MINISTRY OF EDUCATION

FIJI SCHOOL LEAVING CERTIFICATE EXAMINATION 2006

CHIEF MARKER’S REPORT

ACCOUNTING

1.0 INTRODUCTION

This year about 4,608 candidates sat for the Fiji School Leaving Certificate Examination Accounting paper. There had been a decline in the number of students taking Accounting at the Fiji School Leaving Certificate level. Compared to previous years, a number of structural changes had been done to re-align examination questions according to the FSLC Accounting Syllabus (1987) and FSLC Accounting Learning Outcomes (2004). Marks had also been re-allocated between multiple choice and problem solving questions. The FSLC Learning Outcomes (2004) addresses the changes that took place relating to accounting procedures and income tax legislations. Reference is made to CDU Circular No: 83/2006 released on 28 August 2006 stating changes to the format and facilitating summary notes on some major topics. This year’s examination paper was aligned to each theme of study. It was an outcome-based assessment testing competency skills. Teachers are strongly reminded that the teaching, learning and assessment of FSLC Accounting shall always be based on the FSLC Learning Outcomes 2004. It was quite evident that the teaching, learning and assessment of FSLC Accounting in the classrooms were purely based on textbooks rather than FSLC Accounting Syllabus (1987) and FSLC Learning Outcome (2004). Teachers in many cases failed to update themselves with changes in the field of Accounting, Financial Management, Business Economics, Basic Statistical Analysis and Taxation. Of particular concern was the computation of Value Added Tax. Candidates scored good overall raw marks but lost badly in some questions that required basic theoretical, bookkeeping and mathematic skills. However, we commend the candidates and teachers for their professional effort and participation in this year’s examination.

2.0 Specific Comments

Question 1 Multiple Choice Multiple-choice questions were proportionately spread over the two – year course coverage based on the allocation of marks per theme of study.

In many cases, candidates were able to score between 7 to 9 marks. Questions that posed difficulty were 1, 2, 5 and 10. Teachers and students are strongly encouraged to read, discuss, understand and learn to apply various concepts and principles to given situations. Always assess multiple choice questions using original questions.

Question 2 Nature, Purpose, Scope and Environment of Accounting For the very first time this theme was tested on it’s specific learning outcomes.

Candidates were able to score good marks in this question with the exception of many who did not have any idea of the functions of the Fiji Institute of Accountants. Work covered in the early part of Form 5 like other coverage hold a very significant position in the two – year program of study, hence can not be ignored by the students and teachers. Students and teachers need to research and update themselves with the presence and services of professional institutions in Fiji. Question 3 Personal Accounting Part A Source Document With the exception of Questions 3 (A), (b) to (e), Question 3 (A), (a) on the completion of tax income was very badly done. Hardly 5% of the candidates got this correct. Candidates could not correctly calculate vat inclusive price for each item. The only correct answer provided they charged $8.50 being amount of rice, which is zero – rated vat. Students and teachers are once again reminded that we deal with transactions of this nature everyday in our real life yet we ignore the fact. This concept had been covered in Themes 2, 3, 4 and 6. Part B Form ‘S’ Income Tax Return

This question carried five sets of resources that required candidates to synthesis and analyse the income tax liability of the taxpayer. Out of ignorance or confusion, some candidates did not take ‘Dependent Relative Allowance $200.’ Reference to ‘Elderly Mother’ living with the taxpayer was sufficient enough to apply the rules of age limits.

However there is no issue to debate as to the applicability because Resource 3 was quite clear in its application. Question on Value – Added – Tax and Income Tax based on current rates shall be tested every year at all levels of secondary school accounting.

