DECEMBER 2005 - EXAMINERS' REPORT

Firstly I would like to offer my congratulations to all of those candidates who achieved a pass at this diet and my commiserations to those who did not. The examination consisted of Section A and Section B. Section A consisted of two compulsory questions for 45 and 15 marks respectively. Section B consisted of three optional questions for 20 marks each from which candidates were required to answer two questions. It was pleasing to see a large number of candidates providing good answers to every question they attempted and consequently achieving high marks. Sadly, the examination revealed a large number of candidates who were inadequately prepared for the examination and scored low marks. In general, the overall performance of candidates was not too dissimilar from that in recent diets. Unfortunately, many candidates who clearly had knowledge of the areas of the syllabus which featured within the examination questions were unable to achieve a pass at this diet as a consequence of poor examination technique which frequently manifested itself via poor presentation and/or time management. Well-prepared candidates invariably provided concise workings which arrived at the correct solutions to the computational parts of the examination paper. However, a large number of candidates produced workings which were difficult to follow and a significant number of candidates displayed their answers poorly. Therefore it is vital that future candidates give more thought to the layout and organisation of their answers. Valuable time was wasted in the production of pages of workings to arrive at incorrect solutions to relatively straightforward calculations such as those contained in part (a) of question 1. Yet again a number of candidates ignored the advice given in previous examiner's reports that each question should be started on a new page in their answer booklet(s) and that there should be clear labelling to indicate which questions are being attempted. Most candidates attempted all four questions although there was some evidence of poor time management, particularly affecting Question 1. Indeed, the number of candidates who attempted Question 1 last, was surprising high. Where not all questions were attempted, Question 2 was most frequently omitted. The poor performance of many candidates was once again exacerbated by a clear failure to read the content and requirements of questions carefully. This contributed to poor performance in the computational and discursive parts of each question. Excellent answers were presented by many for all four questions and very high marks were achieved by a number of candidates. The performance of candidates overall, however, continued to disappoint with a large number appearing to be unprepared for the examination.
Question 1

Part (a) was generally well answered with a large number of candidates gaining most of the 15 marks available. Common errors were ignoring the requirement for calculations to be 'based on the number of consultations' and the calculation of fees and variable costs based on the number of clients as opposed to the number of client consultations. In contrast to part (a), part (b) was very poorly answered. Many candidates were unable to perform the basics, such as identifying that there are 4 options for which an expected value needs to be calculated in order to select the option with the highest expected value. If candidates were unable to produce a reasonable answer to part (i), it was then extremely difficult for them to apply maximin and minimax regret criteria and to calculate the value of perfect information in parts (ii) and (iii). Even candidates who were able to answer part (i) were unable to answer parts (ii) and (iii) correctly. Overall, there was widespread evidence of a failure to study what is after all a core technique. Candidates who had read the requirement closely were able to provide the assessment criteria required in their answers to part (c). A common error was to focus on the phrase 'value for money' and answer the requirement using the 'economy, efficiency and effectiveness' framework. It was difficult for those candidates to gain many marks as a result. In their answers to part (d) many candidates were able to reproduce two features and benefits of environmental management accounting to gain full marks.

However, a significant number of candidates interpreted the requirement as taking account of the external environment and produced irrelevant answers about, for example, PEST analysis.
Question 2

In their answers to part (a) the majority of candidates demonstrated enough knowledge about backflush accounting and its applicability to achieve at least some of the marks available. However many candidates were unable to explain backflush accounting clearly enough to gain full marks. Similarly, most candidates were able to gain at least some marks for accounting entries in part (b) (i). Few were able to gain very high marks, which was surprising given that a similar example had appeared in 'Student Accountant' in May 2004. Some candidates lost marks by only showing journal entries, not ledger accounts, as required. Few candidates understood what was required in part (ii) and wrote instead in very general terms about just-in-time systems.
Question 3

In their answers to part (a) it was noticeable that a large number of candidates did not make any reference to the Moffat Ltd scenario. However, most candidates were able to reproduce a list of the characteristics of strategic, tactical and operational information. In general, the examples given of each type of information were reasonable although some examples of tactical information were in fact in the nature of operational information. There were few candidates who provided good answers to part (b). A large number of candidates described quantitative benefits as opposed to qualitative benefits. In their answers to part (c) most candidates were able to identify two benefits. However, many candidates omitted to explain how the benefits might be assessed.
Question 4

In their answers to part (a) most candidates were able to identify some of the advantages. Some candidates lost the opportunity to achieve further marks by repetition of the same advantage. In part (b) many candidates failed to address the specific requirement and simply produced a SWOT analysis for Diverse Holdings Plc. Some of these were quite detailed, suggesting that those candidates had not noted that there were only 3 marks allocated to this part of the question. Many answers to part (c)(i) calculated market shares and operating profit percentages and then simply described the trends in these two measures without relating them to the background information given about each subsidiary. Other candidates reproduced the background information but did not provide any 'data analysis' as part of the competitive assessment of Diverse Holdings Plc. Many answers to part (ii) suggested accounting techniques rather than strategies. Better answers suggested three strategies and related each to the circumstances of an individual subsidiary.
Question 5

Part (a) was generally very well answered. The large majority of candidates selected four performance measurement problems that they were not only able to explain but could also illustrate in a reasonable manner. Some candidates provided very good answers to part (b). However, candidates often ignored the requirement to suggest the problem classifications which the actions might address. A worrying number of candidates appeared to have no idea what is involved in the audit of a performance measurement system.