Presentation on theme: "“Cracking the Case” How to Pass the ICAN Case Study Paper C5 Presentation At: ICAN New Professional Examinations Syllabus Sensitisation Programme Lagos."— Presentation transcript:
1 “Cracking the Case” How to Pass the ICAN Case Study Paper C5 Presentation At: ICAN New Professional Examinations Syllabus Sensitisation Programme Lagos Airport Hotel, 16 August, 2014By: Isma’ila M. Zakari mni, FCA – Chairman, ICAN Professional Examinations Committee
2 Content Case Study Objectives Case Study Syllabus Learning Materials Pilot Case Study ExaminationsSolution to ExaminationsThe Marking KeyTeaching and LearningConclusionQuestion Time
3 Case Study ObjectivesThe ICAN case study requires students to demonstrate their professional ability and skills to respond to a business scenario, with accounting and finance issues at its core, as though they were dealing with real client situation. This will normally require the drafting of a report dealing with the issues presented in the business scenario to a client or other equivalent recipient.The case study is marked by reference to a Competency Based Assessment (CBA) Key. All marks are awarded for the demonstration of professional skills. Where students are required to demonstrate technical knowledge, marks will be awarded in the context of how they analyse the problem and develop and present their solutions.
4 Case Study Syllabus Case Study Vision Case Study Approach Student PositionThe Case Study OverviewCompetences - 24Case Study Tools - 5Case Study Scenario Types - 13Case Study Tasks - 11Ethics Component
5 Case Study VisionThe case study approach is based on a vision of a newly qualified ICAN member as:A rounded business professional capable of contributing real value in business management.A professional accountant with the core values that enable him/her to act in the public interest as well as the interest of his/her employer and or client.Someone possessing the competences that include sound knowledge and higher value technical skills expected of a finance professional.
6 Case Study Approach A four hour paper A scenario and information pack limited to no more than 15 pages including context, market and entity information with extracts of financial statements and management information which will be provided for candidates on the day of the exam.The case study exam will comprise the production of a report, without an executive summary, in accordance with a request from, or on behalf of, a client. There will normally be two exam requirements for candidates to answer:Each requirement will be an assessment of the business scenario and issues arising considering different factors and perspectives which candidates will identify and comment on from their analysis and evaluation of the material.Limited appendices may be required where relevant and these may be financial or non- financial in content.
9 The Case Study Overview – Cont’d Students’ Output
10 The Case Study Overview – Cont’d Students’ Output Assessment Criteria – 8 or 9UDIA – Using Data and Information AppropriatelyUPTK – Using Professional Tools and KnowledgeUAS – Using Analytical SkillsIIO – Identifying Issues and OptionsASE – Applying Scepticism and EthicsESJ – Evaluative Skills and JudgementDCR – Drawing Conclusions and Making ReservationsMCR – Making Clear RecommendationsCAR – Communicating Appropriately with the Recipient
11 Competences - 24 Demonstrate understanding of a scenario Demonstrate understanding of dataDemonstrate understanding of informationMake sense of data as informationSelect and use a tool appropriatelyIdentify and state opportunities, risks, problems and issuesExplain themIdentify that there are optionsIdentify and state the optionsExplain the optionsEvaluate the optionsCompare the choice of optionsDemonstrate understanding of drivers of choiceAssess the risks of using given data, information and toolsExplain risks of using given data, information and toolsMake reasoned and reasonable inferencesShow professional skepticismDemonstrate ethical awareness and good understanding of professional and business ethicsKnow when to and how to constructively challengeMove to and state conclusionsMake appropriate qualifications and reservationsDevise and state appropriate recommendationsCreate a required deliverableDraft a defined report with two requirements
12 Case Study Tools - 5The case study tools are the basic underlying process elements of knowledge and skills that students will apply in the case study examination to support the content of the report they produce as an output.Those to analyse a basic set of financial statements consisting of statement of profit or loss, statement of financial position, cash flow statement and supporting notesThose that can be used with management information such as budgets and forecastsStrategic tools such as PESTEL, Five Force analysis and SWOT analysisFinancial engineering assessment toolsBusiness valuation tools
13 Case Study Tools – Strategic Tools PESTEL: Political, Economic, Social, Technological, Environmental, LegalSWOT: Strengths, Weaknesses, Opportunities, ThreatsPorter’s Five Forces: Threat of New Entrants, Rivalry, Threat of Substitution, Supplier Power, Buyer Power
