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“Cracking the Case” How to Pass the ICAN Case Study Paper C5 Presentation At: ICAN New Professional Examinations Syllabus Sensitisation Programme Lagos.

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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, 2014 By: Isma’ila M. Zakari mni, FCA – Chairman, ICAN Professional Examinations Committee

2 Content Case Study Objectives Case Study Syllabus Learning Materials
Pilot Case Study Examinations Solution to Examinations The Marking Key Teaching and Learning Conclusion Question Time

3 Case Study Objectives The 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 Position The Case Study Overview Competences - 24 Case Study Tools - 5 Case Study Scenario Types - 13 Case Study Tasks - 11 Ethics Component

5 Case Study Vision The 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.

7 The Case Study Overview

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9 The Case Study Overview – Cont’d
Students’ Output

10 The Case Study Overview – Cont’d
Students’ Output Assessment Criteria – 8 or 9 UDIA – Using Data and Information Appropriately UPTK – Using Professional Tools and Knowledge UAS – Using Analytical Skills IIO – Identifying Issues and Options ASE – Applying Scepticism and Ethics ESJ – Evaluative Skills and Judgement DCR – Drawing Conclusions and Making Reservations MCR – Making Clear Recommendations CAR – Communicating Appropriately with the Recipient

11 Competences - 24 Demonstrate understanding of a scenario
Demonstrate understanding of data Demonstrate understanding of information Make sense of data as information Select and use a tool appropriately Identify and state opportunities, risks, problems and issues Explain them Identify that there are options Identify and state the options Explain the options Evaluate the options Compare the choice of options Demonstrate understanding of drivers of choice Assess the risks of using given data, information and tools Explain risks of using given data, information and tools Make reasoned and reasonable inferences Show professional skepticism Demonstrate ethical awareness and good understanding of professional and business ethics Know when to and how to constructively challenge Move to and state conclusions Make appropriate qualifications and reservations Devise and state appropriate recommendations Create a required deliverable Draft a defined report with two requirements

12 Case Study Tools - 5 The 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 notes Those that can be used with management information such as budgets and forecasts Strategic tools such as PESTEL, Five Force analysis and SWOT analysis Financial engineering assessment tools Business valuation tools

13 Case Study Tools – Strategic Tools
PESTEL: Political, Economic, Social, Technological, Environmental, Legal SWOT: Strengths, Weaknesses, Opportunities, Threats Porter’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 judgment Managerial judgment Professional skepticism Professional ethics Business ethics Risk assessment Due diligence Corporate Social Responsibility Governance Social issues Efficiency, economy and effectiveness Stakeholder and shareholder balancing Globalisation issues

15 Case Study Tasks - 11 The tasks that students perform may include financial statement analysis, financial data analysis, and the analysis of operational and strategic issues, including: Financial statement analysis Identifying financial strengths and weaknesses Setting a price for a product Valuing a business Analysing costs Break-even analysis Cash flow analysis Setting key performance indicators (KPI) Sensitivity analysis Strategic analysis Efficiency, economy and effectiveness analysis

16 Ethics Component Ethics 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 Materials ICAN 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 – Introduction Chapter 2 – Financial Statement Analysis Chapter 3 – Financial Data Analysis Chapter 4 – Operational and Strategic Analysis including Business Trust and Ethical Awareness

18 Learning Materials – Cont’d
Not a textbook More of a tool and support Communicates what students are looking for Advice on how to achieve it It’s the learning process that really counts Only for supported learning and may not really work for distance learning

19 Pilot Case Study Examinations
Pilot Paper 1: Clear Grow Limited Pilot Paper 2: LAG Film & DVD Limited (LAG)

20 Solution to Examinations
There is no right answer We do not give a solution There is no solution? There isn’t just one way but there is a solution in mind But 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
Overall Requirement 1 Requirement 2 TOTAL Reading & Planning 30 15 60 Calculations - Drafting Report 120 105 240

22 Case Study Assessment and Marking Key
Competency Based Assessment (CBA) and Marks Allocation It 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 Key In 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: Requirements Boxes Requirement 1 8 Requirement 2 16 Overall Paper: Report 2 Overall Paper: Appendices TOTAL 20

