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Passing your EPP exam

The Ethics and Professional Practice examrequires you to explain how you would respond to real world dilemmas inthe workplace.

Ethics and Professional Practice can be a daunting subject for many – even experienced accountants! This short article should hopefully give you some hints and tips to help you put your best foot forward in the upcoming exam.

Practice questions You wouldn’t run a marathon without training – and you should also think of the upcoming exam as a test of fitness that you need to train for. Your BPP book contains a large number of practice questions that you should be trying in the run-up to the exam. In particular, remember to practise the following skills:

● Read the scenario carefully, underlining or highlighting key points or anything else you think is important.

● Read the question carefully – it is particularly important that you answer what the question is asking you to do, not the question you would like it to be asking.

● Plan an answer to fully address these points – it’s a good idea to take a new paragraph for every point you’re making.

Once you’ve answered your question, review your answer carefully against the solution in the book. It’s very easy to look at the solution and think, ‘Yeah, I would have got that’ – but if you didn’t put it down on the paper, you wouldn’t have got the marks in the exam.

Spend some time thinking about how your answer compares to the model one: does your answer contain all the necessary information, and are all the key points covered in detail? It’s a good idea to practise the question again, changing it based on what you know now.

Write enough

In many of the recent exam attempts, we have seen candidates answer with very brief and underdeveloped answers. Quite simply, a complex and detailed ethical situation can’t be answered in a few brief sentences.

It is therefore important that you write enough to allow the marker to give you marks. No matter how much you’ve thought about a scenario or think you understand it, the marker can’t award any marks unless you put those thoughts down on paper.

Let’s take this example from the December 2021 sitting, question 1 B (ii):

Identify and critically evaluate two threats to effective corporate governance within the above scenario and suggest what safeguards could be adopted to reduce these threats.

To fully develop an answer to the above we would have to do the following:

1. Write down what each of the two threats were.

2. Critically evaluate them – in other words clearly state why they are a threat to corporate governance.

3. State what the company could do to prevent these threats.

In the exam sitting, we saw some of the following issues:

● Some candidates simply writing down two threats and moving on, without attempting to deal with the other parts of the question. If you don’t answer all the question, unfortunately we can’t give you all the marks.

● Some candidates repeating the threat as the explanation; for example: ‘The position of the CEO on the board is a threat as the CEO should not have that position on the board.’ An answer like this gives the reader no explanation or understanding as to what the issue was with the CEO or why it poses a threat to the company.

● Some candidates giving very generic answers with regards to suggested safeguards, and merely implying that the action was bad. For example: ‘The CEO should stop acting in such a way.’ Again, an answer like this gives the reader no understanding of what could be done to deal with the situation in practical terms.

A much better answer would follow the steps laid out above:

1. What is a threat to corporate governance? The CEO appears to have a very close relationship with the chairman.

2. Why is this a threat? The chairman is supposed to be independent and represent the shareholders’ interests within a company, which means challenging the executive directors on their decision making. If the chairman is very close to the CEO and mainly following their guidance, then they are clearly not carrying out this role correctly.

3. What could be done? Safeguards could be put in place in recruitment to ensure that the chairman and other non-executive directors are truly independent upon appointment and do not have a vested interest within the company or a close relationship with any of the existing directors.

As you can see here, we are not expecting you to write a huge amount, but enough to fully develop and answer the question.

Situational ethics

A good way to approach any exam is to think what the examiner is looking for or trying to test. In the case of Ethics and Professional Practice, the aim is to test how you would respond to various ethical and professional dilemmas that you would face in the workplace.

As a professional accountant, it is likely that you will have to make a number of decisions regarding ethical and professional choices throughout your career. AIA naturally considers it to be of vital importance that you are properly equipped to make these decisions.

Every candidate has a different background, different experiences and a different role, and it is impossible to predict what roles each person will carry out in their professional career. If we had a crystal ball and could predict the future, we would write a different exam for every student, preparing each of them for the exact scenarios they would be set to face in their professional life!

Unfortunately, this is clearly impossible (we don’t have crystal balls yet!) so in the exam we make use of a technique called situational ethics. This tests your ethical knowledge and abilities by assessing how you would react in a certain situation. The exam, therefore, has a number of short case studies or scenarios in which you are presented with a situation that an accountant may face in real life. You may notice from the model solution that in many cases there isn’t a single right answer to some of these scenarios – and that is correct. We’re not assessing your ability to get to a specific correct answer (as we might, for example, in a finance exam), but more your process of reaching a particular decision or response.

Answering situational ethics questions

Getting a good exam mark therefore relies on approaching the questions correctly. The first step in this is recognising that each scenario is different and will place you in a different role within a different organisation. This means that trying to learn a set formula won’t work: it’s important that you judge each scenario on its individual situations and characters. In particular, it’s vital to consider the fact that the role in the scenario may be very different from your current employment.

In some scenarios, you will be taking on the role of a specific ‘character’, while in others you will be an observer looking at the role that other characters are carrying out. In either case, it is essential that you consider:

● the position of persons within an organisation;

● their responsibilities; and

● what pressures are on them.

Let’s consider the following example:

Example: Swithin Audit

Swithin Audit LLP is medium-sized audit firm based in Cardiff, Wales. One of the audit firm’s main clients is Broderick Plc., a large manufacturer of computer components.

Just from this short paragraph, we can tell a lot about this situation. As an audit firm, we have a responsibility both to our clients and to our professional standards.

The current audit has been difficult due to staff shortages. During recent audit work, Stephen Clark – a newly qualified accountant – has been asked to supervise part of the audit. Due to the staff shortages, however, he has ended up doing much of the audit fieldwork himself. He has prepared some payroll testing sheets and asked audit trainee Sioned Jones to sign these off as her own work. Stephen will then sign them off as reviewed, saving everyone time.

How we approach the situation, however, can be very different depending on our role within the firm. If we had a junior role within the firm, our responsibilities would largely be to ensure that our own work would be of good quality and meet the expectations of our professional standards. We would not be expected to be involved in the setting of the culture of the firm. It would also be expected that there could be significant pressures on us related to our junior role within the organisation. A reasonable answer in this case could involve a description of how we would report this to a more senior member of staff.

If we were a partner in the firm, however, reporting this would not be a very good answer. In a more senior role, it would be expected that we would take a lead in setting the culture and the organisation of the firm. If we were to suggest reporting it, who would we report it to? We are one of the most senior people in the firm – there is nobody above us that we could report to.

A good answer in this situation would consider how we could make it clear to Stephen that his behaviour was inappropriate and send a clear message to other employees of the firm regarding expected conduct.

How you approach this question can therefore be very different depending on what your role in the organisation is.

Summary

To sum up, the best way to approach an Ethics and Professional Practice case study question is as follows:

1. Read the case study carefully. Try to understand the nature of both the organisation in the case study and your role within it. Underline or highlight any parts you feel are particularly important.

2. Read the questions carefully, making sure you understand what is being asked – not what you would like to be asked!

3. Plan your answer to fully deal with all elements of the question. Make sure you write enough to clearly deal with all of these elements.