CHIEF EXAMINERS REPORT FOR NOVEMBER 2013

BUSINESS INFORMATION SYSTEMS (PAPER 1.4) PART 1

GENERAL PERFORMANCE OF CANDIDATES
The general performance of candidates was just above average. The standard of
performance was better than previous ones.

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.

CHIEF EXAMINERS REPORT FOR NOVEMBER 2013

ECONOMICS (PAPER 1.3)
GENERAL PERFORMANCE OF CANDIDATES
1. The performance was average. There were two favourite questions (3 and 7) that
candidates did answer well.
2. The higher performers cut across the examination centres in the country.
3. The low performers were spread around all the examination centres.
4. Generally, the majority of the candidates did perform well.
NOTABLE STRENGTHS IN THE PERFORMANCE OF CANDIDATES
There were no notable strengths in the performance of candidates that cut across.
WEAKNESSES
QUESTIONS

DEMONSTRATED

BY

CANDIDATES

IN

ANSWERING

The main weaknesses demonstrated were in answering questions 4, 5 and 6. For

question 4, the students answered it like a question on demand and supply under
microeconomics. For question 5, the candidates could not write an equation that
establishes a relationship between consumption and disposable income. For question
6, majority of candidates presented the same answer for sections (a) and (b).
QUESTION BY QUESTION ANALYSIS OF PERFORMANCE
1. Question 1 was on own price elasticity of demand.
2. Question 2 was on production and cost theories.

3. Question 5 was on national income determination. Candidate who answered this

question did well. The main challenge they had was the specification of the
consumption function.
4. Question 6 was on international trade. This question was popular with candidates,
majority of the candidates produced the same answer for sections (a) and (b).
5. Question 7 was on public finance. This question was popular and well answered
by majority of the candidates.

CHIEF EXAMINERS REPORT FOR NOVEMBER 2013

BUSINESS MANAGEMENT (PAPER 1.2)
GENERAL PERFORMANCE
The performance of candidates was generally very good. Indeed, it was better than the
May 2013 performance. Out of the 314 candidates who wrote the paper, 217 of them
passed, giving a 69% pass rate. Some candidates did extremely well and the poor
performance spread across the various centres. Accra candidates performed very well
probably because they had access to more effective tutorials.
WEAKNESSES OF STUDENTS
Some of the candidates demonstrated a lack of understanding of some questions and gave
the wrong answers.
DETAILED QUESTION-BY QUESTION ANALYSIS OF PERFORMANCE
Question 1
Most candidates answered this question and scored very high marks, although a few of
them did poorly at (c).
Question 2
Many candidates did not attempt this question and the few who did performed poorly,
especially at section (a).
Question 3

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.

CHIEF EXAMINERS REPORT FOR NOVEMBER 2013

ACCOUNTING FUNDAMENTAL
WEAKNESSES OF CANDIDATES
The performance of candidates was average compared to the previous sittings. A small
number of candidates exhibited a high sense of preparedness while most were not well
prepared. The most prevalent reasons for some candidates obtaining low marks remains
as in previous sittings i. e. studying only a few selected topics, not reading the question
carefully enough, or lack of structure in the approach to answering questions.
STRENGTHS OF CANDIDATES
The level of preparedness of candidates was mixed because while others performed
extremely well others performed poorly. The strength of most candidates was
demonstrated in the preparation of Manufacturing Account and a theory question on
concepts, conventions, basis policies in accounting. Candidates generally scored better in
question five and three than in the other questions.
QUESTION BY QUESTION ANALYSIS OF PERFORMANCE
Question 1
Question 1 required candidates to prepare a statement of financial position from a set of
information provided of a partnership after the resignation of a partner. The question did
state clearly the requirement. The performance of candidates in this question was below
average.
Candidates scored very low marks in this question. It was clear that most of them have
not learnt the principles. A greater number of candidates were not able to calculate the
correct bank balance. Even though the question required candidates to transfer the profit
or loss on revaluation to the current account quite a number of candidates treated this in
the capital account.
It is therefore recommended that in future requirements should be specific that is, if the
examiner wants candidates to prepare Partners Current Accounts, Capital Accounts and
Revaluation Account, the requirement should state them and marks should be allocated
for each requirement.

