do here. Avoid the word “check” and use more active words instead – try to explain what you are doing, why you are doing it and how it gets done.
4. Concluding and reporting (25%)
The final part of the syllabus has seen some improvement in recent sittings but candidates are still poor at committing themselves to a firm answer, preferring to hedge their bets when clear information, such as the likely pervasiveness of a misstatement, is supplied. You must learn why reports are modified in certain ways and why some opinions are more appropriate than others for a given set of circumstances.
There is a lot to remember here, but some of the techniques should be easy for you to pick up and start working on now. It may take time for you to grasp all the technical knowledge (for example, that audit reports are not qualified) but hopefully, if you take all this guidance into account, you will get qualified – good luck.
Steve Whittenbury is a tutor at BPP Professional Education. For more information about ACA courses offered by BPP visit bpp.com/icaew
This article originally appeared in the April 2013 edition of VITAL.