Mastering ACCA AAA Current Issues: Exam Preparation and Techniques

[Music] Hello, my name is Ben Wilson. I'm the ACCA's expert tutor for the AAA exam

paper. Now, this session, this topic explainer is going to focus on current issues. This is an area that many

students struggle with in AAA. They don't know how best to prepare for current issues. They don't know how it's

tested and they don't have good exam technique for current issues questions. So, this topic explainer is going to

make sure that you know how current issues are tested, how best to prepare for them, and I'm going to give you a

demonstration of great exam technique for a current issues question so that you are well prepared if this comes up

in your exam. So, we'll start with a bit of a recap of current issues. What is it that they can test you on as a current

issue? What does the examiner define as a current issue? Then I'm going to give you a bit of insight on how current

issues are tested in the AAA exam. Then I'll give you my top tips how to be successful in a current issues question.

And then we'll finish off with a demonstration of great exam technique using a current issues question I've

written so that you know how to approach a current issues question in the exam. So the topic recap first of all what is

it that the examiner defines as a current issue? Well, it's pretty straightforward. A current issue is

anything that the examiner has published a technical article on. You can find these technical articles on the ACCA's

website. You probably know where they are already, but if you don't, just Google AAA technical articles and you'll

find them on the ACCA's website. And these articles are really nicely organized by topic area, by syllabus

area, which makes them really easy to refer to. Now, when you do go to the ACCA website and look at these articles

and byte-size videos, you will see that some of them aren't actually covering current issues. There are some on other

things like areas where students have been struggling or some exam technique guidance, but hopefully that'll be

fairly obvious to you when you go and look at the ACCA's website. One thing I wanted to note here is that recent world

events, so stuff that has been happening in the news right here and right now, it's not going to be examinable. If

something is a current issue that ACCA intend to test you on, it will have been flagged as part of a technical article.

Now, that doesn't mean that ACCA won't be bringing in um up to-date things in the scenarios that they base your exam

questions on. What it does mean is that you're not expected to have any wider knowledge um around anything that's in a

scenario unless it's been um unless it's been flagged as part of a technical article. And if let's say the industry

is something new uh that that uses artificial intelligence for example, well they'll tell you everything that

you really need to know in the scenario, right? Rather than expecting you to know anything particularly about it in

advance or other than just sort of general wider business acumen and business

awareness. So you now know that you need to be all over those technical articles so that you know what uh what could be

examined as a current issue in the exam. Now how are they then tested? Well, first thing to say is it's generally for

about five marks in the exam. Sometimes a few more, sometimes a few less, maybe up to eight marks maximum, but around

five marks are for current issues. And the most common type of current issues question will be scenario-based. So in

the context of a particular scenario, can you show that you have understood some of the issues around this

particular technical article? For example, there's a technical article on data analytics and a previous exam

question or recent exam question might focus on on how would data analytics impact the planning or the use of data

analytics impact the planning or performance of this particular audit. And so you're showing you've understood

the technical article because you need to know a bit about data analytics, but you're also showing you can apply that

knowledge by picking out things that are relevant and explaining them in the context of this particular audit perhaps

to address some of the challenges that have been identified in the scenario. So those scenario based ones are the most

common but we do get knowledgebased questions as well where the examiner actually specifically says you don't

need to use the scenario at all here and they'll ask you a pure knowledgebased question to show that you have well

perhaps memorized or learned the content of a technical article. Now that might be recent ones there have been around

ISQM1 and ISQM2 which are the quality management um standards. There two technical articles on those. Another

recent one on sustainability assurance as well. Now, um I wanted to just really kind of um try to put you

off from memorizing all the technical articles. There are loads of them and some of them are pretty big and pretty

detailed. To memorize the content of those technical articles, it's going to take you ages. And look at the number of

marks. Is it worth it? I mean, for me, it's a big resounding no. It is not a worthwhile investment of your time to

memorize the content of all of those technical articles. What it is worth you doing is making sure you've got a decent

understanding of those technical articles and perhaps you've got like a key point summary of of each one so you

know the important things that are in there. And when I get one of these knowledge

questions, instead of having memorized the technical article, what I do is I think, well, the examiner said I don't

need to use the scenario, but they haven't told me that I'm not allowed to. They haven't prohibited it. In fact,

there will almost certainly be some things I can use in the scenario to spark ideas in my mind because the

scenario will be in the context of whatever this this technical area is around sustainability or quality

management or whatever it is. So, I know that if I go through that scenario, I will find some things in there that that

will perhaps spark a thought or an idea in my mind that I can use to then generate an effective answer. So for me,

