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WEAKNESS OF CANDIDATES
There were isolated cases of some levels of weaknesses demonstrated by some of the
candidates in answering the questions.
The main reasons that could be deduced were:
Very short period of preparation. Most candidates allow themselves only a few
contact hours of study towards the examination.
It was evident that candidates did not have proper grasp of the topics, obviously
attributable to inadequate preparation.
Lack of or no apparent practical skills in the field of Information Systems in the
workplace.
Poor communication skills.
Inexperience at handling typical examination-type questions.
The observed weaknesses may be remedied by the candidates themselves making
conscious efforts to prepare adequately before registering to write the examination.
QUESTION BY QUESTION ANALYSES OF PERFORMANCE:
Q1. This was an extremely simple question on computer software which was only fairly
well answered.
Q2. This question was quite popular among the candidates and was handled fairly well.
Q3. This was a straightforward knowledge-type question based on the System Security
and networks.
Q4. This was another straightforward knowledge-type question which was based on
System Security and Hardware. It was also only fairly well answered.
Q5. (c) was a knowledge-type question on Information and was poorly answered by
candidates.
Q6. This was an application-type question on Computer Software which attracted the
worst answers.
Q7. This was a straightforward and standard question on the System Development Life
Cycle and System Security and Control. There were only a few good answers.
In each question, the amount of work required was commensurate with the allotted time
and marks. No question was loaded.
With a little bit more preparation and commitment, the entire paper should have been
within the capability of any average candidate.
DEMONSTRATED
BY
CANDIDATES
IN
ANSWERING
Most candidates answered this question and many of them scored very high marks.
Question 4
A lot of candidates attempted this question, although some did badly on section (a).
instead of describing control techniques, they rather dwelt on the control process.
Question 5
This question was generally well answered by many candidates. Most candidates scored
very high marks.
Question 6
Many candidates attempted this question with some of them doing badly at (a) and (b).
Section (c) was however well answered. Generally, the performance on this question was
not bad.
Question 7
Most of the candidates attempted this question. While sections (a), (b) and (d) were well
answered, (c) was very badly answered.
Question 2
Question 2 was on Branch Accounts and candidates were required to
(a) State two objectives of Branch Accounting
(b) Prepare Branch Inventory, Goods sent to Branch, Branch Receivable, Branch
Adjustment and Branch Income Statement.
The approach to this question was mixed as some few candidates scored good marks and
a number of candidates scored very low marks. A number of candidates did not prepare
for this particular question and could not prepare the accounts required. No candidate was
able to calculate the commission due to the branch manager correctly. Most candidates
could not prepare the branch adjustment account to derive the gross profit for the period.
This is due to the fact that most of them did not understand how to calculate the cost of
goods sent to the branch from the statement that the goods were sent to the branch at cost
plus 25%.
It is therefore recommended that lecturers preparing candidates should let them
understand statements such as goods were sent to branch at cost plus a percentage and the
manager is entitled to a percentage of net profit after charging such commission.
Question 3
Question 3 asked candidates
(a) To distinguish among Depreciation, Amortization and Depletion and
(b) Explain (i) Business Entity Concept
(ii) The dual Aspect Concept
(iii) The Accrual Concept
(iv) Accounting Basis and
(v) Accounting Policies
The approach to this question was very good except that some few candidates could not
distinguish among depreciation, amortization and depletion. Overall candidates scored
high marks.
Question 4
Question 4 requested candidates to calculate ratios from a set of financial statement for a
company. The ratios requested were as follows:
Net Profit Percentage, Current ratio, Inventory ratio, Acid test ratio and Return on capital
employed (ROCE) based on Net Assets.
The approach to this question was good except that some candidates could not state the
formula for some of the ratios (current ratio, inventory ratio and return on capital
employed)
Question 5
Question 5 required candidates to prepare
(a) Manufacturing Account
(b) Income Statement and
(c) Calculate the net profit as a percentage of the manufacturing cost
The question was well answered except that some of the candidates combined
manufacturing and income statement and mixed items that should go into the two
accounts although the question stated that they should be separated.
Question 2
This question on Variance analysis was well answered by the candidates.