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.

CHIEF EXAMINERS REPORT FOR NOVEMBER 2013

COST AND MANAGEMENT ACCOUNTING
GENERAL PERFORMANCE
Candidates were examined in the following areas: Contract Costing, Standard Costing
and Variance Analysis, Performance Measurement using ROCE and ROI, Preparation of
Profit Statements using Marginal and Absorption Costing and Inventory Management
System and the preparation of Stores Cards.
The question tested candidates in both theoretical and practical requirements in a fair
proportion, as 34% of the marks related to written (theory) questions. Unfortunately,
candidates performed better in the calculations as compared with the theoretical
requirements.
QUESTION BY QUESTION ANALYSIS ON PERFORMANCE
Question 1
The performance of the candidates is barely satisfactory. Most of them could not get the
Expected Profit correct just because they have the difficulty in determining the value of
the contract which is 250,000 instead of 200.00 which they identified.
Also, about 80% of the candidates could not determine the percentage of completion to
be able to calculate the profit to be transferred to Income Statement. The formula for
calculating this is Cost to Date divided by Cost to Date plus Cost to Completion.
Therefore profit to be transferred 179,250 X 100%
206,750
i.e. 86.69 X 43,250 = 37,493
100
Most of the candidates got this wrong.

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:

The general organization of the particular business

The technical aspect of the business concerned

The minimum amount of details in which records are to be complied

Records to be provided by all categories of staff with little clerical work as

possible

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.

CHIEF EXAMINERS REPORT FOR NOVEMBER 2013

FINANCIAL REPORTING (PAPER 3.1)
GENERAL PERFORMANCE
The general performance of the candidates was abysmal. More than 80% of the
candidates scored less than 40% of the total marks while a candidate scored as low as
8%.
The high performers were concentrated in Accra, Kumasi and Koforidua. The low
performers were in the other regional centres. The general performance showed that the
background of most of the candidates was poor and they were not really prepared for the
examinations.
NOTABLE STRENGTHS OF CANDIDATES
Candidates who prepared adequately and were ready for the examinations scored more
than 50% of the total marks.
Candidates with high understanding of the Accounting Standards scored high marks
especially in questions 1 and 4b.
WEAKNESSES OF CANDIDATES
Most of the candidates were not fully prepared for the examination. They showed lack of
understanding of the Accounting Standards and the double entry principles. The orderly
and logical presentation of answers was below average.
A few of the candidates presented their answers without showing workings to support the
final figures in the answer, resulting in the loss of vital points.
A few of the candidates failed to record the question numbers answered on the front
cover of the answer book in chronological sequence and also on top of the page in the
answer book. They also failed to record their index numbers and number the pages in the
answer books. A few others failed to comply with the instructions not to write in the
either margins. A few candidates used both their Students Registration numbers and the
index numbers.
DETAILED QUESTION BY QUESTION ANALYSIS OF PERFORMANCE
Q1. (a)

The approach to the question was below average.

(i) Most candidates showed a poor understanding of the concepts/assumptions

underlying the IASBs Framework for the preparations and presentations of
Financial Statements and therefore could not explain the terms.

(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.

This was a simple preparation of Consolidated Income Statement and Financial

position of a company and its Subsidiary.
(a) The performance showed that only a few candidates did not show good
understanding and preparation of Consolidated Financial Statements.
(b) Only a few candidates did not show workings to support the final figures in the
Consolidated Statement, and could not compute the percentage shareholding to
determine the Control Structure.

Q3.

The approach was far above average. There was

flexibility in determining the Goodwill. And most candidates scored the
maximum marks.
(a) Similarly, most candidates scored the maximum marks in the preparation of the
Revaluation Account.
(b) The Statement of Financial Position of the new Partnership was poorly prepared
as most candidates could not determine the balances on the Capital and Current
Accounts.
(c) Most candidates combined the Capital and Current Accounts even though the
question required two separate accounts.

