Examiner reports: common mistakes at Q2022 Level 4

This article has been written to help you familiarise yourself with some of the units in AAT’s level 4 Diploma in Professional Accounting. 

It is based on the feedback available in the examiner’s reports, which “provide information on the overall performance of students” and “are intended to be constructive, informative and provide further understanding of the specification content and assessment requirements.”  The reports are published annually but as the new specification of the qualification only started in September 2022, the current reports are interim versions and based on data from the initial stages of the qualification’s launch.

That said, they highlight key areas of strength and, more importantly, areas for improvement.  Therefore, they contain really useful nuggets of information.  Because if you know in general which topics/tasks most students find hard, you can use that information to guide your learning and revision and ensure you avoid common mistakes. Although, be careful not to neglect topics just because people generally perform well in them!

So, to encourage you to use them, here is a summary and links to other Comment articles that will support your understanding of the topics.*  The reports can be found in the learning portal. 

Applied Management Accounting (AMAC)

Overall pass rate: 68%

Use of time: on average students only use 86% of the time available to them but spend proportionally more time on the written elements.

Notable areas of strength:

• features and application of the product lifecycle
• standard costing and variance analysis
• resource and production budget calculations
• relevant costing
• financial and non-financial performance evaluation.

Key area for improvement:

Maybe unsurprisingly, two out of the five areas noted as weak relate to written tasks, an area that most accounting students find challenging, regardless of the level within the qualification: 

• improved use of the content provided within the task data for written responses to ensure they are tailoring their responses
• making sure that all elements of the question requirement are addressed

A range of resources have been written and developed over the last few years to help you hone your writing skills, produce the kinds of answers that the examiners are looking for and gain you maximum marks.  The examiner has stated that written tasks are proving more challenging, particularly where students are required to question the validity of the decisions being made.  Therefore understanding active verbs, such as assess and evaluate, is key.  So, 

• the writing skills e-learning unit and associated videos on the learning portal, which explain each of the verbs used and give examples, is a good place to start
• plus you could have a read of the following Comment articles:
  • How to apply active verbs at professional level, which is the last article in a 3 part series, all of which would be worth reading as they cover applicable writing techniques, as well as the verbs
  • How to write more professionally

On a positive note, the examiners also said that student performance in the written tasks when looking at performance evaluation using ratios analysis has been strong.  So if it can be done in one area, it will be possible to transfer those writing skills to other topics!

The other areas for improvement are:

• budgetary responsibility and accountability
  • Production budget report: note that this is the final part of a series so will make the most sense if you read all three Comment articles
• evaluation of the reliability of forecasts
  • The How to apply active verbs Comment article linked above, includes AAT’s definition of ‘evaluate’ and gives an exemplar answer
• linear programming
  • This Comment article on limiting factors will help your understanding of both key factor analysis, which relates to decision making when a single resource is scarce and linear programming, which is about how to produce an optimum production plan when multiple resources are scarce. 

Other relevant AQ16 Comment articles:

• Budgeting: 3 part series
• Understanding fixed overhead variances
• Discounted cash flow
• What actually is standard costing?
• Variances and standard costing: 2 part series
• Labour variances
• What’s the difference between marginal and absorption costing?  This will provide good background and/or revision in relation to relevant costs, which are often the marginal costs of production.
• Linear regression – not to be confused with linear programming and is referred to in the Q22 specification as the simple regression equation.
• Index numbers
• Trend analysis

Drafting and Interpreting Financial Statements (DAIF)

Overall pass rate: 72%

Use of time: only 80% used on average

Notable areas of strength:

• preparing of individual company statements of profit or loss, statements of changes in equity and statements of financial position
• preparing consolidated statements of financial position and consolidated statements of profit and loss tasks with students dealing with most consolidation adjustments well
• understanding of how to calculate ratios
• identifying whether a ratio has improved or deteriorated which shows a good level of understanding

Key area for improvement:

• preparing of statements of cash flows as this is the weakest area of Task 1
• performance on tasks involving the IFRS Conceptual Framework is generally weaker and students should ensure these areas are revised thoroughly
• the accounting treatment of different elements of financial statements as various things could be tested, and students must understand the impact, if any, on the financial statements
• taking note of the number of marks available to ensure students are making enough valid points to achieve full marks. This is particularly relevant in the ratio analysis task and students should think about the components of the ratio when answering this task to ensure all their points are valid
  • Part one of the How to apply active verbs series, explains a technique that would help you ensure that you answer question appropriately and in full
• care must be taken when reading the task to ensure the students tailor their response to the question asked. Marks cannot be awarded if responses are generic and not relevant to the task.

Relevant AQ16 Comment articles:

• Financial Statements
• Ratio analysis of financial statements

Internal Accounting Systems and Control (INAC)

A report about the INAC unit is yet to be published, however, the unit includes tasks that require written answers so the suggestions made in relation to AMAC would also be applicable to INAC.

A couple of Comments have been written to specifically support the Internal Accounting Systems and Control unit:

• What is data analytics, and how is it used in business?
• It’s not fraud if I make a call on company time, is it?

And the following AQ16 Comment article is also relevant:

• Cost benefit analysis

*  Note that Comment articles published before September 2022 will have been written in line with the AQ16 specification therefore, they could use different terminology, for example, sales ledger/control account as opposed to receivables ledger/control account, but the theory will still be valid.

Gill Myers is a self-employed accounts consultant. She has taught AAT qualifications since 2005 and written numerous articles and e-learning resources.