14 Case Study Scenario Types - 13 The scenario and requirements will be in the context of a business advisory situation that includes few issues relating to disclosure, reporting, assurance or tax. It may require or embrace the following 13 scenario types:Informed business judgmentManagerial judgmentProfessional skepticismProfessional ethicsBusiness ethicsRisk assessmentDue diligenceCorporate Social ResponsibilityGovernanceSocial issuesEfficiency, economy and effectivenessStakeholder and shareholder balancingGlobalisation issues
15 Case Study Tasks - 11The tasks that students perform may include financial statement analysis, financial data analysis, and the analysis of operational and strategic issues, including:Financial statement analysisIdentifying financial strengths and weaknessesSetting a price for a productValuing a businessAnalysing costsBreak-even analysisCash flow analysisSetting key performance indicators (KPI)Sensitivity analysisStrategic analysisEfficiency, economy and effectiveness analysis
16 Ethics ComponentEthics is a component of the ICAN case study. It will be assessed in a contextual and broad way.Students will not be asked about ethics directly. They will have to recognise and discuss ethical matters identified within the case scenario and present their concerns as part of their output of the case.Ethical issues may relate to their own or their employers position and may be within the client they are advising. They may include not only professional issues but also matters of how business is conducted, issues of business trust, social impact, environmental impact and sustainability.Ethics may be seen in the context of regulations, regulatory oversight, professional duties, public interest and reputation.
17 Learning MaterialsICAN has developed case study learning materials which will be available for students to purchase in form of a hardcopy book of four chapters:Chapter 1 – IntroductionChapter 2 – Financial Statement AnalysisChapter 3 – Financial Data AnalysisChapter 4 – Operational and Strategic Analysis including Business Trust and Ethical Awareness
18 Learning Materials – Cont’d Not a textbookMore of a tool and supportCommunicates what students are looking forAdvice on how to achieve itIt’s the learning process that really countsOnly for supported learning and may not really work for distance learning
19 Pilot Case Study Examinations Pilot Paper 1: Clear Grow LimitedPilot Paper 2: LAG Film & DVD Limited (LAG)
20 Solution to Examinations There is no right answerWe do not give a solutionThere is no solution?There isn’t just one way but there is a solution in mindBut I won’t tell you!!!Students try to obtain ‘model answer’ but that is not the right way to learn!!!
21 Suggested Time Allocation – In Minutes OverallRequirement 1Requirement 2TOTALReading & Planning301560Calculations-Drafting Report120105240
22 Case Study Assessment and Marking Key Competency Based Assessment (CBA) and Marks AllocationIt is important for candidates to understand that in the Case Study exam the assessment uses a process known as Competency Based Assessment (CBA). This means that it is the evidence of a candidate’s professional skills (or competence) that is being assessed.The starting-point for developing the assessment of a specific case is the generic competencies that are set out in the introduction which are then tailored to the Case Study requirements. The list of assessed skills indicates the areas in which professional skills might be assessed in a Case Study exam and that list is combined with the case requirements to create a tailored list for the specific exam requirement.
23 The Marking KeyIn order to assess candidates objectively a specific marking key is developed for each exam. This will assess a candidate’s professional skills in the following way:There will be two main requirements for which marks are given, together with marks for integrative and multidisciplinary skills (including relevant financial appendices).There will be 8 Skills Assessment Boxes (SABs or more commonly referred to just as boxes) – see below for definition and an example – for each of the two requirements,There will be 4 skills boxes for integrative and multidisciplinary skills that apply to the document as a whole (2 of which are for the financial appendices). (See below for an example).Across the whole paper, there will thus be 20 skills boxes.
24 The Marking Key – Cont’d A typical allocation of grade boxes is therefore as follows:RequirementsBoxesRequirement 18Requirement 216Overall Paper: Report2Overall Paper: AppendicesTOTAL20
25 The Marking Key – Cont’d Marks Within Skills BoxesWithin each skills box there will be a number of assessment criteria (ranging from 4 – 8) which will be the basis for assessing candidates under each box (an example is shown below)Not all will be relevant to any given Case Study; the examiners select those that are relevant to ensure that the marking of successive cases is comparable.Candidates will only have to demonstrate 4 of these assessment criteria to achieve the maximum assessment marks for that specific box and to demonstrate adequate competency in that box.
