DFS - My Suggested Answers

That's ok. Hopefully the answers will put some minds at rest.

Kind regards
Steve

No problem Shaun. Glad they've calmed you down!!!

Can I point out the following which have arisen from queries raised to me:

* if you did not set the workings out on the next page of, say, the income statement/balance sheet (as was done in my answers) you will not lose marks.
* you do need to show your workings even if your answer is incorrect. This is particularly the case in the consolidated reserves working in consolidated balance sheet task. A marker cannot give credit for a wrong answer if s/he doesn't know your approach.
* if you did not show how to calculate the ratios in the report you will lose marks. The question explicitly asked how the 4 ratios are calculated.
* if you did not write a report when you were asked for it, you will probably lose presentation marks. Marks are awarded for following the examiner's instruction.
* if your cash flow statement/balance sheet/consolidated balance sheet didn't balance - don't panic. As long as the basic approach is correct you should be ok.
* business combinations are dealt with in IFRS 3 - the answer is not incorrect. I accept that Goodwill is dealt with in IAS 38 "Intangible Assets" but IAS 38 was not tested. Goodwill is mentioned in IFRS 3 though the IFRS does not explicitly deal with Goodwill in its entirety - a number of, if not all of, the accounting standards mention other standards - e.g. IAS 36 "Impairment" is mentioned in IAS 16 "Property, Plant and Equipment" but the two are entirely different standards. IAS 38 considers when to recognise, and how to measure, an intangible fixed asset, which could be goodwill, patents, licences, copyrights, brand names, software etc. This is different than a business combination because it isn't necessarily presupposed that goodwill will always arise or be purchased on a business combination.
* I was asked about whether referring to IAS's/IFRS's when preparing the journals was needed (task 1.1). This was a waste of time if any student did this because (a) you would have lost time in referring to the standards, because (b) it was not asked for in the question.

I was also asked for my opinion of whether I thought the paper was fair (I hate this question because I know some students won't necessarily agree with me). But I will be entirely honest:

I thought the paper was extremely passable. Similar tasks have all been asked in previous papers and a well-prepared student will have absolutely no problem in passing this paper. In fact, I will go as far as to say that the DFS examiner has certainly not tested candidate's abilities to the level that should be tested at technician level.

I do feel that the AAT should place more emphasis on testing more accounting standards than they do. There are 20 examinable IAS's out of a possible 37 and there are only ever one or two asked about in their entirety at every DFS sitting. I do feel that section B was more friendly in December than in June as I think most students hate things like "gearing ratios" appearing. Overall DFS is becoming rather predictable and I suspect if the trait continues students will also become to expect predictability.

Undoubtedly some students may disagree with my comments and moreso my feelings towards future DFS exams but as the AAT is a professional qualification in its own right, papers should be set with a degree of unpredictability to avoid students question spotting.

Best regards
Steve

It was a much easier paper to answer than the June 07 paper, I feel.

I hope you will get through it this time!!

I don't think I will have time to be on the forums until next year so will take this opportunity to wish you all a happy (and stressless) xmas and new year.

See you all in 2008!!

Best wishes
Steve

Examiner Review Board quote from PQ Magazine re DFS:

DFS was a lovely, straightforward paper; TB with adjustments all seen in previous papers, and a standard consolidated balance sheet with associated standards tested in the same way as on previous papers. A standard cash flow statement question was also required. Section 2 required ratios that most students consider among the easiest to interpret and the additional task was identical to previous papers. This paper was a gift to students.

I do tend to agree that the examiners need to increase the difficulty levels in terms of technician level exams - I can't really comment on the other papers but DFS this time was not a particularly challenging paper.

There have been sittings where students have come on the forums after doing a DFS paper and they have been absolutely horrified at the difficulty level. I fear that students may well become complacent (certainly those doing distance learning) and be shell-shocked if DFS takes a turn for the worse in terms of complexity. In June 2007, I received countless queries when I published my suggested answers and the vast majority of those queries were in connection with the gearing ratio. I deduced from this that where the examiner throws in a topic that is not regularly examined - the candidates jump up and down about it, despite the subject or topic being examinable. I still say that setting a paper such as DFS to this level of ease will encourage a candidate to question spot (and it does happen).

Best regards
Steve

Hi Beverly,

I wouldn't have thought that my advice would "amaze" people!! Without sounding pompous, there are others on here that give just as good (if not better) advice, but thank you for your kind words.

I work in practice as a senior accountant dealing in audit/accounting and tax but technical compliance and financial reporting issues are now becoming a much larger part of my role.

Kind regards
Steve

No I didn't mind you asking. I'm not a tutor - I enjoy what I do but I think it's one thing giving advice and writing articles for accountancy web sites, but another standing up in front of a class of 40 teaching it!! I don't think I'd be much good at that!!