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The Professional Accountant - How to tackle case studies

The 5 P's
Case studies are a way of testing the application of knowledge and skills in a
meaningful and relevant situation. Consequently they are being introduced into the
professional accounting bodies' examinations, where they tend to be used more in
the later stages, where students are expected to relate the underpinning knowledge
and skills that they gained from their earlier studies to a realistic situation. The
situation often involves making one or more decisions.

The case-study approach to examinations has gained favour with the professional
bodies and employers alike, as it is seen as replicating the application of the
knowledge and skills that may be needed in real-life situations. Case studies and
simulations are also often used in the development of work-based skills during
professional development and training programmes.

This change to the format of traditional exams can cause problems for individual
students if they are not adequately prepared to cope with the required analysis.
Students who have grown used to traditional 'straightforward' numeric or essay-type
questions often encounter difficulties when dealing with a case study. These
difficulties arise not as a result of a lack of subject knowledge but because of the
failure to prepare for this type of questioning.

It is important to note that a case-study based style of examination can be used in a


variety of different subject areas and on a differing range of topics; it is not directly
related to any one syllabus area. Therefore the approach that will be developed here
will lend itself to the preparation of case study or scenario answers for any syllabus.

It is important to remember that this approach to the answering of case study or


scenario-type questions complements, not replaces, the necessary subject
knowledge.

The framework

The framework for the general approach that we are going to suggest for the process
of analysing any case study consists of a list of five P's:

• Position

• Problems

• Possibilities

• Proposals

• Priorities

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The Professional Accountant - How to tackle case studies

By following this approach when analysing case studies, students should be able to
use their knowledge and skills to their maximum advantage. The individual stages in
the framework (position, problems, possibilities, proposals and priorities) should be
attempted consecutively, although there may well be areas that overlap. The amount
of work necessary in each of the five areas will depend on the particular case study
being analysed. However, by following the framework a structured and internally
consistent answer should be produced.

It is worth noting that for many case studies there is not one unique 'correct' answer--
what is important is the process that has led to, and justified, the proposed answer.

Note: case studies can involve the analysis of situations facing individuals,
companies or organisations. In this article we will use 'organisation' but the
suggested approach can be applied to all.

Position
This stage in the framework is concerned with trying to identify the current position of
the organisation. It may also be necessary to investigate the organisation's recent
history.

The first step is to read all of the case study. At this point, do not annotate the case.
Annotating the case study should be avoided until you have gained some concept of
the entirety of the situation facing the organisation. Students who attempt to annotate
what they feel is important at this early stage often end up underlining or highlighting
almost every word of the case study--this is of little help.

During the first read through, a series of themes should emerge from the case. What
you should be trying to do here is to gain an overall impression of the situation and
then extract the important elements from the case. In order to do this, some form of
sifting process must be used. It might be useful to note, in rough, the themes that
have emerged from the first reading. If insufficient themes have been identified it
may be necessary to re-read the whole case again.

Having noted the themes, the case study should then be re-read, possibly several
times, in order to identify any relevant information that substantiates the themes that
you noted (don't worry if new themes emerge during these later readings).
Traditional techniques such as highlighting and underlining can be used to mark
salient information so as to make it easier to access for later use.

It is important to point out that what should be growing at this stage is an


understanding of the organisation's situation, not a list of apparently unrelated facts
and data. Further analysis using higher-level techniques such as, for example, ratios
or 'swot' analysis may also be necessary. It is important to stress that the reason for
using these techniques is to develop an understanding of the organisation's position,
not just to provide an increased amount of data.

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The Professional Accountant - How to tackle case studies

It should now be possible to identify if any of the individual themes are in any way
related to each other. The success of this stage of the framework is dependent on
the extent to which you can clearly identify, analyse and then present in a concise
format the past and current positions of the organisation as described in the case
study.

Problems
If the first stage of the process, i.e. the establishment of the organisation's position,
has been successfully completed you should already be starting to identify the
problems that may be facing the organisation.

Case studies can often be as much concerned with problem-identification as with


problem-solving. The extent to which the question that accompanies the case study
identifies the problems within the case can vary considerably. In shorter scenario-
type questions the problem may be clearly identified by the question. An example of
this would be: 'What should B Ltd do to improve profitability'.