Some of them had difficulty in reconciling the actual and budgeted profit. This is
because they could not calculate the Budgeted Profit correctly which is simply the
Standard Margin multiplied by the Budgeted Production. That is 20 X 1000 = 20,000.
Question 3
The performance in this question (performance measurement) was satisfactory. About
75% of the candidates were able to compute the ROCE and ROI correctly.
However, they were unable to identify the factors that will de-motivate staff in a
Budgetary Control System which include:
Lack of participation
High and unattainable targets
Lack of management support
Use of Budgets only to punish
Limited dissemination of budget information
Question 4
Candidates faced three major difficulties
a. Calculation of Cost of Sales under each method
b. Valuation of Closing Stocks under each method
c. Calculation of Under/Over Recovery under the Absorption Costing Method
Whilst Production Cost and Closing Stocks are valued at 60/unit (Variable production
cost per unit) under Marginal Costing, it is 75/unit (Variable production cost per unit
plus Fixed production overhead per unit) under Absorption Costing.
Also, most of the candidates could not present the profit statement correctly under each
option as shown below:
Marginal Costing
Sales
Cost of Sales (Variable)
Contribution
Less Fixed Costs (Production, Sell)
Net Profit
Absorption Costing
Sales
Cost of Sales (Fixed and Variable)
Gross Profit
Less Selling & Distribution
Net Profit
Question 5
Economic Order Quantity and Maximum Stock Levels were well explained by most of
the candidates. Unfortunately, most of them could not provide the principles that should
guide the Accountant in the establishment of a Cost Accounting System for a medium
sized manufacturing company. Most of them mixed up Cost Accounting System with
Financial Accounting System. Some of these principles are:
Also most of the candidates were able to prepare the Stores Ledger Card for the receipt
and issue of materials to production. however, most of them got the cost of materials sent
to W-I-P Account wrong because most of them mistook the value of closing stock at the
end of the period as the value of materials issued to production.
CONCLUSION
Generally, performance was satisfactory.
(ii) Only a few candidates could apply the concepts/assumptions in accounting for
inventories in the preparation of financial statements. Most of the candidates
deviated from the subject matter of inventories to write on general issues.
(b)
The general approach to the treatment of the transactions on the lease was a
challenge. The drafting of entries in the Income and Financial Statements of
Adom Ltd was a challenge to most candidates. Most candidates did not attempt
the question on Journal entries.
Q2.
Q3.
Q4.
Q5.
This could have been a bonus question but most candidates could not operate the
few adjustments required. A few candidates did not show workings to support the
final figures in both the Statement of Comprehensive Income and the Statement of
Financial Position. A few candidates spent valuable time preparing Statements
like PPE and Changes in Equity Schedules not requested.
(a) Most of the candidates could not prepare the Statement of Comprehensive Income
simply because of difficulties in preparing the adjustments required.
(b) Similarly, only a few candidates were able to prepare the Statement of Financial
Position.
(c) Most of the candidates failed to answer the question on the companys proposed
treatment of the deferred development expenditure.
Question 3 (c)
ARIC (Audit Report and Implementation Committee) roles and responsibilities are
clearly spelt out in the Audit Service Act and the Internal Audit Agency Act. Candidates
should therefore discuss what the laws specify and not their own views.
Question 5 (a)
Instead of preparing cash flow statement according to established rules in public sector
accounting, majority of the candidates prepared Receipt and Payments account.
Question 5 (c)
The benefits of due process in the procurement law are specified in legislation.
Candidates are therefore not expected to discuss their own views, but what the law
stipulates.
RECOMMENDATIONS
It is important for candidates to understand the fundamental rules and concepts of public
sector accounting and more importantly the import of the financial laws of Ghana and
other relevant legislation if they are to perform well in this paper.
Question 4 (b)
This question involves the tax implications of land inherited by an individual and later,
after many years, sold to a company.
The company developed the land into serviced plots and sold them to individuals at a
gain. Very similar questions have been asked quite recently. The response given by
candidates was however not good enough.
Question 5 (a)
This question called for tax incentives in Agriculture, Manufacturing and Real Estates.
Very straight forward and basic.
Question 5 (b)
Reasons and benefits of filing returns. Again, this was very straight forward and basic.
The response was very good.
