FNST Tips

Steve Collings

Hi Guys

Just lately I have received lots of e-mails from concerned FNST students worried about the exam. There was a recent article in the PQ Magazine which also highlighted the fact that this exam has seen its pass rates on the downward spiral. I thought it may be a good idea to summarise some of my recommendations to students on here rather than write it in an article which would take a while to be published, so here is what I suggest students of FNST should do to tackle this exam successfully:

• Make sure you have a copy of the syllabus to hand BEFORE you start to study.
• Go through the syllabus in fine detail, highlighting those areas where you strongly suspect you will struggle.
• Read past chief assessor reports to gain an understanding of the pitfalls to avoid.
• Make sure that you allocate sufficient time for study. If you are receiving formal tuition you should at least aim to do an extra day at home. If you are a home studier you need to devise a realistic study timetable and plan and STICK TO IT.
• Make sure you give equal attention to each area of the paper. Don't concentrate too much on accounting standards etc at the detriment to other areas of the paper such as ratio analysis.
• There are lots of accounting standards to go through and learn. You need to have a sound, basic understanding of the main thrust of each standard.
• To get a sound understanding, do a list of bullet points for each standard and pin it to the wall. Some students have been known to record the main content of standards on their phones and subsequently listen to them on the train/bus/car!
• If you are struggling on a particular point in the accounting standards, default back to the Conceptual Framework (which defines things like assets/liabilities/income etc). This will help to focus your answers.
• If you struggle with consolidations make sure you break it all up into bite-size chunks. Many students tend to trip up because they try to do it all in one go - this doesn't help. Go through the "step" approach, concentrating on each one in isolation.
• I have met many students that can calculate ratios until the cows come home. Calculation is not enough - you need to be able to talk about them. Remember the job of an accountant is primarily about interpretation and telling clients/non-financial staff whta things mean. FNST is no different in this respect. Be sure you can talk about the ratios as well as calculate them.
• Remember that FNST is not just about the numbers - the chief assessor will expect you to be able to talk about the numbers (similar to the bullet above). You need to get a sound understanding of what the numbers in a set of financial statements mean and be able to talk about them.
• Don't be fearful of this exam. Yes it is the final level financial reporting paper at AAT but many students have passed it and so can you!
• Be sure to cover the whole syllabus in ample time. Do not rely on threads where students tell others what accounting standards/ratios came up - this is a pointless exercise - there are so many examinable standards/ratios that each exam will be different.
• Don't get mixed up with your standards. For example the examiner could ask you to define a current asset and a current liability. It is IAS 1 'Presentation of Financial Statements' that deals with this issue. Many students have fallen into the trap of seeing this type of question and automatically defining an asset and a liability. Assets/liabilities are defined in the Conceptual Framework NOT IAS 1, so be sure to read the requirements very carefully.
• Try to "teach" FNST as a means of revision. It might sound silly stood there talking to yourself but often if you pretend you are teaching the subject you can sometimes come across issues that you thought you were OK with, but you may find you need further work.
• Interact with other students as much as possible - on here, in groups at college etc. Helping each other understand difficulties is far more effective sometimes than attending a formal class.
• Read around the subject - there are lots of technical articles written by me/others on accounting standards etc. Sometimes these help to understand a topic much better than a text book.
• After you have worked a question, review the answer carefully against the suggested answer to understand where you went wrong and then after a while attempt a similar style question.

Those are just some of the issues I have advised students to do in order to get them on the right road to success. The important point, over and above all of these, is to firmly believe that you can pass this paper! Keep the glass half full and where you do struggle, devote extra hours to these areas.

Good luck

Steve

StuartW

This is a fantastic post, Steve - thanks so much for sharing your knowledge and experience. This will be a useful link to share next time someone asks for tips on this learning area.

Stuart

The Magician

Thanks for taking the time to provide advice.

I have FNST tomorrow.

You have me worried now though regarding the definition of non current assets and liabilities!

A non current asset under IAS 16:-

Tangible assets that are expected to be used during more than one accounting period.

Are held for use in the production and supply of goods and services, for rental to others or for admin purposes

Under IAS 1:-

Current assets are cash, cash equivalents, assets held for trading, collection or consumption within an entities normal operating cycle or held for trading within the next 12 months. All other assets are non current.

Current liabilities are amounts to be settled within an entities normal operating cycle, or due within 12 months, or held for trading or those for which the entity does not have the unconditional right to defer payment beyond 12 months. All other liabilities are non current.

