November 2024
First Intuitionâs Nick Craggs looks at task 2 in the INAC assessment, and exactly what the examiner needs to see in your answers.
At the time of writing, the latest AAT examiner reports have just been released. The feedback from the examiner details where students struggle and where marks are lost. Students should make sure these examiner reports are a key part of their preparation for their upcoming assessments.
The latest examiner report in the level 4 Internal Accounting Systems and Controls has a lot of really valuable feedback. There is a lot of great information in all of it, but one subject I would like to focus on is Monitor, Review and Report in task 2. This is a large task and overall worth 25% of all the marks in the assessment.
One of the weaknesses mentioned in relation to task 2 is âexplaining the risk instead of explaining how the organisation can monitor, report and review the riskâ. AAT students do tend to want to fix things, which is commendable.
They will see a problem and then tell me what they would do to fix it, which is great, but that is not what we are looking for with a monitor, review and report type question.
In this type of question you need to break it down into three parts and make sure that you answer each part to get all the available marks.
The first part of this process is the monitor part; for this we are not looking for you to tell the examiner what a possible risk is or could be. In fact, you may be told what the risk is that you need to analyse using Monitor, Review and Report. Nor are we looking for you to tell us what the company could do to solve the issue. We are looking for you to identify data that you would monitor on an ongoing basis that could indicate that there could be an issue from the risk. An example of this could be a risk of fake employees being put on the payroll and their salaries being paid to someone else. What we are not looking for is for you to say that there is no segregation of duties between the task of approving new employees and the running of the payroll, causing there to be fake people on the payroll â this a potential cause of the risk. Nor are we looking for you to tell us that the company should outsource the payroll to a third party company to solve the problem. This is a risk but we are looking for what you could monitor that could highlight that the risk is happening. You could monitor the number of new employees every single month, and if you get a spike one month this could be due to a weakness, allowing the risk to occur. However, it doesnât definitely prove there is a weakness and that there is definitely an issue.
This is where the next step comes in, the review stage.
The review stage is where you start to look at the underlying data and individual transactions to see if the potential issues from the risk have occurred.
This is the stage where you start your investigation into whether there is a potential problem or not.
Using the potential risk I mentioned above about fake employees, this might be where you start to look at individual employees and check that you have third party ID for them. Some companies might want a copy of a personâs passport or driving licence to make sure they are a real person and not some fake employee someone has slipped in the payroll. If you have now decided that there is a problem in the controls of the company you now need to report it, which as you might guess leads to the next part of the Monitor, Review and Report process.
You now need to report the issue to the top layers of management, and this could be done in a variety of ways. You may want to produce a table detailing the fake employees, and how much this has cost the company. You may want to visually display this; for example, by producing a chart showing the proportion of new employees that were not genuine starts. Ideally you would choose a medium that is suitable for the information that you have prepared. If you want to express numerical data a chart or spreadsheet might be useful, whereas if the risk is causing non-financial implications you may want to express this via a report. The subject itself isnât that technical, but the trick is to make sure you are giving the examiner what they are looking for.
- Nick Craggs, AAT distance learning director, First Intuition