Question 4
This question was in two parts. Part (a) of this question asked candidates to describe ways
by which the stakeholders of a company can assist to achieve the organizational
objectives. In part (b), the candidates were required to explain the roles that the
accountant of a business can play to promote corporate governance.
A good number of the candidates attempted this question and the performance was good.
Question 5
In the first part, the candidates were asked to define venture capital. The second asked for
the advantages of a business going public. The third part asked candidates to explain the
sources for identifying the need for change.
This question was also popular with the candidates and the performance was good.
Question 6
The first part of this question asked candidates to explain what the mission statement of
an organization means. The second part attempted explanation of the reasons why
organizations need to have a mission. The third part seeks the steps that a modern
organization should follow in filling the position of a Chief Executive Officer in the
organization.
This question was answered by a good number of the candidates and the performance
was good.
Question 7
In the first part, the candidates were asked to explain the right strategies for managing
each of the four conglomerate business units in order to ensure an efficient allocation of
resources. The second asked for reasons why companies use retrenchment strategy.
Not many candidates attempted this question. It appears they did not prepare well on this
aspect of the syllabus.
On the other hand some candidates displayed maturity and intellectual depth in answering
the questions. Performance in the paper can be assessed as very good in terms of the
number of passes and the high marks scored by some candidates.
QUESTION BY QUESTION ANALYSIS ON PERFORMANCE
Question 1 (a)
This question demanded five tests of control an auditor will perform on a named clients
sales systems and the objective of each test. While many candidates were able to
prescribe the correct test, some were not able to clearly state the objectives. Some few
candidates rather prescribed control measures or control activities instead of the tests of
control. Good performance.
Question 1 (b)
Candidates were to describe substantive procedures to audit year-end receivables. While
some candidates provided the right answers, others mistook receipt of goods into stock
for receivables leading to wrong answers being given. Mixed performance.
Question 1 (c)
Candidates were to identify and explain controls to implement to reduce the rise of fraud
in a clients sales system, and to describe how the controls will mitigate the risk. Many
candidates did well.
Question 4 (c)
Candidates were to give two examples of specific application controls over data being
processed in a purchase system and the purpose of each control. Answers provided did
not show understanding of what was required. Poor performance.
Question 4d (i & ii)
This question demanded what are CAATS, the benefits that would be derived from them
and two examples of how CAATS can be used to audit Trade Receivables, these two subquestions were correctly answered.
Question 5a
Candidates were to state four obligations imposed on the Professional Accountant under
the principle of Professional Competence and Due Care. Few candidates gave the right
answers while other candidates wasted time on the entire principles or Professional
Ethics.
Question 5b (i)
Five factors to consider in the review of profit forecasts resulted in mixed performance.
Question 5b (ii)
Five factors to be stated in a report on profit forecast also showed mixed performance.
Question 5c
Three appropriate audit tests to deal with environmental issues were correctly given by
many candidates.
Question 4
Question 4 was in two parts. Part A which involved calculation of capital gains should
have been quite simple. Unfortunately, majority of the students made a mess of the
question. They should pay attention to the minor topics as well.
The tendency is to treat topics like Capital Gains and Gift Tax lightly.
Question 5
This was about partnerships. There was no problem and the answers were on the average
satisfactory.
Question 2b
Candidates were to identify five stakeholders that use the Auditors Report and
Management Letter and to differentiate between the two. While some candidates were
able to respond correctly to both aspects of the question, other candidates could not
correctly state what the Management Letter is. Some candidates described the
management letter as an engagement letter.
Question 2c
Candidates were asked to describe how they would substantiate Trade Receivables during
an audit. Some candidates were able to provide the right answers but others equated trade
receivables to receipt of goods into stocks. Performance was mixed.
Question 3a
Candidates were to list factors and reasons that may indicate that a client company may
not be a going concern. This was clearly a non-syllabus topic as it was not specifically
mentioned in the syllabus. Strangely, however, many candidates performed very well in
this question. Very good performance.
Question 3b
The term Materiality was to be explained to a potential interviewee before an
interview. Few candidates gave correct meaning of the term but many candidates did not
find their way clear. Mixed performance.
