Struggling with Financial Statements at AAT Level 4? Steve Collings, Accounting Technician of the Year 2011, shares his advice for exam success.
With Financial Statements (often referred to in its abbreviated form, FNST) proving a tricky area for AAT Level 4 students, a member of AAT’s discussion forums recently decided to share some helpful tips.
The tips came from a good source: Steve Collings was named Accounting Technician of the Year at the British Accountancy Awards 2011, and has written a number of books including IFRS For Dummies.
In addition to the helpful pointers below, Steve advises: “The important point, over and above all of these, is to firmly believe that you can pass this paper! Keep the glass half full and where you do struggle, devote extra hours to these areas.”
- Make sure you have a copy of the syllabus to hand before you start to study.
- Go through the syllabus in fine detail, highlighting those areas where you strongly suspect you will struggle.
- Read past chief assessor reports to gain an understanding of the pitfalls to avoid.
- Make sure that you allocate sufficient time for study. If you are receiving formal tuition you should at least aim to do an extra day at home. If you are a home studier you need to devise a realistic study timetable and plan and stick to it.
- Make sure you give equal attention to each area of the paper. Don’t concentrate too much on accounting standards and so on to the detriment of other areas of the paper, such as ratio analysis.
- There are lots of accounting standards to go through and learn. You need to have a sound, basic understanding of the main thrust of each standard.
- To get a sound understanding, do a list of bullet points for each standard and pin it to the wall. Some students have been known to record the main content of standards on their phones and subsequently listen to them on the train/bus/car!
- If you are struggling on a particular point in the accounting standards, default back to the Conceptual Framework (which defines things like assets/liabilities/income etc). This will help to focus your answers.
- If you struggle with consolidations, make sure you break it all up into bite-size chunks. Many students tend to trip up because they try to do it all in one go – this doesn’t help. Go through the ‘step’ approach, concentrating on each one in isolation.
- I have met many students who can calculate ratios until the cows come home. Calculation is not enough – you need to be able to talk about them. Remember the job of an accountant is primarily about interpretation and telling clients/non-financial staff what things mean. FNST is no different in this respect. Be sure you can talk about the ratios as well as calculate them.
- Remember that FNST is not just about the numbers – the chief assessor will expect you to be able to talk about the numbers (similar to the bullet above). You need to get a sound understanding of what the numbers in a set of financial statements mean and be able to talk about them.
- Don’t be fearful of this exam. Yes, it is the final level financial reporting paper at AAT – but many students have passed it and so can you!
- Be sure to cover the whole syllabus in ample time. Do not rely on online discussions where students discuss what accounting standards/ratios may/may not come up – this is a pointless exercise, because there are so many examinable standards/ratios that each exam will be different.
- Don’t get mixed up with your standards. For example, the examiner could ask you to define a current asset and a current liability. It is IAS 1 ‘Presentation of Financial Statements’ that deals with this issue. Many students have fallen into the trap of seeing this type of question and automatically defining an asset and a liability. Assets/liabilities are defined in the Conceptual Framework, not IAS 1, so be sure to read the requirements very carefully.
- Try to ‘teach’ FNST as a means of revision. It might sound silly stood there talking to yourself, but often if you pretend you are teaching the subject you can sometimes come across issues that you thought you were OK with, but which you find may need further work.
- Interact with other students as much as possible – on AAT’s forums, in groups at college, and so on. Helping each other understand difficulties is far more effective sometimes than attending a formal class.
- Read around the subject – there are lots of technical articles written by me/others on accounting standards and related areas. Sometimes these help to understand a topic much better than a text book.
- After you have worked on a question, review the answer carefully against the suggested answer to understand where you went wrong and then after a while attempt a similar style question.
These tips first appeared on AAT’s discussion forums. You can learn more about Steve Collings and buy his books at stevecollings.co.uk, and you can find him on Twitter at @stecollings. Steve wrote another useful article about this learning and assessment area on his website: ‘Preparing to pass AAT paper FNST’.
You’ll find learning support material, help modules and Green Light tests for Financial Statements at AAT E-learn (you’ll need to sign in to your MyAAT account).