Q4.

The approach to the question was above average.

(a) Most of the candidates could not explain how the issues raised could not be dealt
with in the published Financial Statements.
(b) Most of the candidates were able to compute the various ratios from the Financial
Statement. Similarly, most candidates were able to effectively assess the financial
and operating performance of the Company in relation to the Consultants ratios as
a benchmark.

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.

CHIEF EXAMINERS REPORT FOR NOVEMBER 2013

PUBLIC SECTOR ACCOUNTING (3.2)
GENERAL PERFORMANCE AND UNDERSTANDING OF THE SUBJECT
Majority of the candidates do not understand the fundamental rules and concepts of
Public Sector Accounting. Therefore, when questions are asked, they resort to
generalizations and their own perspectives which have no bearing on the answers
expected by the examiners.
Public Sector Accounting has from time immemorial been buttressed on established
rules, procedures and laws. Indeed, as far back as 1957, the Public Accounts Ordinance,
1957 (no. 37 of 1957) established enabling rules relating to public accounts (how they are
to be made). In the same year, The Public Accounts (Audit) Rules were issued. These
enactments chiefly related to the audit of public accounts, but they also contained a
section specifying the accounts and statements to be presented for audit by the
Accountant General.
Since then Ghana has had several public financial laws, regulations and procedures. The
important composition of these laws, rules and regulations is that public sector
accounting practitioners should always be guided by rules relating to the manner in which
public accounts should be rendered and prepared.
Again, the practice of public sector accounting does not only seek to demonstrate priority
of transactions and their conformity to established rules, but it also gives evidence of
accountability for the stewardship of government resources and provide useful
information for the good control and efficient management of government resources. It is
important therefore for candidates to recognize that in public sector accounting there is
excessive emphasis on rules, procedures, laws and a concern for specific legal definitions
and details often dominated by budgeting and financial controls.
QUESTION BY QUESTION ANALYSIS ON PERFORMANCE
The following questions in the current examination have been selected to emphasize how
many candidates have misunderstood fundamental rules and procedures of public sector
accounting.
Question 3 (a)
Budgetary Policy Objectives are spelt out by the Government in the budget statement.
These objectives are received periodically. Candidates are therefore not expected to
discuss their own perspectives.

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.

CHIEF EXAMINERS REPORT FOR NOVEMBER 2013

ADVANCED TAXATION & FISCAL POLICY
GENERAL PERFORMANCE
On the whole, apart from questions 1 and 3, the performance would have been above
average.
QUESTION BY QUESTION ANALYSIS ON PERFORMANCE
Question 1
The standard of the paper was fair. The written down values of assets for the computation
of capital allowances were stated at 30th June, 2008. This created a lot of problems for the
candidates as they were required to compute capital allowances from 2009 to 2011. Some
were compelled to work backwards to arrive at the written down values for 2008. Others
had to answer the question to suit their own understanding.
The team of examiners at the co-ordination exercise was therefore compelled to find
alternative solutions. In spite of all these, the performance was poor.
Question 2
This question which was based on tax planning was fairly answered.
Question 3 (a)
Although the question was quite straight forward, it was loaded and time consuming.
Candidates were required to state all the provisions covering chargeable assets and
exemptions. Surprisingly, many candidates misconstrued this to mean capital allowances.
Question 3 (b)
This required for the computation of capital gains tax on shares acquired part sold. To
arrive at the cost base it involved a lot of calculations before the actual computation of
the capital.
Question 4 (a)
This question called for the views of candidates as to how the Ghana Revenue Authority
would react to a stated transaction between two companies. The transaction involved the
transfer and sale of ordinary shares of one of the companies. it was clear that the
companies were related or associated and therefore the transactions between them were
not at arms length.

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.