Question 4a
Candidates were to state and explain the fundamental principles of ethics that
professional accountants are required to comply with. Many candidates did very well.
Good performance.
Question 4b
The broad categories of threats to compliance with the ethical principles were required.
Just handful of candidates got the answers right. Most of them just listed the individual
sources of professional risk with respect to independence. Mixed performance.
Question 4c & d
Candidates were to explain Analytical Review Procedures and indicate the objectives of
applying analytical review procedures at each stage in an audit. Some candidates could
not explain analytical procedures let alone explain the objectives and stages in the audit
where the procedures are performed. Other candidates provided the correct answers.
Average performance.
Question 5a
Outsourcing was to be explained together with three advantages and three
disadvantages. Many candidates gave the right answers but some candidates treated
outsourcing as consultancy work.
Question 5b
Candidates were to identify the forms of audit working papers and list factors which
affect the form and contents of working papers. Many candidates were able to describe
the form of working papers but when it came to the factors that affect the form and
contents they just listed the contents of the audit files.
Question 5c
This question required candidates to explain the procedures for a walk-through-test.
While some candidates were able to explain the procedures, they could not give the main
objective of the test. They stated that the test was to confirm the effective operation of
controls rather than the auditor confirming his correct recording system. Mixed
performance.
Question 1
This was a popular question, well patronized by candidates. Candidates performance
was much below average. The candidates had some difficulty to formulate or construct
linear programming models.
Question 4
This question required good understanding of matrix techniques to solve the problem.
Question 5
This question was an inventory problem. Though this question was popular with the
candidates, the performance was poor.
Question 6
This question was on the use of statistics to solve very simple problem. It was observed
that either the candidates deviated in understanding of the question or that the candidates
never expected this question in the paper. The performance was generally average.
Question 7
The strength of this question was quite high and also candidates were required to spend
much of the examination time on this question.
The question was well answered by the majority of the candidates who answered it.
However, some of the candidates failed to spell Quantum Meruit properly. Some spelt
Quantum Merit. This gives a different meaning altogether. With the remedies of
specific performance and injunction candidates were expected to state what these are
equitable remedies and are given at the discretion of the court.Candidates were expected
to explain the circumstances under which they would be granted by the court.
Question 3a
The requirement for this question was under section 49 of the sale of goods Act and
broadly speaking there are only three circumstances under which a buyer may reject
goods.
(a) Where the buyer is guilty of a breach of a fundamental obligation.
(b) Where the seller is guilty of breach of a condition of the contract whether the
breach is in respect of all the goods or of part only.
(c) Whether the buyer has entered into the contract as a result of fraudulent or
innocent misrepresentation on the part of the seller.
Candidates rather took a circuitous turn of itemizing the breach of implied conditions
enumerated in sections 11-14 of the Act and listed the breach of those conditions. The
question could have been better answered by focusing on section 49 and using examples
from sections 11-14 in support of the breach of conditions. It must be emphasized
however that candidates were not penalized but I believe if they had read the Sale of
Goods Act they could have saved precious time.
Question 3b
Candidates had the same problem of (a) in this question. The answer to this question is in
section 52 of the Sale of Goods Act. The section deals with three modes of acceptance.
(a) Where the buyer informs the seller that he accepts the goods.
(b) Where he does not, within time after delivery by the seller, inform him that he
rejects the goods.
(c) Where the buyer wrongfully refuses or neglects to place the goods at the disposal
of the seller after notifying him that the buyer rejects the goods.
Like (A) most candidates rather gave indices of acceptance instead of behavioural pattern
from which acceptance could be premised.
Question 4
Most of the candidates could not explain the circumstances under which the Registrar
would call for the production of books. So for their benefit and that of future candidates
the circumstances are produced hereunder.
(a) Where the provisions of the code are not being complied with
(b) Where a document submitted to the Registrar does not disclose a full and fair
statement of the matters which it purports to relate
(c) The business of the company is being conducted with intent to defraud its
creditors or the creditors of any other person for a fraudulent or unlawful purpose.
(d) The business of the company is being conducted or powers of directors are being
exercised in an oppressive manner to some members of the company or debenture
holders in disregard of their proper interests.
(e) Persons concerned with its formation or the management of its affairs have been
guilty of a breach of duty towards it or its members.
