Question 1a b
Examiners Report

This question was based on a wages system, being based on an amalgamation of real world information obtained by the examiner. Candidates were expected to use information in the scenario for all sections of the answer apart from section (a).

1a
Candidates were required to list four control objectives of a wages system.

The question was worth 2 marks. Most candidates provided 4 points in their answers, although a minority provided more than 4 (sometimes up to 8 points). However, only a maximum of 2 marks was available. The requirement verb “list” also indicated that no explanation of the control objective was needed; however a minority of candidates did provide a detailed explanation which was not required.

Most candidates provided a list of controls, although a minority did provide significant explanation of the controls; detail that was not needed for this answer.

Example comments provided and reasons why those comments did not obtain a pass standard are noted below:

Answer comment
“The auditor will confirm the accuracy of the wages calculation”

Examiners assessment of comment
This is not a control objective of a wages system but appears to relate to audit procedures. The comment is therefore not relevant.

Other common errors included:
• Listing controls over computer systems, not the wages system (e.g. access controls or backup of computer data).
• Provided detailed explanation of each control, which as noted above was not required.
• Stating possible controls from the scenario when generic control objectives of a wages system were required.

For example, stating that foremen should observe the clocking in process but the control objective was to ensure accuracy of hours worked.

The majority of candidates answered this question well, with a significant number obtaining full marks.

1b

Candidates were required to use the scenario to write a management letter to identify and explain weaknesses, explain the effect of each weakness and finally recommend a method of alleviating the weakness.

The question was worth 14 marks. The requirement stated that 4 weaknesses were required and that 2 marks were available for presentation. The marking scheme was therefore 3 marks for 4 groups of weakness, effect and recommendation plus the 2 presentation marks. A minority of candidates provided more than 4 weaknesses in which case only the best 4 were marked.

Most candidates provided a brief introductory comment in a letter or report format, followed by a table with three columns normally headed Weakness, Effect and Recommendation. This clear presentation made the answers easy to follow.

Two other answer formats were also adopted:
• Firstly, using a heading for the weakness (eg lack of authorisation of overtime) and then providing the weakness, effect and recommendation as three paragraphs under this heading. This format was again clear and easy to follow.

• Secondly, a minority of answers listed all the weaknesses in one section, then all the effects in another and finally the recommendations in a third section. Apart from being somewhat repetitive in the comments made, it was very difficult to follow the structure of weakness > effect > recommendation, especially where the order of the points was not followed.

For example, weakness 1 could relate to effect 3 and recommendation 2. Answers taking this latter approach were of a lower standard simply because the logic of points could not be followed.

There was also some confusion regarding the requirement to “write a letter”. A significant number of candidates used a report or memo format which was clearly inappropriate. Provision of basic information such as addresses, heading and an introductory paragraph, as outlined in the suggested answers, was expected.

Example comments provided and reasons why those comments did not obtain a pass standard are noted below:

Answer comment
One weakness is that normal working is not monitored.

Examiner’s assessment of comment
Normal working time was monitored. This is an example of a point starting which was not relevant to the question, ie it was not a weakness.

Answer comment
The code is generally known being based on the name of a domestic pet; this means that any member of staff can amend wages information. I recommend that only the chief accountant knows the code word.

Examiner’s assessment of comment
Although this example is relatively brief, the main issue is that the recommendation does not completely overcome the weakness; the point is the code word also needs to be not so easily “guessable”, not simply allowing one official to have the codeword as this is probably not realistic in practice.

Other common errors included:
• Explaining weaknesses that were not part of the scenario. These points normally started “there is no mention of..” indicating that the candidate was attempting to write weaknesses into the scenario which were not evident from the information given. For example, “there is no mention of backup procedures for wages information”. While this may be correct, the question requirement was clearly focused on the recording and payment systems as given in the scenario; there was no need to “make up” additional weaknesses.

• Not always fully explaining the points being made. For example, the code word being generally know so any employee could authorise wages does not, in itself, constitute a problem. It is the unauthorised amendment of wages information increasing hours worked, adding “dummy employees,” etc that is the problem. In situations such as these candidates were not always awarded a full mark as points had not been fully explained.

Overall, the standard of answers for this section was very high. A minority of candidates did not obtain a pass standard either due to lack of knowledge of wages systems or because this question was answered last and insufficient time was allocated to produce a full answer. The high standard indicates that letters of weakness remain popular with candidates.