CHIEF EXAMINERS REPORT ON NOVEMBER 2013

CORPORATE STRATEGY AND GOVERNANCE
GENERAL PERFORMANCE OF CANDIDATES
Overall, the performance of candidates in November 2013 was comparable to or slightly
better than May 2013. There were sizeable numbers of poor scripts.
STRENGTHS OF CANDIDATES
The main strength is that almost all the candidates attempted the required number of
questions.
WEAKNESSES OF CANDIDATES
Some of the candidates demonstrated lack of knowledge of the syllabus. Also a few of
them provided incorrect responses to questions.
QUESTION BY QUESTION ANALYSIS OF PERFORMANCE
Question 1
This was a compulsory question. Some of the issues tested included the effect of human
resources practices on productivity, how corporate governance practices can contribute to
the success of an organization and reasons why the company in the case should engage in
corporate social responsibility.
Question 2
The first part of this question tested the candidates on what financial regulations are. The
second part was on the supervisory roles of the financial regulator and the third part of
the question required the candidate to explain controls that an organization can use to
safeguard its resources.
The question was attempted by a good number of candidates and the performance was
average.
Question 3
The focus of this question was for candidates to advance argument as to whether the roles
of Chairman of Board and the Chief Executive Officer should be separated or combined.
The performance was good. Candidates who failed to obtain good marks were weak on
the basics of the subject and may not have studied hard enough.

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.

CHIEF EXAMINERS REPORT FOR NOVEMBER 2013

ADVANCED AUDIT AND PROFESSIONAL ETHICS (PAPER 4.2)
GENERAL PERFORMANCE OF CANDIDATES
Many candidates performed creditably, while the output of some candidates clearly
showed that they did not adequately prepare for the paper.
Common faults of candidates included.
1.
2.
3.
4.

Lengthy and unproductive introductions to answers

Inability to use correct auditing terms and expressions
Wrong spelling of words, and
Disregard for correct grammar

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 2 (i and ii)

These sub-questions required knowledge of techniques of audit testing or methods for
gathering audit widened with examples relevant to the audit of purchases and other
expenses.
Instead of techniques of methods, the examiner used procedures for gathering
evidence and this confused some candidates. The cleaver ones who followed the example
given in the question were able to provide the right answers while those who did not,
wrote about substantive and compliance procedures, as well as walk-through-tests. Mixed
performance.
Question 2 (b)
Knowledge of business risk is required to answer this question correctly, but again the
examiners use of audit risk instead of business risk threw some candidates off-course.
However candidates who read the preamble to the question very well were able to get the
catch and answered the question correctly. While some candidates were able to identify
the relevant business risks some could not provide the needed auditors response to the
risk.
Question 3 (a i iii)
These three sub-questions were on Due Diligence. Even though Due Diligence falls
under other Assurance Services, it is not specifically mentioned in the syllabus. The
question proved to be alien territory to many candidates who mistook Due Care for
Due Diligence. Very bad performance.
Question 3 (b i& ii)
These questions involved auditors responsibilities in respect of management use of
going concern basis for the preparation of financial statements and indications of
going concern problems. These questions were answered correctly by many candidates.
Very good performance.
Question 4 (a)
How an auditor is affected by computerized accounting systems was the requirement of
this question. Few candidates were able to provide the right answers. Performance was
poor.
Question 4 (b)
Candidates were to describe Application Controls and General Control in a
computerized environment. Here performance was mixed. Some candidates had it right,
others had no knowledge about the subject.

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.

CHIEF EXAMINERS REPORT FOR NOVEMBER 2013

PRINCIPLES AND PRACTICE OF TAXATION (2.4)
GENERAL PERFORMANCE
The overall performance was satisfactory. Those who passed were more than those who
failed. It appears those who failed did not prepare adequately.
WEAKNESSES OF CANDIDATES
Surprisingly, the theory questions posed much difficulty.
QUESTION BY QUESTION ANALYSIS ON PERFORMANCE
Question 1
This was a theory question. It appears candidates could not marshal their thoughts
properly to explain these questions well.
They have been applying the laws but could not explain the rules or laws behind the
practice. This is where many candidates failed.
Question 2
Generally, this question was well tackled but a few candidates do not know or forget how
to treat unutilized capital allowances and carry-forward losses.
Above all a few candidates did not know that incomes from all sources must be added
together and assessed in the case of individuals, even though loss from source cannot be
set-off against profits from another source. This caused the downfall of few candidates.
Question 3
This question was well tackled. Students appear to be conversant with expenses which
are not allowed for tax purposes.
There was a little problem with the question. The question gave an extract of profit/loss
account for year ended 30th September 2013. However, the residual values of assets from
the previous year ended 1/10/11. It should have been for the year ended 1/10/2012. As it
is many students were compelled to calculate capital allowances for two years. It is
doubtful if this is what the question was aiming at.

