General Comments 6f 6_ztTL
Firstly,I would like to offer my congratulations to all of thosecandidates who achieved a pass at this diet and my commiserations to those whodid not.
The examination paper comprised two sections,A and B.Section Aconsisted of two compulsory questions for 60 marks in total.Section B consistedof three optional questions for 20 marks each from which candidates wererequired to answer two questions.
It was pleasing to see a large number of candidates providing goodanswers to every question they attempted and consequently achieving highmarks.Sadly,the examination revealed a large number of candidates who wereeither inadequately prepared for the examination or failed to read the questionrequirements carefully.The performance in this diet was poorer compared toprevious diets partly to be due to an inability of some candidates to beflexible in their approach to the examination.As a final level paper,candidatescannot expect there to be one standard answer to all questions on a giventopic.The examination is intended to make the candidate apply their knowledge toa given scenario and that scenario will always present newchallenges.
As in previous diets,in general,candidates are demonstrating goodskill at description but are weaker on analysis.This is a lesson that has goneunlearned from previous diets.An example of this was in Q4 (b) where an analysisof a given table of data was required.This is a core skill for any commerciallyvaluable accountant much like being able to read a set ofaccounts.Therefore,these should be straight-forward marks as this skill isbuilding on those tested at previous levels in the qualification.It is apparentthat many candidates believe that because the basic application of this skillhas been tested at a lower level,it is thus excluded from later diets.This iswrong!
At the professional level,you can expect skills and knowledgeobtained at previous levels to be tested but now in a more complex and realisticscenario.Candidates should remember that the examination is intended to be atest of their ability to ‘add value’ in their work.They can demonstrate thatability by doing things that those they are reporting to cannot – picking outthe nuggets of gold from the pile of dirt.Thus,good characteristics to developin the interpretation of questions are the strength of will to maintain focus onthe overall objectives,the keen-sight to identify the driving factors ofperformance and the breadth of knowledge to be able to suggest methods ofperformance improvement.
Presentation of answers continues to show improvement and morecandidates are obtaining higher professional marks as a result.One area thatcould still be improved is the use of subheadings to break up long answers andin particular,making sure that question sub-parts are all clearlyindicated.Candidates should also note that bullet point answers often do notgive sufficient detail to earn good marks.
As usual,the examination presented a challenge in the efficient useof the candidates’ time.However,well-prepared candidates found this no issue inproviding good,complete answers to all questions.It was noticeable that thosecandidates who failed to complete all of the questions were ones who did nothave a clear grasp of the question requirements and the basic knowledgerequired.As a result they spent considerable time writing irrelevant or vagueanswers that gained few marks.
Specific Comments `6j?2plZ
Question One P;KbS~ SlC
The question requested sections of a report on the identification andlinking of critical success factors (CSFs) to key performance indicators (KPIs)and the subsequent impact of these choices on the information systems of a filmproduction company (FP).
In general,answers to requirement (a) were weak with few ofcandidates gaining maximum marks by ensuring that their example metrics wererelevant to FP.The problems were due to a lack of knowledge of the definition ofmonitoring and building CSFs and a lack of familiarity in usingCSFs.
This became more apparent in responses to requirement (b) which waspoorly attempted.This part asked for the information used in setting CSFs andthen,using their reading of the scenario and general businessknowledge,suggestions of suitable CSFs.Many candidates were unable to addressthis part of the question due to lack of knowledge of the definition of a CSFand devoted their answer purely to KPIs,as a result scoring no marks.Thosecandidates that read the question requirement and responded to it were quicklyrewarded.
Requirement (c) was generally well answered with many candidatesgetting 7 or 8 out of 10.The best answers were those that used the questionrequirement to give a methodical structure to their answer.Those candidates whodid not score well tended to provide bullet point lists of many KPIs when thequestion asked for four.Candidates should look at the total marks available forthe question part and realise that they are expected to develop points abouteach KPI suggested,not simply identify them.
Requirement (d) was generally adequately attempted.The better answersclearly linked the KPIs to changes that would be required in the design and useof the information systems mentioned.Thus,they could demonstrate knowledge ofhow such systems operate and the use to which the information produced issubsequently put.
There were 2 professional marks available for this question and thesewere given under the headings:use of subheadings,professional language andclarity.Candidates should note that they were asked for sections and not thefull report.Therefore,the standard report header,introductions and conclusionswere not required except as appropriate to each section itself.(No harm was doneif these were produced but mostly they wasted time.)
Question Two 5`oor86
This question presented data on a manufacturer (RL) that providedlaptops for use in dangerous environments. Pb} &c
In part (a),candidates were askedto evaluate a traditional costing method with an activity-based one(ABC).
Calculations of the result of using both these methods were possibleand expected.There were significant variations in the overall quality ofcandidates’ answers to this question.Those candidates who could correctlycalculate the relevant costs scored well as they could then provide specificevidence for their recommendations about the two methods.Indeed,a good numberscored 12 or more out of 15.Those that then continued the calculations toconsider the main commercial implications of the two methods on the pricing atRL often scored full marks.Sadly,a number of candidates did not appear to knowhow to use the ABC method which should be considered a basic technique for amanagement accountant.