Teachers and students are required to acquaint themselves thoroughly about the theory and application of the basic principles of the Value Added Tax and Income Tax as applied in Fiji. Question 4 Financial Accounting Part A Business Ownership Most scoring question for all level of candidates. Students and teachers are strongly suggested to base their studies of various types and kinds of business entities specifically relating to Fiji. Questions of this nature could be tested in so many ways, hence open options are available. Part B Accounting Equation This is a type of question that students and teachers had been handling from the Fiji Junior stage. The candidates did very badly in this section. Many transactions in this question required ‘three – way adjustments’. Students and teachers are requested to revise similar questions from the Fiji Junior Certificate Accounting past year papers, textbooks, study guides and revision books. The teaching, learning and assessment of Accounting Equation form an integral part of accounting and bookkeeping hence cannot be ignored. Failure to grasp the accounting equation at an early stage would pose difficulty to candidates at higher Part C Accounting for Capital Expenditure This was a quite straight – forward question requiring candidates to journalise acquisition of capital assets from vendor, record part payments and account for depreciation expense. Very few candidates scored 2 to 4 marks whereas greater number of candidates left the answer book blank. May be this part of the syllabus was not given due importance by teachers and students alike. The break – down of information in the question was self – explanatory. It was surprising to note that almost all candidates quoted depreciation expense as $3,512.50, which is 5% of $70,250 for Freehold Land.

Freehold land is not depreciated but leasehold land is amortised. Likely answers should have been for Freehold Land Property $21,096 being 5% of $421,920 or only for Commercial Building $17,583.50 being 5% of $351,670. Should the freehold land been isolated, than objectivity principle would have been violated because legal expenses and insurance premiums relating to the purchase could not be isolated for each capital asset. Students and teachers are advised to practice solving more questions of this nature because it directly concerns our personal and commercial life in Fiji. Part D Short Answer Very well attempted with the exception of sub – part (b) where almost all candidates failed to identify non-monetary items present in the commerce and industry. Similar types of question testing applicability of certain accounting theories and also examined in Theme 7 of the course. Question 5 Accounting Process Candidates in general have attempted this question very well. They had shown the skills of consolidating items of receipts and payments and balance day adjustments into the income and expenditure statement. However, some candidates showed capital expenditure items in the income and expenditure statement such as ‘FDB Loan Repayment’ and ‘Purchase of IBM Computer’. Some candidates provided ‘Net Income on Farm as $24,320 or $20,660’ was acceptable in both cases. With respect to the advantages of a registered club or society, almost all candidates ended up providing answers for ‘functions of a club or society’, hence losing valuable marks. Clubs or societies must be first registered with the government to qualify for a number of benefits as well as have to comply with a number of regulations. Question 6 Measuring Periodic Income Part A Worksheet Since 1995, question of this nature was tested for the third time but from a different perspective. It was pleasing to note that many candidates were able to score good marks in this section.

Candidates found some difficulties in consolidating balance day adjustments such as doubtful debts and depreciation within the worksheet. The notable feature of this type of worksheet was that it did not have columns for ‘Adjusted Trial Balance’ and ‘Amended Trial Balance’. Students and teachers must expose themselves to the very many ways in which worksheets could be presented. Financial reports are also prepared from fully adjusted worksheets. Part B Calculations These questions were based on the computations of the items of certain balance day adjustments. As such candidates were not asked to provide any journal or ledger entries. Very few candidates were able to tackle this type of question. Students and teachers are strongly requested to use mathematical strategies to solve this type of balance day adjustment questions. Part C Valuation of Inventory Question on inventory valuation this year was quite unique from the previous years. It tested skills of analysis, synthesis and evaluation to arrive at the desired or correct gross profit. Learning outcomes on inventory valuations could be tested in many ways such as completing of inventory cards to synthesizing or evaluating given or missing information. Question 7 Accounting Sub-Systems Part A Internal Control Procedures Questions were based on the entire six accounting sub-systems of an accounting system that are found in a business. Candidates were able to attempt all the questions. Some questions tested candidate’s ability to solve issues relating to real-time situations that are found in commerce and industries around Fiji. It was surprising to note that many candidates had no idea about the exact amount of contributions per dollar made by employees to their Fiji National Provident Fund Account. Students and teachers are strongly advised to update themselves about ‘Payroll and Wages’ compliance in Fiji.