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.

CHIEF EXAMINERS REPORT ON NOVEMBER 2013

AUDIT AND INTERNAL REVIEW
GENERAL PERFORMANCE
Performance in the paper was generally very good. Many candidates displayed maturity
in their approach to answering the questions. Handwriting on the whole was very good.
However, common faults noted include:
1. Lengthy and unproductive introductions to answers;
2. Wrong spelling; and
3. Disregard for correct grammar
Performance is assessed as very good, taking into account the pass rate and the high
marks scored by some candidates.
QUESTION BY QUESTION ANALYSIS ON PERFORMANCE
Question 1a & b
These sub-questions required knowledge of the concept of independence of the auditor
and how independence can be compromised. These questions were well answered by
many candidates. Some candidates however could not distinguish independence from
objectivity and integrity. They mixed up all of them. Good performance.
Question 1c (i & ii)
These questions related to confidentiality of client information and circumstances in
which the auditor can disclose such information. Candidates performed well.
Question 1d
Candidates were to explain Expectation Gap and highlight two responsibilities each of
the Directors and Auditors towards the financial statements. Expectation Gap was
correctly explained by many candidates. The responsibilities of the directors and auditors
respectively towards financial statements were also correctly given. Good performance.
Question 2a
This question demanded distinction between compliance testing and substantive testing.
While almost all the candidates were able to outline compliance testing, a few could not
correctly spell out substantive testing. Good performance.

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.

CHIEF EXAMINERS REPORT FOR NOVEMBER 2013

QUANTITATIVE TOOLS IN BUSINESS
GENERAL PERFORMANCE
The general performance of the candidates was fairly average. The average performance
evenly spread across all the centres. There were no signs of copying at any of the centres.
It is still very clear that the level of preparedness of candidates is still not high enough.
This continues to affect the performance of candidates in examinations.
WEAKNESSES OF CANDIDATES
The noble idea behind this paper was to test candidates on the understanding of the
quantitative techniques as applied to solving problems in business. The general
performance of candidates never reached the goal of the paper in general. In most cases,
in the paper, the tools in mathematics were very much to be used to solve problems in
business but this objective was not achieved since the candidates could not very well
display this aptitude. Few candidates, however, were able to demonstrate their
understanding of mathematical tools needed to solve problems. Most of the candidates
displayed weakness in applying the mathematical tools to answer the questions in the
paper. I very much suspect that most candidates lack very basic fundamental knowledge
required to apply the mathematical tools to solve problems. To remedy this, it would be
suggested that candidates ought to devote quality time and resources in preparing towards
this paper.
QUESTION BY QUESTION ANALYSIS ON PERFORMANCE
The broad overview of questions attempted by the candidates is as follows:
Popular questions attempted by candidates: 1, 4, 5, 6 and 7
Unpopular questions attempted by candidates: 2 and 3
Question 2
This question required candidates to employ normal probability distribution to solve very
simple question in business. Most of the candidates who attempted this question
showered a serious lack in understanding of these tools to solve the problem.
Question 3
This question required the use of the techniques of calculus. Most of the candidates who
attempted this question could not appreciate the connection of the calculus to solve the
problem.

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.