I wouldn't advise you to memorize those technical articles. Make sure you've got a good understanding of them and then

use good exam technique to get you through. Now, my top tips for success with current issues. Firstly, when

you're reading those technical articles, at least the five that I suggested, and ideally all of them, you do so actively.

You don't just read, you read and you make notes at the same time because by making your own notes as you're reading

the article, you are much more likely to retain the key points. So I would read the article first of all, skimm read it

and then read it again making summary short notes maybe you know five or six notes per article and these are

effectively your revision notes for that article and just before the exam you can skim read over those revision notes as a

bit of a reminder. My third tip, when you are doing a current issues question, very often the answers to the question

are in the scenario and your job is to squeeze that answer out of the information that you're given in the

scenario. You're going to see me do this in a second with a demonstration question, but what I do is I take facts

from the scenario, right? I always try and sp start my point in a current issues question with a specific fact

from the scenario and then I take that fact and I develop it. I run with it to explain how that fact is relevant to

answering the question. I develop it into a mark scoring point. Now, this is a great technique for scenario-based

quality management questions or sorry, current issues questions, but it's also really helpful in a factual

knowledgebased question because even in a knowledgebased question, they will always give you a few facts in the

scenario that you can use and run with and you can pick up a few marks and then move

on. Time for that demonstration. We're going to use a question I've written on current issues to show you great

technique for one of these questions. So here's the scenario showing on screen and the requirement. Now obviously good

exam technique you start by reading the requirement and setting up an answer structure which I've already done. So we

need to look for benefits of using data analytics in this company's audit. And what I'd like you to do now is

firstly read through the scenario so that you're familiar with it. Pause the recording here so that you can read

through the scenario. Right. In this demonstration, we are going to base everything in the

answer on facts in this scenario. So let's pick out some relevant facts. In this first paragraph, we're told that

this is a new audit client of our firm. Now, how's that relevant? Why is it beneficial to use data analytics if this

is a new audit client? Well, when it's a new audit client, the auditor has to get a good

understanding of the business. They have to really understand monkey company so that well, they can identify where to

focus their audit attention. What are the high-risk areas? If you don't know the business, then you can't really

identify where to to focus your audit attention. So, using data analytics, we can get a better understanding of the

client by taking some of their management information and putting it into nice graphs, nice data

visualizations so that we can really understand their numbers. maybe compare it to market trends on things like

profitability levels or sales growth rates. So, I would say we've got a good point here and I'm going to get it into

my answer plan. This is exactly how I answer the question in the exam. By the way, I get my idea and I write it in

brief note form like this and then when I've made my answer plan, I then write up each of the points by extending out

um each of these planned points. So, it's a new client. That's the fact. We need to get an understanding of the

client's business and we can do that using data visualizations and that will help us to identify where to focus

during the audit. Lovely. We've got our first point. How many do we need in total? Well, it's six marks. You know,

it's one mark per well explained point in most AAA questions. It's only audit risk and business risk that are more

than one mark per point. Audit risk is three marks. Business risk is two marks. Everything else is one mark per well

explained point. So, we need six points in total. We're well on our way. What about in this second paragraph? Was

there anything interesting and relevant in here? Ooh, they've introduced a new accounting software package and that new

package was operated alongside the old system in parallel. The two systems running together. Now, that's pretty

common practice. I think when you introduce a new system, you run the old one with the new one to make sure the

new one is working properly. But, well, how do you make sure the new one's working properly?

