Prepared by Cormac Kavanagh Education Lead at CPA Ireland on behalf of the Examinations team.
Our role, as professional advisors, requires that we communicate opinions and present financial information to a variety of potential users. These communications will often be used as the basis for economic decisions and have significant financial implications for the user. Should the outcome of these decisions be less favourable than expected the underlying information will be scrutinised and, if incorrect or misleading, may expose the professional advisor to liability.
In professional examinations, you will be asked to present your answer in a particular format. A quick internet search will highlight that there is no prescribed format for these communications. However, there are some principles that should be employed to ensure you gain any presentation marks available. These same principles help ensure that the risks of professional liability are managed appropriately.
The language used throughout the communication should be professional and slang should be avoided. If you wish to use abbreviations or acronyms these should be clearly explained the first time they are used. For example, on first use Artificial Intelligence (AI) and subsequently you can use the acronym AI throughout the report.
Essential requirements:
From: This is the author of the communication and may be an individual accountant or the accountancy firm they represent. In examinations you should read the scenario to identify your role/position and use this information. Should this be unclear then A.N. Accountant or similar designation can be used. (You should not use your actual name in the exam).
To: This identifies the parties to whom the report is addressed and who can therefore reasonably be expected to rely upon the information presented. The professional’s duty of care will usually be restricted to this party. Different users have differing information requirements, and your report may not address all the needs of other potential users.
Subject: Briefly describe the subject matter of the report and the intention for which it is anticipated it will be used. The content of your communication may change depending on the purpose for which it is being prepared and this should be clarified at the outset.
Date: Your advice is based on the best information available at a particular moment in time. Professional competency obligations require that we are up to date with the latest developments, but we are not expected to be able to anticipate changes in advance of their occurrence. Currently the area of sustainability reporting obligations is an area of constant change and a report prepared today may quickly become outdated due to regulatory changes.
Within the context of the examination, we would expect to see the below items included (and professional marks may be gained)
Limitations and assumptions: There will often be constraints on the information available which may alter your advice. If you can identify these restrictions, they allow the user to more fully appreciate some of the potential risks associated with the decision. This is a good opportunity for the student to demonstrate their understanding of the wider context of their subject.
Introductory paragraph: This briefly sets the scene for the advice that follows and is often linked to the limitations and assumptions section described above.
Logical Structure: Content should be presented in a logical manner with links between paragraphs. Headings are recommended to focus on the core issue being addressed within the paragraph/section.
Conclusion: A succinct summary of the issues addressed with your advice/recommendation. This should flow logically from the main body of the report.
In addition to the above in a professional context you may also include:
Disclaimers and restrictions of use: This tool is widely used in practice to draw attention to the intended use of the advice provided and the audience for that advice. Should the information be used in other circumstances then our advice may require adjustment.