Which of the two statements above fits a non current asset and is the definition above for non current sufficient?

Panicked!

Steve Collings

Hi,

In order for a non-current asset to be recognised in the financial statements, it has to meet the recognition and measurement criteria which are laid out in the Conceptual Framework. Once it meets this definition then it is accounted for under the provisions in IAS 16. Your definition as per IAS 16 is correct (and so is your definition of a current asset).

June 2009 DFS saw the examiner test the definition of a current asset and a current liability (as per IAS 1) with many candidates citing the definiton of an asset and a liability (as per the Framework doc). This is the point I was making in my earlier post - make sure that when you see a keyword (e.g. asset or liability) that you don't drift off into autopilot! It's very easy to miss another keyword (such as IAS 1)!

ps for clarity I have also amended the original post to read 'current' asset and 'current' liability.

Steve Collings

StuartW wrote: »

This is a fantastic post, Steve - thanks so much for sharing your knowledge and experience. This will be a useful link to share next time someone asks for tips on this learning area.

Stuart

Many thanks Stuart.

The Magician

Ah, I know from my studies that Recognition is the process of incorporating in the statements an item that meets the definition of an element i.e. asset, liability, expense, income and equity interest and satisfies the following criteria for recognition.

the items cost or value can be reliably measured.
probable that future economic benefits will flow to or from the entity
The item meets the definition of an element of the financial statements

An asset is recognised when it is probable that future economic benefits will flow to the entity and the cost of the asset can be reliably measured.

Many, many thanks.

Steve Collings

Absolutely! Perform like that in the FNST exam and you'll breeze through it!

Best wishes
Steve

The Magician

Thanks so much!

I am very intimidated by this exam.

I know it sounds stupid, but sometimes some of the big words they use can really put me off how to answer the question accurately!

Rozzi Rainbow

Steve Collings wrote: »

June 2009 DFS saw the examiner test the definition of a current asset and a current liability (as per IAS 1) with many candidates citing the definiton of an asset and a liability (as per the Framework doc). This is the point I was making in my earlier post - make sure that when you see a keyword (e.g. asset or liability) that you don't drift off into autopilot! It's very easy to miss another keyword (such as IAS 1)!

Ahh, I remember this question! This was the DFS exam I sat, and we had all made sure we knew the definitions of assets and liabilities but then they threw this one in. I just stated the definitions that I had already learned, and then added on how current assets and liabilities are used/settled within 12 months.

Brilliant article Steve, and those points are also relevant for anyone studying ACCA F7.

welshwizard

Thanks Steve!

Hi Steve

I would like to thank you for these words of wisdom, I will be passing them on to my students tomorrow! I have also shown them your lovely yellow book - I think it's great and could be a very useful tool for them to understand the whole 'standards' issue from a very different angle. Incidentally, your tip of teaching to yourself is very good - why don't students try teaching each other the salient points because, as you say, if you can teach it, you generally have to understand it as well!

I am off to one of the Master Classess in a couple of weeks so will feed back any pearls of wisdom from the Chief Assessor (if there are any).

Again Steve, thank you for your support for the student members, if there were an annual award for contribution to the Community, I would nominate you.

'WelshWizard'

embica

Hi

I'm about to take this last exam for the 3rd time - I have all my Kaplan notes from the course and revision course I went on 2 months ago but wondered as per your post if there was a list/straight forward syllabus anywhere? I'm struggling to find one that I can just tick things off on to ensure that I've covered all areas?
Thank you in advance

Thanks

welshwizard

Attachment not found.

There is a very good set of documents and guidance (attached) available in the E-Learning section of the AAT Website (https://services.aat.org.uk/elearn/level4/) and here (https://services.aat.org.uk/myaat/guidance_standards/).

embica

Thank you - not as clear cut as I was hoping but think that's the best I'm going to get.
I have to admit I'm not loving the AAT website at the moment - find it very hard to use and hard to find anything that I want

welshwizard

I know the website fairies are working overtime to rejuvenate the whole thing but, as with many things in life, you have to wait for things to develop.
They are slowly getting the site into some sort of order (mind you, I don't envy them it must be a nightmare)

Barry

These tips are amazing. Thanks Steve. Even though I'm on ACCA F7 they are still as valuable

I remember coming on your DFS revision course in Birmingham Steve and I believe that helped me pass DFS! You certainly know what you are talking about and you should have carried on teaching students. I think I came to your last student lecture where the cash flow statement suddenly clicked after you spent time showing me after the course.

You are a legend in your own right.