(f) That members of the company have not been given all the information with
respect to its affairs (ref section 219 of code)
Question 5
This question was fairly well answered. However in some isolated cases candidates failed
to give information on the stated capital, the amount of authorised shares of each class,
the amount paid either in cash or otherwise and the remaining amount payable either due
or not yet due for payment.
Question 6
This question, it appears, was not appreciated by candidates. The question did not ask
for answer an removal of directors. This is governed by section 185 of the code.
However, the question was specific on the appointment and retirement of directors of a
public company. It appears almost all the candidates who answered the question suffered
from the Agama Lizard Syndrome and answered the question on the basis of removal of
directors.
The answer to this question is at section 298 of the companys code. Candidates may be
well advised to have a closer look at section 298.
Question 7
Strangely enough only a handful of candidates answered this question but they made a
mess of it. The answer to this question is the expectations to the definition of a
partnership as spelt out under section 1 of Act 152. Sections 1 (2), (3) and (4) list and the
exception to the definition of a partnership in section 1 (1) and candidates are well
advised to take note. In fact any average text book on Partnership brings out this
exception but it is imperative that candidates make efforts to read the various local Acts
on the subject.
Question 8
This question did not pose any serious problem for candidates.
Question 1b
Part (b) tested the application of IFRS principles on Financial Reporting in
Hyperinflation (IAS 29) specifically the characteristics exhibited by an economy
experiencing hyperinflation. Although many candidates answered this sub-question fairly
well, many others got carried away with technical matters regarding inflation accounting
and failed to address the specific requirements of the question.
Question 2a
Part (a) tested the meaning of significant influence. Many candidates still think of
significant influence in terms of having more than 20% but less than 50% of shareholding
in a company and having majority voting rights. The question was poorly answered by
many candidates.
Question 2b
Part (b) tested the preparation of a consolidated statement of comprehensive income and
a consolidated statement of financial position involving an associate. Many candidates
are still not able to grasp the basic techniques involved in the preparation of consolidated
financial statements and so treated the associate as a subsidiary. Only a few candidates
got the interest in associate, the 6% Loan Notes as well as other key figures correct. The
question was poorly answered.
Question 3
Question 3 was generally well answered but the following need to be noted:
i. Some candidates failed to explicitly advise whether to liquidate or reorganize the
company as required by the question.
ii. Some candidates spent disproportionate time recommending long-winding
scheme far more than the requirements of the question as well as the allocated
marks for that section.
iii. Some candidates wasted valuable time by preparing irrelevant T-Accounts and
journal entries that were not required.
iv. The statement that some liabilities were secured on some specified properties
while other liabilities were floating did not mean anything to some candidates.
v. Some candidates brought in both liquidation expenses (GH40.00) and reorganization expenses (GH30.00) in both the Position in Case of Liquidation
as well as the Determination of Losses to be written off. Clearly, they did not
understand what they were doing.
Question 4
Question 4 tested Business Valuation techniques using Net Assets, Price Earnings Ratio
and Dividend Yield methods. This topic appears in every examination diet. Candidates
once again showed very poor understanding of the technical calculation involved. The
common errors included:
i. Failure to adjust net assets or the earnings with the information provided.
ii. Dividing earnings per share by share price when computing price earnings ratio.
iii. Failure to state relevant formulas.
Question 5a (i)
Part (a)(i) tested the preparation of a Value Added Statement. It was poorly answered.
Most candidates could not identify the specific elements in the income statement that
comprised value added as against those that comprised disposal of value added. Figures
were picked and put anywhere without regard to whether they appear above value added
or below it.
Question 5a (ii)
Part (a) (ii) tested the objectives of a value added statement. It was generally well
answered.
Some candidates prepared a Value added Statement of Financial Performance, a
Value Added Income Surplus Account and a Value Added Statement of Financial.
Question 5
This question was on replacement of an asset, where as the requirement was to use both
methods; (LCM and EAC) to determine the economic life of the asset, examiners limited
the requirement to either method.
Performance was excellent.
CONCLUSION
The following was noted:
1. Questions were wide spread.
2. Candidates demonstrated mastery of questions 4 and 5.