Other case studies may give a generous hint, such as, 'Identify using accounting
ratios the problems of B Ltd'. The least specific, and therefore perhaps the most
daunting, is 'Does B Ltd have any problems?'.

The important factor at this stage of the process is to have identified and then clearly
recorded the organisation's problems. This should be done by concisely listing the
problems in a structured way, trying to classify them in terms of importance and
again noting any possible inter-relationships. Don't forget that a problem may also be
an opportunity.

Possibilities
Having established an understanding of the situation and from this having identified
the problems, the next stage of the process is to explore the possibilities in terms of
potential solutions. This stage differs from the preceding two stages in that it is more
creative; it takes the organisation forward from what the position has been to what it
might become. Previously acquired subject knowledge and the practical application
of analytical techniques will play their part in the development of a range of
possibilities.

When, for example, a scenario is used to explore an area of company law or taxation
there may be only one correct answer. However for many case studies there is no
one correct single answer. In this instance the 'correctness' of the answer depends
for its validity on the consistency of the proposed solution with the identified problem.
It is therefore of paramount importance not only to propose possible solutions but
also to support their rationale.

The evidence for their rationale can often be best explored through the processing of
potentially feasible alternative possibilities in terms of potential solutions. However, it

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The Professional Accountant - How to tackle case studies

is first necessary to have generated the possible solutions. This could be done by
'brainstorming' the range of possibilities. This is the creative stage of the problem-
solving process.

Proposals
Having identified the possibilities, the next step is to evaluate these potential
solutions in terms of their appropriateness for solving the organisation's problems.
Logical argument, within the context of the case study, and an appreciation of the
advantages and disadvantages of any suggested courses of action are needed at
this stage.

What then follows is an iterative process that should enable a potential solution or
series of solutions to emerge logically. This may well take the form of the systematic
elimination of the weaker suggestions and then the further evaluation of the stronger
suggestions. The proposals should be relevant for, and consistent with, the problems
that you identified earlier. The proposed solutions that emerge must be feasible and
credible. For an organisation facing liquidity problems, proposing that they should
win the lottery and then inject the cash into the organisation is not a realistic
suggestion!

Priorities
Under this heading you are required to state what, by having reached this point in
the framework, should have become apparent to you. This means listing the set of
proposals that you have resolved to be the course of action for the organisation to
take in the given situation.

The reader of your report will assume that the list is in order of priority. It is therefore
important to make sure that it is. This may mean classifying the list in some way,
perhaps for example in relation to what needs to be done in the short term through to
the long term.

It is important to remember that people carry out plans. The action points suggested
must be clear and, where possible, areas of responsibility should be identified.

Presentation
Another important 'P' to add to the five that provide the framework for our suggested
approach for coping with case studies is 'P for presentation'. In many instances the
required output from a case study will be a report. It is important to present your
answer in the format that is expected. Report writing is a topic in itself; here we shall
summarise and highlight major points that are consistent with the approach to case
studies that we have suggested.

Reports should be readable and it is therefore important that the report is well
structured and that the contents are capable of being understood by the recipient.

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The Professional Accountant - How to tackle case studies

Reports have a format that is more concise and structured than that of an essay.
They are normally aimed at a particular person or group of persons to address a
particular issue. This is normally indicated at the start of the report by stating; 'to,
from date and title of the report'.

The next section should state the 'Terms of Reference'. This is a concise statement
of the purpose of the report. In examinations this may simply be a restating of the
question posed to the student.

The body of the report could then be a synopsis of the stages in the framework we
have explored. Any supporting detailed information such as charts or tables should
be placed in appendices.

Conclusion

Case studies, just like reality, do not necessarily have one specific 'right' answer.
Given the absence of a definitive answer, it is the process (in terms of the student's
thinking) rather than the product (in the form of a 'right' answer) that is of paramount
importance. Similarly, there is no one right way to approach case studies. What we
have suggested is a flexible approach that should enable an answer to be produced
that is relevant and has been arrived at in a structured and systematic way.

~~~~~~~~

Management Accounting: Coping with case studies: Examinations and case reality.
Hassall, Joyce, Magazine for Chartered Management Accountants. Mar97, Vol. 75
Issue 3, p62. 2p.

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