Well, it should have the same data in it as the old one. So that's an area we can use data analytics. We can make sure all

of the data that is within the new system is identical to the old system. And well data analytics will be super

helpful here because instead of manually checking every data point which would take forever. Well, we can test

everything very very quickly using data analytics because you can you can just go well find any differences. So let's

get that point planned out. So that new software package we can compare the data in the new and the old systems to

identify differences. It wouldn't be practical to do this manually because of the volume

of transactions. And so what we're doing here, how data analytics is helping us

is it's reducing sampling risk. Sampling risk is well it's a problem during the audit. that's that the

auditor can't test everything manually. It's not practical to do so. They pick a sample and there could be an error, a

misstatement in the population that is not tested. And so by using data analytics here, we can test everything

and it reduces or removes sampling risk. When it comes to writing up my answer, by the way, I will explain what sampling

risk is because anytime you use a technical term like this, you should always show you understand what it is in

your explanation. Right. Next, we're told this stuff about the previous auditor's

files. Oh, and controls weren't working over credit limits. They were allowing finance, allowing credit to customers

who were already over their credit limit. That's a weakness in controls. That control was not operating

effectively. Now, how's that relevant to this audit? Well, it might still not be working properly, that control. So, we

can use data analytics to identify if that control is now operating effectively. We can look

at all through the year. We can compare customers credit limits, the amount they should be allowed as credit. we can

compare that to the amount that they were actually extended. So with these credit limit

controls, we can test every single customer and compare their credit limit, what they should be allowed to how much

they were sold. And well, if they were sold more than their credit limit, this control

was not operating. We can identify any breaches. And if there are no breaches, that tells us the control is operating

effectively. That's good for our audit, but it also is good to be able to report that back to the client that your

control has been working perfectly all the way through the year. I'm trying it with each of my points to make my

explanation a little bit different the benefit to the uh the benefit of using data analytics to be slightly different

in each of the points so that I score more marks. You tend not to score marks in AAA for repeating yourself. Right.

Next up, we're told about a payroll fraud. Oof. And in that payroll fraud, the supervisor added fake employees to

the payroll and then paid their wages into his own bank account. Woohoo. Sneaky. Now, how would the auditor pick

that up? And how could data analytics help? Well, we could go through all of the bank account details that are

registered for each employee. And if there are any that have the same bank accounts, that would tell us that

uh well something dodgy is going on. So we can use data analytics to compare all of the bank account details of all of

the employees and see if any of them match. So we can test that payroll standing data. Standing data is the bank

details. And we can look for any duplicates, employees with the same bank account or anything else that's the same

because you shouldn't have employees really unless you I don't know have a husband and wife that work for you and

live together. You they should all have different addresses. They should all have different bank account details

particularly. And if there are any with matching details, we can then investigate them. And that will give us

some comfort that the fraud is no longer happening. Right. How many points have we got? We've got four points into and

we need two more into the last paragraph. We're told that the audit report was delayed. O um the market was

hungry for this audit report, but it didn't get it because it was delayed. The financial statements were delayed

because we had to get additional evidence over receivables and payrolls. Well, how can data analytics help here?

Well, if you have to manually test things during an audit, it takes ages. I can tell you from my experience as an

auditor. I spent four or five years working at KPMG in London doing audits about 20 odd years ago and during that

time we didn't have data analytics. We did have to do things manually and it was painful. Everything took ages.

Whereas now using data analytics the the computer is much much quicker than the manual junior auditor.

So we can be quicker in doing our work and therefore we can release the audit report more quickly and that's going to

be beneficial to any users of the of the financial statements and the audit report. They can make decisions more

quickly. So using data analytics is more efficient. We will take less time over manual audit work and therefore we can

release the audit report on time. That's going to be beneficial for users of the accounts so that they can make any

decisions. Oh no, I've only got five points and I've reached the end of the scenario.