CHIEF EXAMINERS REPORT FOR NOVEMBER 2013

BUSINESS AND CORPORATE LAW (PAPER 2.3)
GENERAL PERFORMANCE
Generally the performance was above average as many candidates got over 50% and in
some instances some went beyond 80%. I believe this may be due to the fact that the
Institute itself has gone a step ahead by setting up a school for prospective candidates. It
is hoped that these schools may be extended to cover the whole country.
The high performance appeared evenly spread across board and I believe this is due to
the level of preparedness or dedication of most of the candidates.
Generally candidates exhibited high knowledge of the Ghana legal system and business
law. Their performance in Corporate Law was just about average especially in company
law. Company Law by nature is a very difficult subject as it consists of rules that have
been codified. However, it is my believe that if candidates take time to read the M & E
Series of company law, they should be able to have an overview of the subject.
QUESTION BY QUESTION ANALYSIS ON PERFORMANCE
Question 1
(a) This question was quite well answered. However, in explaining common law
most candidates could not clearly explain themselves. Under the constitution
itself, Acts of Parliament, Existing law i.e. laws passed by previous governments
before the adoption of the constitution, delegated legislation, and common law.
The constitution explains that the common law includes the common law properly
so called i.e. laws inherited from the colonial era, rules of equity and customary
law which are laws applicable to particularly communities that have over the
years been assimilated into law by usage and recognition.
(b) The question was fairly well answered. However a lot of candidates confused
necessaries with necessity. A child is bound by a contract for the provision of
necessaries. Necessaries are defined as things for the sustenance of life like food
and clothing suitable for the station of life of the child. Thus what may be termed
as necessary for a child from an affluent class may not be a necessary for a child
of a low class.
Another pitfall was the fact that almost all the candidates who answered the
question failed to allude to contracts of a permanent nature. Eg purchase of shares
or land which are voidable at the option of the minor but he is expected to take
steps to avoid the contract immediately on attainment of majority or he would be
bound by it.
Question 2

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.

CHIEF EXAMINERS REPORT FOR NOVEMBER 2013

ADVANCED FINANCIAL REPORTING
GENERAL PERFORMANCE
Performance was extremely poor as compared to previous diets; a reflection of lack of
readiness to take the examination.
STRENGTHS OF CANDIDATES
Candidates showed improved understanding of the techniques of consolidation and
scheme design as evidenced in the marks picked up in questions 2 and 3 on group
accounting and scheme of re-organization respectively.
WEAKNESSES OF CANDIDATES
The following weaknesses were noted:
i. Most candidates did not prepare adequately for the examination and a sizeable
number did not attempt all questions. Some even attempted as few as one or
two questions out of five and therefore reduced their chances of passing.
ii. Some candidates did not read the questions well and therefore did not understand
their specific requirements. As a result they wrote lengthy material that did
not satisfy the requirements, thereby losing good marks.
iii. Some candidates lacked effective time management when tackling questions,
spending disproportionately too much time on areas whey believed could be
handled to the detriment of others. Candidates should be advised to allocate
time to questions according to their respective marks and take steps to move
on to other questions when the time allocated is spent.
iv. Some candidates wrote so illegibly that it was difficult to read and mark what had
been written on the script.
v.

QUESTION BY QUESTION ANALYSIS ON PERFORMANCE

Question 1a
Part (a) tested section 56 of the Ghana Companies Act 1963 (Act 179) on prohibited
transactions in shares. Most candidates gave general answers such as not issuing shares to
minors, criminals, person involved in money laundering etc. This section represents the
most poorly answered question throughout this diet.

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.

CHIEF EXAMINERS REPORT FOR NOVEMBER 2013

FINANCIAL MANAGEMENT
PERFORMANCE
Performance is detailed below:
Question 1
The question tested candidates on two areas:
a. Shareholders value maximization objectives and other non-financial objectives.
b. The swap (interest and currency) market.
Performance was excellent.
Question 2
This question tested the understanding of candidates in two areas:
a. Methods /ways of listing on the Ghana stock exchange.
b. Debtors management with specific reference to factor service.
The first part was handled satisfactorily, but candidates struggled through part 2.
Question 3
This question was made of three parts:
a. Theory on NPV.
b. Stock management / EOQ
c. Financial Mathematics with specific references to finding the future values of a
present amount. Performance was quite good.
Question 4
This question tested candidates on two areas:
a. Mergers
b. Share valuation
Performance was very good.

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.