August 2021
In just a few months, AAT are shaking up their qualification structure. Mark Hempinstall cuts through the misinformation to show just what’s happening with Quals ‘22.
In this article I’m going to look at how the units fit together within the new AAT qualifications 2022 specification.
One of the key design features of Quals ’22 is the removal of duplicate assessment. Now, and this is a really important point for us to recognise, although duplication of assessment has been removed, knowledge retention has not.
Accounting is a building block subject, what a student learns on the very first day of the level 2 AAT course will be used throughout their accounting studies.
Sometimes it is possible that a student could start at level 3, or even at level 4, but just as duplicate assessment is removed, providers are likely to remove duplicate delivery, too.
So it is now more important than ever that students are clear and honest with themselves about the depth of knowledge that they bring with them from prior qualifications or from experience in the workplace.
So let’s have a look at the structure, units, and progression across the levels to demonstrate why it’s important to not skip on basic knowledge.
There are three main levels to the AAT qualification structure: levels 2, 3 and 4.
I’m also going to break this down into three learning strands:
• The financial accounting strand.
• The management accounting strand.
• A general business units strand.
In level 2 under the financial accounting strand, the first unit you are most likely to attempt will be Introduction to Bookkeeping. This gives you the basic underpinning knowledge of how an accounting system is formed along with the rules and principles for recording accounting transactions.
After taking the exam for this unit you will move onto Principles of Bookkeeping Controls, which further extends the principles and processes gained in the first unit. Everything you have understood in the first unit will now form the basis for clear understanding in this second unit.
Under the management accounting strand we have Principles of Costing.
Where the bookkeeping units at this level ensured that we measure and record financial transactions accurately, this unit provides understanding of costs and cost classification, which are the basic building blocks of management accounting in the same way the bookkeeping units do for financial accounting.
In the general business unit strand we have the Business Environment. This looks at economic factor, legal structures and some law that relates to owning and running a business.
This unit is examined as part of the synoptic assessment at level 2. In addition to the information contained in the business environment unit, the synoptic exam will also cover some aspects of Introduction to Bookkeeping and Principles of Bookkeeping Controls.
While this could be seen as repetition, these basic building blocks are so important to your future development and understanding that it is essential we ensure your knowledge is sound before moving on to higher level study.
At level 3 under the financial accounting strand there are also two units.
Here it’s not only important that you retain the understanding from one unit to the next within a level, the knowledge gained at level 2 now forms the basis for your studies at level 3.
We have Financial Accounting – Preparing Financial Statements. As principles of bookkeeping controls takes you up to trial balance and the identification of some potential accounting adjustments, this units builds greater and deeper knowledge of accounting adjustments and moves on to preparing the financial statements.
The final unit in this strand at level 3 is Tax Process for Business.
This is an in-depth look at VAT. Now there are some topics within this unit that are brand new and some that are probably only covered in this unit; however, the underlying principles of bookkeeping still come through from level 2 into this unit.
The Management Accounting Techniques unit obviously comes under the management accounting strand.
This develops from the basic building block principles of costing into more useful analytical techniques undertaken by a management/cost accountant. However, just as financial accounting can appear difficult if you can’t identify if an account is an asset, liability, income or expense from your level 2 studies, understanding the management accounting techniques at this level can be more difficult if you don’t have the skills to identify and classify costs from that level.
Finally, at this level we’ve got a fourth unit, Business Awareness. Now this does build from the Business Environment unit; however, this is a standalone assessment as we only have a synoptic exam at level 2 under the new qualification structure.
On to level 4 and the financial strand follows through to Drafting and Interpreting Financial Statements. This now takes us on to drafting the statements of limited companies and the production of consolidated accounts. You will also need knowledge of the international accounting standards that govern the production of published accounting information and the skills to analyse and interpret the financial accounting statements.
In the management accounting strand we’ve got Applied Management Accounting. Everything you’ve learned from the principles of costing at level 2 through the management accounting techniques at level 3 will have prepared you for this applied and in-depth look at the complex management accounting techniques used to improve the efficiency and productivity of an organisation.
The final mandatory unit at this level under the general business units strand is Internal Accounting Systems and Controls. This looks at other aspects of managing the accounting function within a business and looks at ways of identifying and managing risk.
At level 4 there will also be two optional units that you need to select.
The available options are:
• Credit and Debt Management.
• Cash and Financial Management.
• Audit and Assurance.
• Personal Tax.
• Business Tax.
To some extent we would like to teach you the end of the accounting process, then build back from the beginning with the under-pinning knowledge needed to get you there, as this would give you a better understanding of where your earlier studies are leading.
However, we do need to build up knowledge before we get to these complex topics.
That being said, I hope the graphic on the opposite page will give you some idea of how all of these units do interlock. Understanding this will hopefully drive you to ensure that you take the opportunities at the lower levels to truly understand this subject.
Understanding a topic will provide greater opportunity to remember and implement it.
Exam technique is important but just learning to pass an exam is ultimately much harder when you consider the complexities and varieties of businesses out there!
I hope this helps you decide this is the right path for you and helps you plan for your future as an accountant.
• Mark Hempinstall, Training Link
Training Link’s Mark Hempinstall has provided us with a fantastic video which explains AAT’s new qualification – AQ2022. Check it out at https://vimeo.com/574032702