What do I do? Well, two things. One is don't worry about it. If you've got five points for a sick marks question, that's

absolutely fine. Just move on. But well, look at the verb in the question. The verb in the question was

discuss. And anytime the verb is discuss, you get a mark for doing something at the end. Do you know what

it is? Yes. It's having a conclusion. So, a conclusion is going to be worth a mark here. How are we going to know this

is a conclusion? How's the marker going to know? Well, obviously because I've titled it conclusion and I've got a

little subheading. Now, my conclusion here has to refer back to the question. So, I'm discussing the benefits. So, my

conclusion has to say there are massive benefits or there aren't many benefits. Say yes or say no. Okay, here I'm

definitely saying yes. I found lots of really significant benefits. So my conclusion is going to say yes data

analytics will really help be very beneficial but I have to justify my conclusion for it to score. And what it

means by what I mean by justify the conclusion is I have to support it with some evidence by saying which of these

benefits do I think are particularly significant. So for me I'm saying yes it is a significant benefit and those

benefits the ones that I'm going to use to justify it is I can test all of the transactions getting more evidence and

that improves audit quality by reducing detection risk and makes the audit more time

efficient. I could have actually made this conclusion a bit shorter. It's perhaps a little bit long. Anyway, we're

not all perfect, are we? Right, that's my answer plan and that's exactly what I would have done in the

exam. Now, if I ran out of time at this point, my answer plan would be submitted and it would still get marked and I

would still score some credit. Not full credit, but I would still score some credit. But hopefully, you've been

managing your time effectively during the exam. So, you have time to take your answer plan, which I've just moved over

to this side of the screen. It's exactly the same plan. I've just moved it over here. And we're going to turn each of

these points into a full written answer. Now, in the exam, I would do this by just extending out each of the points

and my plan becomes my answer. And I try and do it in as timefficient a way as

possible. So, I don't try to write long sentences. I try to keep everything short. So, my first point was about this

being a new client. I can get a better understanding of the business using data visualizations. And the benefit of that

is it helps me to identify where to focus my audit attention. So here's that point written up. Have a little read of

it. Short, isn't it? Short points, short words, easy to understand, easy to mark. Yeah, that's the style I would really

recommend that you go for in AAA. So you've seen me write up the first one. Why don't you pause the recording here

and have a go at writing up all of the remaining points and then you can compare your answer to

mine. Right? Hopefully you've had a go now at writing up each of these points. And if you haven't, pause the recording

now and do it. It will be really beneficial for you. I promise you'll get more out of it if you do do

it. Right? Hopefully you have actually done it. Now, let's compare our answers. So my second point was about comparing

data from the old and the new package um to make sure that there are no differences. So um I've actually going

to split this point into two separate points. The reason being is that um it was a bit long for one individual point

and I like to leave a gap between my points so that the marker finds it easier to assess the information that

I've given. So I'm saying it's not practical to manually check the systems, two systems. Um, and I can use data

analytics to compare everything in the old and the new system. Anything that's different indicates issues with the new

package. And look, I've explained what sampling risk is in my answer. Sampling risk would be reduced as every

transaction could be tested. I've shown that I understand sampling risk in the way that I've

written that answer. And that's something I really try and do with any technical term.

Lovely. I try and keep all of my points to this sort of length, by the way, and if they get longer, I break them up so

that it's easier for the marker. Next one was about credit limits. So, my these controls were

breached in the prior year. I can use data analytics to compare the available credit limit to the credit extended with

the new sale. Any instances where the credit limit was breached would give evidence that the control is

operation. Excellent. short and sweet. Next one was around payroll fraud. Um, and I can use data analytics

here as well. Test the standing p payroll data searching for any duplicates and I can investigate them

further. And I can test all of the payroll data and that will give me some comfort that the fraud this fraud is no

longer happening. My last point was about being quicker, wasn't it? Okay. more efficient testing um and therefore

I'm more likely to release the report on time. That's a benefit to users of the financial statements so that they can

make decisions. Again, these points, these ones are slightly longer. I could

possibly have made them a little bit shorter, but anyway, I was enjoying writing. And my last point is the

conclusion. Uh my conclusion, the benefits are significant. A short punchy conclusion and then I justify it. using

some of the points from up here, my more significant points to explain why those benefits are so significant. If you want

to read through this answer in more detail, you can pause the recording here and go back over

it. But that's us done for this session. I hope you found this topic explainer useful and you feel much better prepared

for current issues in the AAA exam. [Music]