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THE INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS IN IRELAND

EDUCATORS BRIEFING 2008/2009

FORMATION 1 ECONOMICS AND THE BUSINESS ENVIRONMENT

Comments on Performance in 2008 Examinations.

The standard of the paper was in keeping with that of other examinations of the subjectat this stage and the performance of those candidates who passed the examination is inkeeping with the standard of previous years. Overall the standard of performance by thestudents was very satisfactory; a significant number of students earned marks over therange of (70 to 90)%.

In general students had a good grasp of definitions but often the application of theconcept to the business environment left something to be desired.

One could not fail to notice the extent to which the general pattern of performance andchoice of questions by candidates, in this exam is similar to the pattern in previousexams.

Answering of Individual Questions.

Q.1. As in other years those students who performed well in question one invariably didwell in each of the other questions while those that had difficulty with question onetended to perform less than convincingly when attempting the other individual questions.Price Elasticity of Demand and the multiplier were the two most popular choices and theappropriateness of their popularity was justified in the quality of the answering.The most common error in relation to Regressive Taxes was a lack of awareness of the

proportion aspect --- not realising that if rich and poor pay the same absolute amount oftax then it is regressive because it takes a higher proportionof income from the poorerperson.

In relation to section (iii) of the question there were some very good answers, and mostcandidates were able to define GDP. Any difficulties that arose were in distinguishingthe determinants of potential and (more often) actual levels of GDP.Some candidates could define Opportunity Costs but had little else of consequence toadd.

Q.2.This was the most popular individual question. The answering to section (a) of thequestion was particularly good and the answering to section (b) was satisfactory.

The answering to section (c) tended to be either excellent, which it often was, or justabout adequate. Given the nature of this question it is not possible to relate commonerrors, it tended to be a case that candidates who understood what was being askedscored well.

Q.3. This was by far the least popular choice being attempted by only 8 of thecandidates. Two of the three parts of this question related to newer elements of thesyllabus viz: sections 3 & 4. These sections of the course, which are contained inchapters 6, 7 & 8 of the Begg & Ward text (see syllabus booklet), relate to matters at the

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heart of the current Irish business environment, as evidenced by the ubiquity of thesetopics in media reporting.

To draw attention to, and encourage the study of, these newer sections of the syllabus,they will be examined on the 2009 exam papers as either full or partial questions. Thisreplicates the approach that was adopted, in relation to the setting of papers, when the

Economics & Business Environment syllabus was updated to incorporate the entry ofIreland into the newly created Euro zone.

It is revealing to record that one of the candidates who chose this question earned 19out of the 20 marks allocated to the question. Other than this candidate, the questionwas chosen by weaker candidates, presumably on the basis that it was the leastunattractive choice rather than in response to a positive impulse.

Q.4. Section (a) of this question was answered particularly well. Many of the answers tosection to section (b) were extremely good. Where weakness was shown it tended to bethat candidates did not see the effects on some of the objectives of national economicpolicy.

Q.5. This was the second most popular choice of question. The answers to section (a)were of a high standard. In terms of sections (b) & (c) there tended to variability in thequality of the answering and hence in the range of marks earned. Obviously there weresome very good answers but others, while seeing dimensions of the answer, did not seethe extensiveness of the impact..

Format of the Examination Papers for 2009.

The format of the examination papers for 2009 will be unchanged from the format thatapplied in 2008.

Educational Focus of Examination Papers in 2009.

The exam questions are conceived and set in a manner which seeks to promote theobjectives of the syllabus. Where appropriate questions are set in the context of thegeneral business environment and seek to reflect the nature of the Irish economy.

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Nature of Questions.Question 1

Seeks to test an understanding of basic concepts and by its nature thisquestion lends itself to being answered more or less directly from whatevertextbook is being used.

This question also provides a vehicle for including parts of the syllabus whichit would be otherwise difficult to include.

This question has a role in emphasising the relevancy of the entire syllabusas printed and also in ensuring a continuity and pattern in the examinationpapers presented,

The role of this question also ensures that students have an opportunity todisplay the results of their study rather than feel that any shortcomings in theirefforts were due to the particular selection of questions set.

Invariably there is at least one question which seeks knowledge of some aspect ofmicroeconomics/the firm and usually this information is sought in the context of aproblem or decision making within the ambit of the accountancy function.

Since we are now member of the European Union and the Euro zone this hasimplications for decision-making which affects the Irish economy it would be remissnot to include a question (or part thereof) testing knowledge of Europeaneconomic/financial institutions and the manner of their influence on the Irisheconomy. To facilitate the teaching of this aspect of the syllabus some additionsupport literature for lecturers has been available for some time from the offices ofthe Institute.

The macro section of the syllabus will be represented by at least one question andwhere possible this question will reflect some current area of national interest andattention.

As already mentioned earlier in this briefing, there will be a question or part(s) of aquestion on the newer element of the syllabus though an effort will be made to examthis section at a general level while this element of the subject is bedding down. Seenote above regarding Q.3. In the section headed answering of individual questions.