Help needed with FNST

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Becky V
Becky V Registered Posts: 374 Dedicated contributor 🦉
Hi all,i have failed financial statements twice now, and have appealed both times to see where i am going wrong. It seems it is on the written tasks. Anyone have any advice on how i can pass this exam?! Many thanks

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  • uknitty
    uknitty Registered Posts: 591 Epic contributor 🐘
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    urgh I have my FNST on Friday and it is the written task that I am dreading ! Sorry I know that is no help to you , just wanted to let you know I am sharing your pain right now!

    I'm OK with the part 2 written task (to invest or not) but the IAS question, I haven't a clue where to start revising - it just seems like they could ask anything and everything !

    What questions did you get asked previously ?

    Also, I think I may have said this before, but A Students Guide to International Financial Reporting Standards by Clare Finch has helped me to understand the IAS's better than the Osbourne and the Kaplan books. I'd highly recommend getting a copy.
  • Steve Collings
    Steve Collings Registered Posts: 997 Epic contributor 🐘
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    When I used to teach students DFS I came across lots of them who had done retake courses and who had failed on section 2 which is the ratio style question.

    The common errors students used to make which made them fail the section (and the paper) was to get the numerical bits wrong, which would then lead to them getting the commentary bit wrong as well. The other part which students used to seem afraid to do was to form a conclusion. I am not familiar with the FNST paper but if you have to advise a client or a potential investor as to whether they should invest in a company or not then you must arrive at a conclusion as this is a practical exam and in real life clients want their accountant to be able to come to a reasoned conclusion.

    I also think a key problem with numerical papers like DFS/FNST is that students tend to spend a disproportionate amount of time on the numbers part, for example running over on time on the consolidations and statement of cash flows and when it comes to the wordy bits they tend to gloss over the questions without putting down enough to give their answer substance.

    Those are the common failings which students who had done DFS told me why they felt they failed the paper first time (or maybe second time) round. Once students overcame these issues and were conscious of these the next time they sat the exam, they passed!

    Good luck for your next attempt.

    Regards
    Steve
  • uknitty
    uknitty Registered Posts: 591 Epic contributor 🐘
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    That is helpful and interesting advice Steve.

    Hope you don't mind me threadjacking for a moment Becky to pick up on Steve's comments about the Investing question.

    In my mock exam I only had 4 lines to write an answer as to if I would invest or not. I said no and gave my reasoning as Return on Equity had dropped from 12% to 7% and gearing had risen from 20% to 35%. I advised against investment in a company whose figures suggested the return was falling whilst risk was rising ( as an investor's primary motivation is typically the best return with the least risk !)

    The suggested answer was "although gearing is higher it is still reasonable and the company is still profitable so providing there is no other adverse information it should be OK to invest"

    So, in this instance I felt that I gave a well reasoned argument based on the figures available - but it was wildly different from the suggested answer. In these circumstances would I be marked "wrong" ? The decision to invest is very subjective (unless there is something glaringly obvious) so surely as long as the reasoning for the conclusion is sound it should be OK to have a different opion to the suggested answer ?
  • zara5034
    zara5034 Registered Posts: 170 Dedicated contributor 🦉
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    I seem to remember that you also need to suggest possible reasons for your findings, looking at the bigger picture, for example, if the gearing has increased, is this because they have recently invested, if the profit margin has increased than this could be a reason for an increased gearing. I appreciate that this may not have been the case in your scenario, but I think the examiner is looking for you to pull a lot more out of the question, and draw a conclusion. (And not sit on the fence!)

    I remember spending a good half hour on this part of the exam, I wrote quite an extensive answer as I was advised to do so by my tutor and it worked as I passed!
  • sdv
    sdv Registered Posts: 585 Epic contributor 🐘
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    Becky V wrote: »
    Hi all,i have failed financial statements twice now, and have appealed both times to see where i am going wrong. It seems it is on the written tasks. Anyone have any advice on how i can pass this exam?! Many thanks

    Log on to the AAT web site

    in the search button type "DFS and written tasks"

    First 3 items on the search are well worth down loading and keeping them saved for future reference.

    Good Luck!
  • uknitty
    uknitty Registered Posts: 591 Epic contributor 🐘
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    I had loads that I wanted to say, but in my Mock online exam (with Premier Training) they only allowed 4 lines of free text to answer the question so I had to get my conculsion and reason over as concicely as possible !

    What you said is good advice though and its certainly given me something to think about in terms of how to improve my anwers.

    I just did the Practice Paper 2 and instead of an investing question the question is about using ratio analysis in terms of improving working capital of a business. I'd be absolutely landed if I got a similar question in the real exam.
  • Becky V
    Becky V Registered Posts: 374 Dedicated contributor 🦉
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    Hi thanks all for your messages and advice! I will not let this exam beat me and will take on all the above advice :)
  • Steve Collings
    Steve Collings Registered Posts: 997 Epic contributor 🐘
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    uknitty wrote: »
    So, in this instance I felt that I gave a well reasoned argument based on the figures available - but it was wildly different from the suggested answer. In these circumstances would I be marked "wrong" ? The decision to invest is very subjective (unless there is something glaringly obvious) so surely as long as the reasoning for the conclusion is sound it should be OK to have a different opion to the suggested answer ?

    I am not familiar with the marking scheme on FNST but I doubt you would have scored full marks but could well pick up marks because of the arguments you put forward as to why the client should not invest.

    I think as long as your arguments are backed up with reasoned commentary you should be fine. Markers and examiners want to see an application of your skills in higher level exams such as FNST. Many students fail this section of the paper because they cannot demonstrate this level of application and simply 'sit on the fence'. In other words they give reasons why an investor should not invest and then go on about reasons why they should in the hope that this 'catch all' will get the marks - unfortunately this method results in a mark of zero!

    My mantra when I used to meet students who came to my revision courses for DFS used to be 'this is a practical exam'. What I meant by this was that clients want yes or no answers, they don't want 'ifs' 'buts' and 'maybes' and students who try a scattergun approach in section 2 of DFS (or any exam for that matter) can hardly expect to pass the paper because in real life you wouldn't give a client such advice (well you might but you could expect to be given the boot!)

    My advice on a paper such as FNST (or, indeed any exam) is to go in well-prepared. As long as you've researched the syllabus sufficiently, practised lots of past questions and exam standard questions, learnt from mistakes during revision phase and read all relevant examiners material (such as examiners reports and articles) there is no reason not to pass.

    Kind regards
    Steve
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