Integration Is One of the Softer Competencies Which I Find Is Quite Inconsistent in The

INTEGRATION COMPETENCIES

Integration is one of the “softer” competencies which I find is quite inconsistent in the assignments I mark. It is one area where practice really helps to ensure it becomes second nature by exam time.

One of the comments I make when I discuss the general approach to studying is the option of writing up your study notes by issue rather than by competency where this makes sense. In the write up of the study plan I mention that you can “cover the issue by looking at the related subject areas (example: operating VS capital leases and the accounting, auditing, tax issues related to these leases). The advantage of the second approach is that it helps you work on integration of subject areas.”

This is particularly effective when you are doing a debrief of the assignment cases and the demo cases since much of this material is written with integration in mind.

There are actually three types of integration which you could be called upon to demonstrate (competencies extracted below).

IA:01 Aggregates information from a variety of sources and perspectives to assess the impact of issues on the organization

IA:02 Evaluates the interrelationship of an issue on different functions of the organization and applies concepts and approaches within and across functional areas to develop integrative solutions (coordinates the relevant accounting, assurance, finance, information technology, and taxation implications of events and transactions)

IA:03 Evaluates implications and assesses the appropriateness of solutions beyond the immediate or short term (considers potential impact of decisions on other systems and processes, such as internal controls, impact on other departments, or other functional areas)

The first integration competency typically refers to using the information provided in the case to support your analysis. For example, assignment 5-6 referred to industry stats for sales increases at 3% and the company’s projections at 40% in year 1 and 12% subsequently. You are expected to integrate the information from the industry stats into your assessment of the reasonability of the company’s sales projection. (Keep this example in mind when you work on my practice case Who Ya Gonna Call.)

The second type of integration is what I refer to in the study plan. This is the most common form of integration since you are expected to be able to recognize that an issue has many technical components. To expand on the reference to leases above, I would suggest that the heading for the study notes would be structured as follows. Then you would fill in the technical details and ensure you are familiar with them.

Leases  Finance (impact on cash flow of lease versus buy)  Accounting (how are these accounted for?) o ASPE - operating and capital leases (know criteria) o IFRS – operating and financing leases (know criteria)  Tax (what are the tax implications?)  Impact on key ratios o Debt covenant – how would this be impacted for operating versus capital/financing lease? o Management bonuses – are there components of the bonus that are affected by the accounting for the two types of leases?

With this list in hand (and knowledge of the specific tax and accounting) you should be prepared to provide a well integrated discussion whenever you see a lease issue in a case.

The third integration competency typically shows up in a more strategic discussion. Many key decisions will have a short term and long term impact which can usually be quickly covered off in one or two sentences, incorporating facts from the question where possible. Often the case "required" will specifically ask you to discuss short term and long term implications...which is straight forward. But sometimes the "required "will not be directive and you have to be able to recognize that an analysis of a significant decision for the company typically should include a discussion of the short term and long term implications - so keep an eye out to ensure you don't miss this!