26 The Marking Key – Cont’d Constructing the Marking KeyHaving selected the required competencies for the exam, the examiners will then set out the specific criteria on which each competency is to be assessed.This will comprise a set of the possible facts, technical and ethical knowledge, outputs from analysis, implications from the analysis, professional judgement, conclusions and recommendations, which are relevant to the case.
27 The Marking Key – Cont’d An example of the marking keyThe Case Study usually entails the need to challenge assumptions or to apply professional scepticism to facts and figures supplied by people or entities that may have vested interests.It is likely that the exam requirements will comprise components that interact in a number of ways. For example, you might be required to prepare a report that comprises:An assessment of current financial information, in whole or in part, with or without adjustments by comparison with previous results, forecasts or other criteria. The application of professional scepticismAn evaluation of a current problem or proposal based on some element of the financial information provided in the context of current or future options by considering criteria such as the possible benefits and risks and any ethical considerations.The marking key would thus comprise three sections being:Requirement 1: Financial statement analysis and related issuesRequirement 2: Financial data analysis and related issuesOverall paper: Appendices; Structure and Communication criteria
28 The Marking Key – Cont’d Grades StructureSASuperior AchievementAt Least 45CACompetent AchievementAt Least 34BCBelow Competent2 or Less2NCNot CompetentOnly 11VVoidNothing
29 The Marking Key – Cont’d How are grades awarded?Competency is assessed by reference to four levels in each box:Superior achievement (SA) – candidates have to show that they have understood the requirement and have provided relevant evidence relating to most (at least 4 items) of the assessment criteria in the box.Competent achievement (CA) – candidates have to show that they have understood the requirement and have provided relevant evidence (some or enough – usually 3 or more items) relating to the assessment criteria in the box.Below competent achievement (BC) – candidates have shown only a partial understanding of the requirement and/or provided less than sufficient evidence (2 or fewer items) relating to the assessment criteria in the box.Not competent (NC) – candidates have made an attempt to demonstrate the skill required but there is little or sparse evidence (only 1 item) of their understanding of what is required in the box.If there is no evidence of a candidate having addressed the competency, it will be marked as 'Void':Void (V) – candidates have not provided any evidence to show that they have understood the requirement or demonstrated the skill required. Void means that under that box nothing relevant has been provided.
30 The Marking Key – Cont’d USING DATA AND INFORMATION APPROPRIATELYUses data identifying business entity in context Uses data identifying position in industry Uses data identifying point(s) in lifecycle Identifies wider context Identifies impact of new competition in sector Identifies impact of new IT on retail sales sectorV NC BC CA SA 2) USING PROFESSIONAL TOOLS AND KNOWLEDGEIdentifies & uses appropriate key numerical information Uses appropriate analytical toolsKey ratios calculated (cross referenced to appendix) Identifies issue of inventory valuation on GP Comments on changed revenue mix (new ↓ old ↑) Comments on other case scenario information Integrates numbers and wordsV NC BC CA SA
31 The Marking Key – Cont’d 3) USING ANALYTICAL SKILLSAnalysis of revenue trend in N and percentages Comment on sales of core items up: N 3,254k (13.7%) Comment on sales of imported items up: N 368k (2.1%) Comment on analysis of GP trend in N and percentages Overall decrease due to growth in old core businessComments on high GP in other salesAppropriate explanations of work conductedV NC BC CA SA 4) IDENTIFYING ISSUES AND OPTIONSOlder revenue streams driven by footfallIdentifies need to maintain existing customer baseNewer revenue streams attract younger customersImportance of IT and internet (pros and cons)Discusses marketing options Identifies materiality of investment issue for ITV NC BC CA SA
