This article has been written to help you familiarise yourself with some of the units in AAT’s level 3 Diploma in 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 are 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 Comments that will support your understanding of the topics.*  The reports can be found in the learning portal (login required).

Business Awareness (BUAW)

Overall pass rate: 63%

Use of time: on average, students only use 76% of the time available to them but spend more than the notional time allocated on the written tasks.

Strongest tasks: 1  – Organisations and Ethics for Accountants, and 5 – Micro-economic Environment and Sustainability

Weakest tasks: 4 and 6

Task 4 – Ethical and Legal Compliance

This task requires written answers, and you need to understand:

• money laundering regulations and the process for reporting money laundering.  In particular, the three-stage process of money laundering and the actions which should be taken to report money laundering, including the information to be included in the report and the timescales for reporting.
  • Use AML (Anti-money laundering) tagged AAT Comment articles to provide background.
  • what happens when a course of action is unethical.  Especially the reporting process and disciplinary actions that can be taken.
    • Use Ethics tagged AAT Comment articles to give you context.

Task 6 – Communication and Visualisation

This task requires written answers, and you have to:

• interpret visual information to indicate relationships and trends.  This requires a high-level view to be taken to identify and understand the patterns in the presented data.
• understand the importance of visualising information in different formats and identify the appropriate format to communicate effectively to meet specific stakeholder requirements.

Other remarks regarding Task 2 – Analysing the External Environment

This task includes written answers in relation to completing a PESTLE analysis, and the report states that students struggle to apply their analysis to the given scenario.  In particular, they are weak at identifying relevant threats and then explaining why they are threats and what appropriate actions can be taken to address them.

The report makes a number of other points about exam technique in relation to written answers, including the fact that students:

• don’t always answer the question asked and/or don’t answer it fully
  • Try to use the number of marks available to help you gauge how much to write, and always check your answer against the question once you’ve written it to ensure you’ve answered it completely
• don’t pay attention to the command verb used
  • Ensure you know what the command verbs mean, as they indicate the kind of answer the examiner is looking for.  Check out the writing skill e-learning unit and associated videos on the learning portal if you are unsure
  • Have a read of the following:
  • How to apply active verbs
  • How to apply active verbs at advanced level
  • How to write more professionally
• don’t use the information given in the scenario and/or make unrelated general comments
  • Ensure you always refer to the scenario to support your points, that way, you’ll maximise the marks you can be awarded.

Q22 Comment articles specifically about this unit:

• Risk management
• Types of good
• Emerging and developing technologies
• Supply and demand curves

Relevant AQ16 articles:

• Fundamental principles, threats, and safeguards – parts 1 and 2
• Principles versus rules in professional ethics
• Conflicts of interest
• Identifying organisational initiatives that support sustainability
• When partnerships dissolve, taking goodwill into account – note that this article refers to accounting adjustments not required in this unit

Financial Accounting: Preparing Financial Statements (FAPS)

Overall pass rate: 57%

Use of time: only 80% used on average

Strongest tasks: 1  – Using Day Books, and Accounting for the Monitoring of Non-current Assets, and 4 – Producing Financial Statements for Sole Traders and Partnerships

Weakest tasks: 2 and 3

Weak areas in this unit include:

Task 2 – Recording Period End Adjustments

• accounting for irrecoverable debts recovered
• accounting for accruals and prepayments when not asked to complete the relevant expense or income account

Task 3 – Producing, Adjusting, Checking and Extending the Trial Balance

• understanding the difference between the extended trial balance of a partnership and a sole trader
• posting to accounts in the memorandum (subsidiary) ledgers
• taking into account the VAT status of organisations when considering the effect of accounting transactions on elements of the accounting equation.

The report also mentions that students struggle to identify causes of changes in profitability ratios, an area that is covered in Task 5.

There are lots of articles to support this unit, and whilst they were originally written to cover tricky areas in the AQ16 units, the topics are fundamentally the same and it is likely that students will still find the same key areas difficult.  Therefore, the following are a good place to start.

Relevant AQ16 articles:

Understanding irrecoverable and doubtful debts
Accruals concept parts 1 & 2
How to successfully extend a trial balance
Accounting adjustments in an ETB or journals series
Using a four line journal to correct errors
The non-current assets cycle series
Accounting principles and why you should understand them
How to prepare closing inventory for financial statements
Capital accounts
Appropriation accounts
Current accounts
Cost of goods sold
Margins and mark-ups

Tax Processes for Business (TPFB)

Overall pass rate: 56%

Use of time: 86% used on average

Strongest tasks: 2  – Calculating and Accounting for VAT, 3 –  Recovery of Input Tax and 8 – Reporting Information on VAT and Payroll

Weakest tasks: 5 and 7

The report notes that in order to improve performance students should pay particular attention to:

Task 5 – Verifying VAT Returns

• verifying and reconciling VAT returns, but also ensure not to spend too long on this task at the expense of others

Task 7 – Principles of Payroll

• payroll principles and operation, as students are not spending sufficient time on this task which suggests it is an area that requires more practice.