In part (b),candidates were asked to explain a ‘beyond budgeting’approach and evaluate its use at RL.This part was generally well attemptedalthough candidates often were sketchy on the details of implementation of thisapproach.It was pleasing to see many candidates analysing the environment for RLas competitive and innovative and applying these as criteria for judgement aboutwhether the beyond budgeting approach suited the company.This is a good exampleof making the answer specific to the scenario.
Question Three |NtT-T)7
This question requested a discussion and evaluation of the use ofvalue-based approaches to performance management at a chain of gift shops(LOL).
Requirement (a) requested an explanation of value-based management(VBM) and how it aids management focus.Candidates often scored a pass but notfull marks on this part.There were often lengthy and irrelevant discussionsabout non-financial factors which suggest incomplete knowledge ofVBM.
Requirement (b) asked for an evaluation of LOL’s performance usingEVA,EPS growth and the share price.It was also typically passed but fewcandidates scored 9 or more out of 12.The assessment of the numerical work wasoften lacking.Candidates infrequently compared the change in share price of LOLto the market and sector performance-which demonstrated that the company wasdoing well in a falling market.Some candidates could not perform the EVAcomputation which was surprising as this is a key performance measure and thescenario offered few of the possible technical adjustments.Having performed thecalculation of EVA,a significant minority then failed to note that it waspositive choosing to focus on the fact that it had fallen from the previousyear.This again showed weak understanding of such a keyconcept.
Requirement (c) was the most difficult part of the question and wasgenerally poorly done,probably as a result of the failure to explain VBM whichwas illustrated in part (a).
Question Four s5|LD'o!
Question Four is set in a telecommunications company which has settargets for the reduction of its environmental footprint.The question asks forthe factors in the business environment that will affect this strategy,anevaluation of its current performance in reaching the target and suggestions forfurther data which could measure the effectiveness of certain initiativesmentioned in the question.
Part (a) was generally well done although a number of good candidatesignored the request for illustrative performanceindicators.
Part (b) was an analysis of a table of raw data which showed up basicweaknesses in some candidates’ skill set.It was well-answered by only a minorityof candidates.
Many candidates wasted their time by limiting their comments to onlywriting out lists of statements such as 'Commercial Fleet Diesel use has fallenfrom 105.4 to 70.1' or even 'Commercial Fleet Diesel use has gonedown'.First,this is stating the obvious to anyone who read the table butalso,this is far too detailed for most reporting purposes.
An appropriate plan of attack for this part might havebeen: M; zRf3S
1.consider the ‘big picture’-whether the overall target for emissionreduction be met; -j3 -
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2.break down the data into smaller but meaningful (and manageable)chunks-Road,Rail and Air transport; and 3~I<f ^K4
3.discuss the individual lines of the data table focussing on thedata that explains the overall picture of emission changes,for example,theswitch from petrol to diesel powered motor vehicles is complete in commercialvehicles and has lead to large reductions in emissions but such a change may bemore difficult in company cars as employees may resist such achange.
Good candidates analysed the numerical data given in thescenario.They created information from the data given and provided the reader oftheir answer with new insight into the key factors driving the reduction inemissions.
Part (c) was often poorly done as a result of the failure to addressthe requirement which asked for the data to be related to the reductioninitiatives mentioned in the scenario.Many candidates got a mark for generalsuggestions of further useful data but few related this to the reductioninitiatives.
Question Five
The question was about using different models for predictingcorporate failure related to a manufacturer of battery packs(RMB).
Part (a) required a general discussion of the strengths andweaknesses of both qualitative and quantitative models. This was generally donewell although some candidates tried to structure their answer as the strengthsand weaknesses of models in general which would not be a helpful method in reallife,where a comparison of the models is likely to be moreuseful.
Part (b) asked for comments on an analyst’s spreadsheet whichprovided the data and results of a Z-score calculation.Answers to this part weregenerally good although many candidates restricted their comment on the Z-scoreto repeating the comment given in the question (RMB is ‘at risk of failurewithin two years’) when the data given was requiring a more analytical answerabout which factors within the model were driving the score down and so leadingto this prediction.A minority of candidates restricted their comments to thecompany’s statements of income and financial position when the question requiredcomment about the spreadsheet data and consequently their answers lackedrelevance.
Part (c) asked for the application of qualitative-type models tofailure prediction at RMB.This was generally well done with many candidatesmaking good use of the Argenti model and the factors mentioned in thescenario.Unfortunately,some candidates ignored the word ‘qualitative’ in therequirement and wasted time writing about quantitativefactors.
Part (d) was poorly answered with many candidates ignoring therequirement to assess the results of previous answers and only picking up marksfor suggesting additional data to gather.