32 The Marking Key – Cont’d 5) APPLYING SCEPTICISM AND ETHICSFigures to be used for extending bank loan Closing inventory high due to ‘price fluctuations’ No inventory write off this year Branch activity/information interdependent (A ↓ X ↑) Branch X manager just achieves sale bonus criteria Questions changing ‘seasonality’ of retail salesV NC BC CA SA 6) EVALUATIVE SKILLS AND JUDGEMENTGrowth in established revenue lines = good value Success of overall growth in a recession = strength Diverse revenue streams = business strength Evaluates impact on GP of stream mix (old ↓ new ↑) Importance of maintaining old core business Evaluates slow growth/decline in new salesConsiders any provenance factorsV NC BC CA SA
33 The Marking Key – Cont’d CONCLUSIONS AND RECOMMENDATIONSDraws conclusions (under a heading) Concludes on strength of diverse revenue streams Concludes on overall revenue growth Concludes on GP% OP% Concludes on customer profile and IT Concludes on impact of recessionV NC BC CA SA 8) MAKING RECOMMENDATIONSMaintain diverse revenue streams Create new interactive websiteInvest in appropriate IT and staff training Maintain / improve contact with established customers Consider more varied retail locations Other sensible / commercial recommendationsV NC BC CA SA
34 The Marking Key – Cont’d REPORT: STRUCTURESufficient appropriate headings Appropriate use of paragraphs / sentencesLegible Correctly / sequentially numbered pagesV NC BC CA SA REPORT: STYLE AND LANGUAGENeeds appropriate disclaimer (if external report) Suitable (formal) language for audience Tactful / ethical comments Acceptable spelling and punctuationV NC BC CA SA
35 The Marking Key – Cont’d APPENDIX 1: R1 FINANCIAL STATEMENT ANALYSISTabulated and mix of N and %s Revenue trend overall and change in revenue mix GP calculation overall and by stream Calculation of inventory daysV NC BC CA SA APPENDIX 2: R2 FINANCIAL DATA ANALYSISLogical approach and numbers clearly derived Well-presented and labelledCalculates [contribution] for next 2 years / SWOT Flexes critical material assumptionV NC BC CA SA
36 The Marking Key – Cont’d Assessment of Professional SkillsThe professional skills that are assessed in the Case Study are interrelated. In general:If your assimilation and use of data and information is weak it will lead to poor analysisInadequate analysis of the problems and poor identification of solutions will leave you without a proper basis for evaluating any issues and exercising accurate judgementIf you are unable to evaluate accurately and exercise appropriate judgement, it is unlikely that you will provide adequate support for your conclusionsWithout developing critically relevant conclusions, you will have no basis for stating any reservations or making any recommendations.
37 The Marking Key – Cont’d Assessment of Communication SkillsIn the grades for the overall paper, your integrative and communication skills will be assessed.Make sure that you know to whom you are writing. Having identified your audience, keep it in mind throughout.Each audience will have different requirements and expectations. Regardless of the audience, you will need to:Avoid technical terminology, jargon and colloquialisms – use simple languageBe professional – remember you are addressing a client or a partner or your bossAvoid casual or indiscreet comments – imagine having to read the report aloud to the recipientBe succinct – try to avoid lengthy, convoluted or unnecessary explanationsBe relevant – only deal with the facts relating to the work you have been asked to doBe tactful – imagine having to read the report aloud to anyone mentioned in it
38 Teaching and Learning Learning by Doing Facilitating not Teaching Assessing and AdvisingTalking and DebatingPractice Makes PerfectThe Case Study Exam is Different
39 Learning Issues Student Who Lack Context and Experience Theoretical LearningLegacy Gaps in Knowledge and SkillsHesitating to Ask QuestionsNot Willing to PracticeFearing MistakesLooking for an AnswerLooking for an Answer from the Lecturer
40 Conclusion – Case Study Key Success Factors Good planning and strict time management to ensure the whole exam is completedGood-quality written financial statement analysis that explains the financial facts derived from the financial information to the appropriate audienceGood-quality financial data analysis properly explained to its intended audienceGood quality financial appendices cross referenced in the body of the reportAppropriate use of relevant material from throughout the case scenarioDevelopment of analysis through judgement into reasoned recommendations and conclusionsAn absence of irrelevant material and answers to non-existent questionsReferences to appropriate economic and industry factors including ethical issuesDemonstration of professional scepticism and the ability to challenge assumptionsApplication of common sense to ensure proposals are reasonable