Acheiving depth in PMR / Accounting on the UFE is an important skill to continually try to develop since it often means taking your RCs to Cs which is necessary to successfully pass the UFE. While the issues on the UFE will vary and a template approach is risky and cautioned against by The Board of Evaluators, today I’m offering a framework which is used for discussing PMR issues which could give you some thoughts on tackling accounting issues and achieving depth.
- Identify The Issue – First, it’s obviously important to identify the accounting issue and rank it high enough to discuss. This is usually because the simulation asks advice about this particular issue, they are accounting incorrectly in the simulation or some other case fact points you to discussing this issue.
- Was the Accounting Treatment Correct? – Ask and answer whether the accounting is correct. Support WHY with case facts. Give reasons based on The Handbook or if guidance is not provided then based on the conceptual framework/definitions.
- Are There Alternative Accounting Treatments? – If yes, present these alternatives with reference to The Handbook. Consider and discuss the impact on the Financial Statements, both Statement of Operations and Statement of Financial Position, and where possible, quantify the impact. Consider whether there is further information required. If no alternative treatments are available, use relevant GAAP to discuss the issue, again, consider the impact on both sides of the Financial Statements and quantify where possible. Consider whether further info is required.
- Recommend and Conclude – It is important to consider Financial Statement user needs or reporting objectives and to conclude on which accounting treatment is superior for users, or alternatively, only one may be allowed for areas where specific guidance is available.
- Consider Impact on Other Areas – Consider how this accounting may impact other areas in the case, this is where you’ll think above how this may be a pervasive issue and could impact assurance, purchasing of a business, going concern, and so forth.
Not every accounting issue will open itself up to a discussion in all of these areas but I think that if you keep these things in mind you’ll be able to have a rich discussion and achieve depth in a lot of accounting discussion.