How numerical work is rewarded, the grade profile and quality versus quantity

Every Case Study needs some calculations, but the marks for them are earned in two places and lost in a third. This topic explains how numbers are rewarded, what a good appendix looks like, what a passing grade profile means and why a longer script does not mean a better one.

How numerical work is rewarded

The Case Study always needs some calculations, though how many varies from case to case. Their purpose does not vary: they establish the mathematical facts for your work. You are rewarded for the right calculations in the appendix and again for the right numbers carried from the appendix into the body of the report. These marks can sit in any of the professional skills boxes.

A short example shows the second step. In the May 2015 case, the appendix works out inventory days of 118.88 for 2014, against an industry mean of 62. In the report you would write: “Inventory days of 119 are almost twice the industry mean of 62, which points to slow-moving stock and cash tied up (Appendix 2).” The number, the comparison, the meaning and the cross-reference all appear in one sentence.

What a good appendix looks like

Produce clear and separate numerical appendices. They should:

• hold all the significant calculations;
• be relevant and concise, not an endless run of standard but irrelevant ratios;
• be clearly labelled, with workings explained so that a reader can follow them;
• state every assumption used; and
• contain key information that you then bring into the body of the report.

Appendix marks are separate from report marks. A neat appendix that the report never uses wastes the second half of its value.

The grade profile that passes

The spread of grades differs from paper to paper with the subject matter. To pass safely, aim for more than half of the boxes in each requirement at competent or superior achievement. For a requirement with eight boxes, that means at least five boxes at those grades.

On the scale in the marking topic, below competent achievement in all 25 boxes gives exactly 50 marks, so any void boxes or any requirement left thin puts the pass at risk.

Three habits support a good profile.

• Use what you have already learnt. Grades reward professional skill and business knowledge more than pure technique. But a sound technical base is the foundation, so be confident in every technical area you have studied.
• Know the stage of the business in its lifecycle. Exhibits differ in use. Some, such as industry overviews and letters, give context. Others, such as financial statements, need detailed use. Others sit in between, such as a client list or an operating schedule. The lifecycle stage usually shapes the whole answer and sets the framework for strategy, finance or transformation.
• Know your role. You are a final-year trainee, either in a practice or in a company, and either employed or seconded to a client or another department. Your role gives your report its perspective.

The report goes to a client or an employer. Its body has two main sections, each with integrated analysis and evaluation, plus an executive summary. The appendices are rewarded separately.

Quality versus quantity

Candidates often ask how much they must write to pass. Passing has nothing to do with how much you write and everything to do with what you write. Long scripts tend to be padded with irrelevant material, and their authors run out of time for the parts that matter.

An examination checklist

1. Read the requirement and answer only what it asks, but answer all of it.
2. Assess the financial data to choose the right tool.
3. Do the detailed calculations in an appendix, labelled and explained.
4. Bring the key results into the report and explain them.
5. Evaluate your analysis and name the critical factors.
6. Question the quality of the information and who provided it, and why.
7. Explain and test every assumption, and flex critical numbers where needed.
8. Decide, state your conclusions under a heading and add practical recommendations.

Common mistakes

• Calculating many standard ratios that no requirement needs.
• Leaving results in the appendix and never discussing them.
• Using the wrong approach. In the November 2015 case many candidates used a profit approach where contribution analysis for the limiting factor was needed.
• Missing a required step, as when candidates could not find the net contribution for a project appraisal in the Sadeco case.
• Writing more to feel safe while leaving the conclusions unfinished.

Quick revision

• Numbers earn marks in the appendix and again in the report.
• Good appendix: relevant, concise, labelled, workings explained, assumptions stated.
• Profile: more than half the boxes in each requirement at competent or superior achievement.
• Know your lifecycle stage and your role.
• Quality, not quantity.

Practice questions

These are original questions in the style of the Institute of Chartered Accountants of Nigeria exam. Try each one before you open the answer.

Model answer

The next topic covers writing the report: its type, structure, headings and format.

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