Q22 articles specifically about this unit:

Exports are zero-rated for VAT aren’t they?

This unit has been changed from the previous AQ16 one to better address the needs of employers.  It therefore includes payroll principles and puts emphasis on the administration, compliance, and verification of VAT processes rather than VAT calculations.  It has accompanying reference material that can be accessed during the assessment, with which I suggest you should be as familiar as possible so that you know what is in it, as well as maybe more importantly, what is not!

With that in mind, the following AQ16 articles are relevant as they should help you improve your underpinning knowledge:

Indirect Tax – focuses on accurate and timely submissions
Standard and cash accounting schemes
Annual accounting and flat rate schemes
Balancing a trial balance and correcting errors with journals – you need strong double entry bookkeeping skills, in relation to how VAT is accounted for, in order to be able to calculate changes and adjustments based on errors identified in previous VAT returns.

Whilst these will help improve your calculation and adjustment skills:

How to calculate VAT
Bad debt relief and fuel scale charges on a VAT return

The report also mentions that students need to be more familiar with the implications for non-compliance of VAT regulations, in particular the penalty regime, an area that is covered in Task 6. So, you should also be aware that the unit is based on a specific Finance Act which is changed annually but is usually a year behind the actual tax year. This means that some of the details you will be assessed on, such as thresholds or penalties, may be different to those that you apply at work. Therefore it’s vital you use the reference material, even if you regularly prepare VAT returns!

Summary

The purpose of this qualification is to ensure that you are well prepared to progress into a career in business, finance or professional accountancy, or into further education. Therefore it develops the skills needed for financial processes, including accounting principles and concepts, advanced bookkeeping and preparing financial statements. It also covers the business environment, technology used in finance and accounting, business issues regarding payroll and value added tax (VAT), issues in business, management accounting techniques, ethical principles and sustainability considerations for accountants.

In order to successfully pass this qualification, you will need to use a range of study techniques. The FAPS and Management Accounting Techniques (on which a report is yet to be published) units require you to learn theory and then apply it in practice, usually through calculations; skills traditionally within the comfort zone of accounting students. However, BUAW and a significant proportion of TPFB, requires you to understand topics, recall and apply facts, more than they need you to be able to do things, such as calculations. Therefore, you will need to adjust your learning techniques so that they are appropriate for each unit.

*Note that 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.

Artificial Intelligence has been around for many years in security, planning, logistics and internet algorithms, as well as chatbots. The controversy which is now surrounding AI is more to do with generative AI, which is capable of creating content, essays, code and, potentially, exam answers.

At the forefront of this is ChatGPT, a piece of software which uses artificial intelligence and is developed by OpenAI. Its launch has been seen as controversial because it can generate content within seconds and it was able to pass a law school exam, although it only managed an average C+ grade compared with real students’ average grade of B+.

ChatGPT generates content by using huge amounts of data from which it creates human-like responses and written content. Sometimes this data is inaccurate or offensive. This has given rise to allegations of unconscious bias, as the content is sourced from existing material publicly available which may itself be racist, sexist or factually wrong. In April this year (2023), Elon Musk and a group of AI experts call for a pause in developing powerful AI systems due to the potential risk to society.

How does chatbot software work?

Chatbots simulate human written conversation in response to your question or prompt. In the background, the software is using machine learning to express thoughts and ideas in a way which is appropriate to human speech and language. While the content that is produced is mediocre compared to that of a great novel writer or grade A student, it takes a matter of seconds to produce a paragraph of 350 words.

This has huge implications for society. Music and art can also be created by computer alone. An AI-generated photograph recently won the Sony world photography awards. Some commentators are suggesting that this software will be as significant in changing society and employment as machines were in the Industrial Revolution.

What are the implications of Chat GPT for students? 

“We are currently witnessing how a groundbreaking invention like AI is changing the way we work, study, generate and transfer knowledge,” says Professor Johannes Kiessler, Dean of the Faculty Art & Design and Head of Programme M.A. Innovation Design Management at University of Europe for Applied Sciences.

