AAA - Professional Marks

ACCA introduced the concept of Professional Marks in all exams at the Strategic Professional level for all exams ( except Strategic Business Reporting ). I believe the introduction of 20 marks for professional skills has been a game changer of sorts. While many view this as a challenge of sorts, I am inclined to believe that mastering these professional skills will help the candidates in their professional journey, outside of academics as well. ACCA candidates thus will be better equipped to handle situations, both inside the examination hall and also, outside of it.

In the Advanced Auditing and Assurance exam conduced by ACCA, four professional skills are tested

• Communication
• Analysis and Evaluation
• Commercial Acumen
• Scepticism

These skills contribute towards 20 marks in the AAA exam. Candidates must understand that these 20 marks of professional skills are a key to unlock the 80 technical marks.

Communication

The skill of communication is tested in Question 1 of Section A. Maximum marks for this skill are 4.

The idea behind testing this skill is to evaluate whether candidates have the ability to understand the tone of the question and respond in the manner that is appropriate. I prefer to use the word "response" and not "answer" because the syntax of the paper is that of a case study and the approach has to be that of "response" to a "situation" and not of an "answer" to a "question"

Question 1 of the exam asks candidates to prepare "Briefing Notes". Usage of the appropriate format is the first step to gain marks for communication skills.

The response should always begin with an introductory paragraph where the candidate must outline what the briefing notes contain. This is simple by itself - all you have to do is go through the requirements and rephrase them to state what all are you writing about.

This has to be followed by a paragraph on "materiality" and "justification of materiality" - more apt when the question tests you on the "Risk of Material Misstatement"

The tone of your answer is critical. The briefing notes are prepared for the partner. The tone must be professional and the candidate has to bear in mind that he is talking to the partner, who is sufficiently senior. ( for example - if the response expects a comment on impairment, you should directly write about impairment. No need to explain to the partner what the term means. Go straight to the issue at hand )

The points should be arranged in a logical order - which means these points have to presented in an increasing or decreasing order of importance and not in a haphazard manner.

The response should always be followed by a "Conclusion" paragraph.

Analysis and Evaluation

Questions in the AAA exam require an assessment of the financial reporting issues of the client, the ethical or legal and regulatory issues and their impact on the audit process.

This may be at the planning stage ( in Section A ) or at completion and reporting stage of the audit ( in Section B )

Candidates need to ensure that any recommendations for further actions are relevant to that point of the engagement.

It is important that candidates ensure that any analysis or evaluation is contextual, specific to the situation and must take into account the situation in which the organisation in the question operates. You should avoid making generic comments.

Analysis can be demonstrated by appropriate use of the information to determine suitable calculations to support your evaluation. You should showcase your ability to draw appropriate conclusions from the data presented.

Identifying where data or information appears to be omitted or where further analysis is needed to make a recommendation is also important, as that means a full evaluation cannot be performed, for example, understanding the basis of a provision and understanding how the audit team can gain sufficient and appropriate audit evidence in the circumstances.

For example - a question states that the company is in the manufacture of cars and has two verticals - one for petrol cars and the other for electric vehicles. The Government has passed a new law stating that using petrol vehicles will be illegal from 01-Apr-2027. In this case, your analytical skills should tell you that impairment testing is necessary for the division that makes petrol vehicles.

Commercial Acumen

Candidates may be asked to demonstrate their commercial acumen by assessing the business risks affecting the client at the audit planning stage.

Questions often ask you to "identify" and "prioritise" the risks. You will get marks for demonstrating commercial acumen if you are able to correctly prioritise the risks.

The following points should be borne in mind in order to correctly prioritise the risks

• Risk that the entity will not be able to continue as a going concern is usually the risk with highest priority
• For other risk areas, try to calculate the financial impact / value in the Financial Statements.
• The higher the value, the higher is the priority

Candidates may show commercial acumen by assessing the impact of the engagement on the audit firm. This may be relevant in a scenario which requires an evaluation of whether to accept an engagement, for example, whether the audit firm is happy to be associated with the client or industry.

Scepticism

Auditors cannot do without scepticism. The ability to have a constantly questioning mind and not taking things at their face value is what makes the auditor stand out.

Candidates are expected to demonstrate professional scepticism and judgement when assessing the information given in the scenarios. This is key when asked to evaluate the significant risks in a scenario, or challenging information which has been provided.

Information may come from the client, such as in the basis for a provision or the basis of amortisation of purchased intangible assets. Other scenarios may ask the candidates to review the audit work and evidence obtained during the engagement and assess whether it is sufficient to support a decision or information in an auditor’s report

Knowing what counts towards securing the marks for professional skills can be the difference between a good score and a great score, a regular "pass" and a "rank".

The 20 professional skill marks are a key to unlock the remaining 80 technical marks.

Keep watching this space for more.