Part B Accounting for Credit Controls Candidates had some difficulties in identifying the correct entries pertaining to Account Payables Control Account. Students and teachers should try to solve a wide range of problems relating to control accounts and its adjustments. Part C Accounting for Incomplete Records On average candidates scored good marks. Candidates were able to identify and compute missing information. Any method of computing for stock loss was accepted. Question 8 Analyses and Interpretation of Financial Statements This question was very poorly answered. In some cases either candidates did not attempt or left certain parts blank. Many candidates managed to score between 9 marks to 15 marks. Also quite many candidates misread or misinterpreted the questions. Despite provision of ‘Standardised Notes on Analysis and Interpretation of Financial Statements’, candidates still applied wrong formula. It seems that students were not given access to the notes and very few questions were solved and assessed in the classroom. Answers for ratios and percentages needed were to be rounded – off to two – decimal points. Candidates who failed to follow this specific instruction lost valuable marks. This question tested candidates on a range of mathematics, statistical and accounting skills. Candidates in all their wisdom could have cross – applied skills learnt in Economics and Mathematics. Students are once again reminded that this content area would be tested again at the Form 7 and tertiary level. Part A Analysing Revenue Statement This question was based on real – time situation of a second hand car dealer in Fiji that required candidate’s skill in accounting, economics and statistics to answer specific questions relating to various economic conditions. Wrongs formulas were applied and instructions were not followed. It was interesting to note that very few candidates were able to answer Question 8 (A) (e) giving valid reasons for no opening and closing stock.

Probable answers were relating to business economics as it happens in our everyday life in Fiji. Part B Analysing and Interpreting a Balance Sheet May be due shortage of time, this section was very badly done. Questions of type appeared in the previous years. Analytical formulas were wrongly applied in (a) and (b). Surprisingly in Part (b) candidates supplied formula to calculate liquid ratio rather than liquid capital. Part (c) was done very badly : required answers were ‘horizontal and vertical analysis.’ Part (d) was done well. Candidates confused themselves in Parts (e) and (f). It required precise reasoning.

3.0 Recommendations for Improvements

a. Teachers are strongly requested to follow the FSLC Accounting Syllabus (1987) and FSLC Learning Outcomes (2004) for teaching, learning and assessment in the classroom.

b. Plan, prepare and implement new schemes of work that are valid and

reliable for the specific school. c. Plan, research, prepared and use detailed lesson notes with suitable

examples, questions, solution and marking guidelines. Practice of textbook teaching must stop at once.

d. Follow CDU Manual for Commerce Teachers for everyday administrative

and professional guidance.

e. Network with other teachers and heads of departments for effective teaching, learning and assessment process.

f. Work closely with the Department of Accounting, CDU for updates and

advisories.

g. Establish district level networking with teachers of accounting and economics such as Commerce Teachers’ Association

h. Upgrade academic qualifications and professional exposure.

i. Instil the personal habits of reading, researching, writing, debating and

exchanging of views and concepts.

8.

3.0 Concluding Remarks

Issues or concerns raised by a number of schools regarding this year’s paper had been addressed. However, students and teachers reminded to change their ways of studying Accounting at the senior levels. There is an urgent need to work out new strategies and methods. Students must have free and full access to the FSLC Accounting Syllabus (1987), FSLC Accounting Learning Outcomes (2004) and various updates of financial and taxation information in Fiji. As early as 2004, during FSLC Advisory and Approval visits to secondary schools around Fiji and in – service workshops head of departments and teachers were duly advised on the upcoming changes to format, so stakeholders are required to take heed of such administrative and professional advisories. Since FSLC Accounting is a two – year coursework, students and teachers must ensure that all work is covered within the set time frame. Students must be continuously assessed in Form 5 and 6 and wherever standards are not met, there must be re – tests and remedial work. The Department of Accounting at the Curriculum Development Unit wishes to thank the students, teachers, heads of departments, school administrators, parents and communities for their valuable professional support. We wish everyone a successful 2007 academic year.

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