Myanmar DA Part II Module I common mistakes
Myanmar DA Part II Module I · Understand the traps and how to avoid them.
Capitalises routine servicing of a machine but expenses a major overhaul that extends its useful life, so profit and the carrying amount of property, plant and equipment are both wrong.
The candidate classifies by invoice size or by whether the item is described as a 'repair' rather than by the definition of capital expenditure.
What to do instead
Apply a recognition test to each cost: probable future economic benefits, reliable measurement, and benefit extending beyond one period. Capitalise the overhaul and depreciate it over the revised life; charge routine servicing to profit or loss.
In the bank reconciliation, adjusts the cash book for cheques issued but not presented and for deposits not yet credited by the bank.
The candidate treats every difference between the bank statement and the cash book as a cash book error and does not separate timing differences from bank-initiated entries.
What to do instead
Reconcile the bank statement balance using unpresented cheques and uncredited deposits; adjust the cash book only for items already processed by the bank, such as charges, interest, standing orders, dishonoured cheques and entity errors. Prove both to the same corrected balance.
Uses one plant-wide direct labour hour rate to absorb overhead in every department, including a machine-intensive department, and then uses the product costs for pricing.
The candidate has memorised a single absorption method and does not test whether the driver reflects how the overhead is actually consumed.
What to do instead
Set departmental rates with cause-and-effect drivers: machine hours for automated departments, labour hours only where labour drives cost, and activity-based drivers for large support costs. Reconcile total absorbed overhead to actual overhead and investigate the variance.
Writes that an unmodified audit opinion guarantees the financial statements contain no fraud or error and that the auditor will detect every misstatement.
The candidate confuses reasonable assurance with a guarantee and omits audit risk, materiality and the inherent limitations of an audit.
What to do instead
Use the reasonable assurance model: the auditor obtains sufficient appropriate evidence to reduce audit risk to an acceptably low level, applies materiality, and recognises that fraud may be concealed. Separate management's responsibility for the financial statements from the auditor's opinion.
In a company law answer, states that a private company may offer shares to the public and that its shares are freely transferable, simply because it is a limited company.
The candidate does not apply the statutory definition of a private company and mixes private and public company characteristics.
What to do instead
Before advising, compare private and public companies on public offers, share transfer restrictions, member limits, and filing and audit obligations. Use the Companies Law definition as a checklist, then apply the facts to the correct company type.
Computes income tax on the gross amount invoiced or received, without deducting allowable business expenses, capital allowances or reliefs.
The candidate equates turnover with taxable income and skips the structured tax computation.
What to do instead
Start from accounting profit, add back disallowable items, deduct allowable expenses and capital allowances, then apply reliefs and the correct resident or non-resident rates. Show each adjustment so the tax base is traceable.
Discounts the first cash flow of an annuity due by one extra period, or uses the ordinary annuity factor without adjustment, so the present value is understated.
The candidate memorised a formula without drawing the cash-flow timeline and cannot see that annuity-due payments start immediately.
What to do instead
Draw the timeline and label t=0 to t=n. For an annuity due, multiply the ordinary annuity factor by (1+r) or discount each payment at its actual date; check the first payment is undiscounted.
Interprets a correlation coefficient of 0.85 as proof that changes in one variable cause changes in the other and uses the regression line to predict far outside the observed data range.
The candidate conflates association with causation and ignores confounding variables, sample size and the limited range of the data.
What to do instead
Separate the three claims: association, causation and prediction. Check the study design for confounding, test the significance of the correlation, and restrict predictions to the observed range; state that causation requires theory or experimental evidence.
Treats an increase in nominal GDP as an increase in real output and concludes that living standards have risen, even when prices have risen by a similar amount.
The candidate uses current-price GDP without deflating and does not distinguish GDP from GDP per capita.
What to do instead
Convert nominal GDP to real GDP with the GDP deflator or a base-year price index; for living standards, compare real GDP per capita and note distribution, unpaid work and environmental effects. State the price base explicitly.
Copies a spreadsheet formula across columns without anchoring the tax rate or discount rate cell, so the formula refers to a different rate in each column.
The candidate uses relative references by default and does not test the copied formula.
What to do instead
Use absolute or mixed references ($B$2 or B$2) for fixed inputs, or create a named range. After copying, inspect the formula in each column and test one calculation manually.