25 The Marking Key – Cont’d
Marks Within Skills Boxes Within 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 Key Having 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 key The 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 scepticism An 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 issues Requirement 2: Financial data analysis and related issues Overall paper: Appendices; Structure and Communication criteria

28 The Marking Key – Cont’d
Grades Structure SA Superior Achievement At Least 4 5 CA Competent Achievement At Least 3 4 BC Below Competent 2 or Less 2 NC Not Competent Only 1 1 V Void Nothing

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 APPROPRIATELY Uses 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 sector V   NC BC CA SA    2) USING PROFESSIONAL TOOLS AND KNOWLEDGE Identifies & uses appropriate key numerical information  Uses appropriate analytical tools Key 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 words V   NC BC CA SA   

31 The Marking Key – Cont’d
3) USING ANALYTICAL SKILLS Analysis 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 business Comments on high GP in other sales Appropriate explanations of work conducted V   NC BC CA SA    4) IDENTIFYING ISSUES AND OPTIONS Older revenue streams driven by footfall Identifies need to maintain existing customer base Newer revenue streams attract younger customers Importance of IT and internet (pros and cons) Discusses marketing options  Identifies materiality of investment issue for IT V   NC BC CA SA   

32 The Marking Key – Cont’d
5) APPLYING SCEPTICISM AND ETHICS Figures 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 sales V   NC BC CA SA    6) EVALUATIVE SKILLS AND JUDGEMENT Growth 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 sales Considers any provenance factors V  NC BC CA SA   

33 The Marking Key – Cont’d
CONCLUSIONS AND RECOMMENDATIONS Draws 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 recession V   NC BC CA SA    8) MAKING RECOMMENDATIONS Maintain diverse revenue streams  Create new interactive website Invest in appropriate IT and staff training  Maintain / improve contact with established customers  Consider more varied retail locations  Other sensible / commercial recommendations V   NC BC CA SA   

34 The Marking Key – Cont’d
REPORT: STRUCTURE Sufficient appropriate headings  Appropriate use of paragraphs / sentences Legible  Correctly / sequentially numbered pages V   NC BC CA SA    REPORT: STYLE AND LANGUAGE Needs appropriate disclaimer (if external report)  Suitable (formal) language for audience  Tactful / ethical comments  Acceptable spelling and punctuation V   NC BC CA SA   

35 The Marking Key – Cont’d
APPENDIX 1: R1 FINANCIAL STATEMENT ANALYSIS Tabulated and mix of N and %s  Revenue trend overall and change in revenue mix  GP calculation overall and by stream  Calculation of inventory days V   NC BC CA SA    APPENDIX 2: R2 FINANCIAL DATA ANALYSIS Logical approach and numbers clearly derived  Well-presented and labelled Calculates [contribution] for next 2 years / SWOT  Flexes critical material assumption V   NC BC CA SA   

36 The Marking Key – Cont’d
Assessment of Professional Skills The 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 analysis Inadequate analysis of the problems and poor identification of solutions will leave you without a proper basis for evaluating any issues and exercising accurate judgement If you are unable to evaluate accurately and exercise appropriate judgement, it is unlikely that you will provide adequate support for your conclusions Without 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 Skills In 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 language Be professional – remember you are addressing a client or a partner or your boss Avoid casual or indiscreet comments – imagine having to read the report aloud to the recipient Be succinct – try to avoid lengthy, convoluted or unnecessary explanations Be relevant – only deal with the facts relating to the work you have been asked to do Be 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 Advising Talking and Debating Practice Makes Perfect The Case Study Exam is Different

39 Learning Issues Student Who Lack Context and Experience
Theoretical Learning Legacy Gaps in Knowledge and Skills Hesitating to Ask Questions Not Willing to Practice Fearing Mistakes Looking for an Answer Looking 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 completed Good-quality written financial statement analysis that explains the financial facts derived from the financial information to the appropriate audience Good-quality financial data analysis properly explained to its intended audience Good quality financial appendices cross referenced in the body of the report Appropriate use of relevant material from throughout the case scenario Development of analysis through judgement into reasoned recommendations and conclusions An absence of irrelevant material and answers to non-existent questions References to appropriate economic and industry factors including ethical issues Demonstration of professional scepticism and the ability to challenge assumptions Application of common sense to ensure proposals are reasonable

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42 Question Time


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