“Some people compare the potential consequences of this technology with the massive disruptions that were caused by the steam engine in the middle of the 18^th century,” he says

“These bots are based on so-called Large Language Models (LLMs) and are designed to analyze large sets of existing data to identify patterns and predict outcomes. Sometimes, we must remind our students that all of these outcomes are based on something that has existed before.”He describes the changes as a “tectonic shift” and suggests that it might best be used to complement human creativity, not replace it.

“We encourage our students to find critical but creative ways for employing it, not as a standalone creative process but rather as a brainstorming partner, a content critic, or a sketch artist,” he says.“We must also remind them that AI is not a replacement for human, people-centric creativity, which requires the ability to read and understand emotions and leads to moral and ethical decisions.”

Human analysis is superior to that of machines – for now

Elizabeth Ellis, Head of School of Digital Education at Arden University, acknowledges that the way in which we are working is rapidly changing.

On the question of using ChatGPT to write essays, she says that the human touch brings a subtlety and nuance to work and decisions which AI does not possess.

“If students are using AI for assessment, are they truly demonstrating what they have learned? Will they still be an asset to the jobs market post-graduation? There are many concerns around using ChatGPT and we are well aware of the lack of emotional intelligence and the missing ‘human touch’ in AI’s work,” she says.

“We must always retain a person’s input. ChatGPT may be trained enough to pass the bar exam, for example, but how well can it assess the intricacies of the human mind that impacts the legal system and the deep analyses of legal cases?”

She says educational institutions and trainers should be focusing on those skills which will be insulated from automation: interpersonal or ‘human’ skills. “These are the tasks that software cannot replace and will become increasingly important in the future,” she says. “The ChatGPT uproar and AI moral panic begs for an entirely different approach – the education system should really be asking, ‘If AI can regurgitate information already, should we be asking our students to do the same?’.”

She says that in terms of employability, transferable skills are much needed, and readily rewarded. She argues that in the future, there may be a shift that involves offering assessments that step away from traditional examinations and instead asks students to navigate real-life challenges and develop ‘workplace-ready’ skills.

How can we preserve the integrity of training and exams?

Sheldon Monteiro, Chief Product Officer, Publicis Sapient, says that the researchers who evaluated ChatGPT’s performance in the bar exam were understandably surprised at the quality of the output which was generated for this challenging exam.

“Fortunately, ChatGPT is an AI language model, not a human being, and therefore cannot take and pass an exam with the objective of earning legal credentials and practicing law on its own, at least not in the foreseeable future,” he says. “For now, AI’s role will assist, but not replace humans. But make no mistake, this advancement in the capability of AI has profound implications for educators, students and the legal profession.”

He says exam boards will need to modify their evaluative methods to better assess students’ understanding, application of knowledge, higher-order thinking skills, structured analysis, and even the ability to effectively use AI tools and critically evaluate AI outputs.

Before students rejoice at AI tools assisting with studying and even helping during exams, they should keep in mind that while AI-powered language models can be a handy tool for exam preparation, examiners have tools to detect work that an AI language model has generated, he says.

“The language patterns in AI-generated text can give it away, making it sound robotic or lacking coherence. AI-generated work may also lack the depth, complexity, or originality typically expected from human work, and it is less likely to contain human errors like spelling mistakes, grammatical errors, or typos.”

AI-generated content is not a substitute for original work. Properly citing and referencing any AI-generated content is essential to maintain academic integrity and uphold ethical standards in education.

“The most obvious advantage that humans have over ChatGPT is emotional intelligence,” he says. “Emotional intelligence will remain an advantage because professions are about understanding complex human dynamics, and using judgement about how others will react and respond to the arguments and context they are presented with.”

What does the future hold for AI software?

The debate on how and where AI is used will continue to be fiercely debated. Professor Kiessler says: “We strongly believe that used in responsible ways, AI Chatbots will become powerful extensions to the human mind in innovation processes.”

However, the concerns of Elon Musk and others are that AI may be employed in dangerous or irresponsible ways, which could damage society.

Perhaps the last word should go to ChatGPT itself, to whom I addressed the question: Can ChatGPT help me pass my exam. This was the response:

As an AI language model, I can provide you with information and insights that could potentially help you prepare for your exam. However, it’s important to note that I am not a substitute for studying and practicing the material on your own.

If you have specific questions or areas of difficulty related to your exam, feel free to ask me and I will do my best to provide you with accurate and helpful information. Additionally, I can suggest study techniques and resources that may aid in your exam preparation.

Ultimately, success on your exam will depend on your own efforts and dedication to studying the material thoroughly.