ICAM Technician common mistakes
ICAM Technician · Understand the traps and how to avoid them.
When a trial balance fails to agree, the candidate adjusts the suspense account or plugs a balancing figure before locating the underlying error, and then presents the corrected trial balance as if it reconciled.
Time pressure plus the habit of forcing the totals to agree means candidates treat the suspense account as a plug rather than as a diagnostic tool; they also confuse errors that affect the trial balance (one-sided postings, addition and transposition errors) with errors that do not (errors of principle, omission, original entry, compensating errors, reversal of entries).
What to do instead
Classify every error first: does it affect only one side of an entry (trial balance fails) or both sides equally (trial balance still agrees)? Only one-sided errors are cleared through the suspense account. Practise a set of ten error scenarios and state for each whether the suspense balance moves and by how much before writing any journal.
The candidate posts the bank statement balance as the cash book balance in a bank reconciliation, or reverses the treatment of unpresented cheques and uncredited deposits, producing a reconciliation that cannot be tied back to either figure.
Candidates memorise a single worked example and apply its direction of adjustment blindly, without reasoning about who has recorded what. They also forget items the bank has recorded but the business has not (bank charges, standing orders, direct credits, dishonoured cheques) which require cash book entries, not reconciliation adjustments.
What to do instead
Build the reconciliation in two columns and label each item by who has already recorded it. Items already in the cash book but not the bank statement (unpresented cheques, deposits not yet credited) go in the bank statement column. Items in the statement but not the cash book (charges, interest, direct debits and credits, bounced cheques) are first written up in the cash book, then the amended cash book balance is reconciled to the statement.
On an accruals and prepayments question the candidate records the whole invoice or receipt in the expense account for the period and then forgets to carry the accrual or prepayment forward, or opens the accrual in the profit and loss account instead of a balance sheet liability.
Candidates treat the cash paid as the expense and do not separate the amount belonging to this period from the amount belonging to another period. The opening accrual or prepayment reversal is also frequently omitted, so the current year's charge is overstated or understated.
What to do instead
Work in a three-line schedule for each expense: opening accrual or prepayment, cash paid in the period, closing accrual or prepayment; the balancing figure is the charge to profit or loss. Post the closing balance to a balance sheet account (accrual as a liability, prepayment as an asset) and reverse the opening balance to the expense account on the first day of the period.
When preparing a bank reconciliation or a control account, the candidate treats a contra item between the receivables and payables ledgers, or a credit balance on a customer account, as an error to be corrected rather than as a legitimate offset or a refund due.
Candidates assume every customer balance must be a debit and every supplier balance a credit, so a credit balance on a receivables account is written off or ignored rather than recognised as an overpayment or credit note to be refunded.
What to do instead
Before adjusting, scan the ledger for the expected direction of each balance. A credit balance on a customer account is a liability to the customer and is shown separately, not netted into receivables unless a legal right of set-off exists. Record contra settlements through the contra or set-off account so both control accounts reduce by the same amount.
In a depreciation question the candidate applies the reducing balance rate to the original cost every year, or charges a full year's depreciation in the year of acquisition and none in the year of disposal regardless of the policy stated.
The two methods look similar in a single-year example, and candidates do not re-read the policy note on proportional or full-year charging. They also forget that the disposal proceeds and the accumulated depreciation at the date of sale both leave the accounts, giving a profit or loss on disposal.
What to do instead
Write the method and the time apportionment rule at the top of the answer before calculating. For reducing balance, carry forward the net book value and apply the rate to that figure each year. On disposal, remove cost and accumulated depreciation, record proceeds, and take the difference to the profit or loss on disposal; check that the remaining asset register agrees to the non-current asset cost and accumulated depreciation accounts.
The candidate values closing inventory at selling price, or includes goods received on a sale-or-return or consignment basis as owned inventory, and then uses that figure in both cost of sales and the balance sheet without applying the lower of cost and net realisable value.
Candidates confuse the physical count with the valuation principle, and they overlook goods in transit, goods held on approval, and damaged or obsolete lines that require a write-down. The link between the closing inventory adjustment and cost of sales is also often missed.
What to do instead
Apply the rule in order: establish cost (purchase price plus directly attributable costs), establish net realisable value (expected selling price less costs to complete and sell), take the lower for each line or group. Exclude goods not owned and include goods in transit where title has passed. Post the closing inventory to both the inventory account and cost of sales, and check that the same figure appears in both places.
In an incomplete records question the candidate computes the missing figure by plugging the balancing number without first reconstructing the control account (receivables, payables, or cash) from the opening balance, sales or purchases, receipts and payments, and closing balance.
Incomplete records questions give a mix of margins, mark-ups and cash summaries, and candidates jump to a formula before deciding which ledger account the missing figure belongs to. They also mix up mark-up on cost with margin on selling price.
What to do instead
Draw the T-account for the missing item and enter every known figure in its correct side before calculating. Convert mark-up to margin (or the reverse) explicitly and state the conversion. Use the trading account to derive sales or cost of sales from opening and closing inventory, purchases and the stated margin, then use the reconstructed cash and control accounts to find drawings or the balancing figure.
The candidate records the purchase of a non-current asset, or the proceeds of a loan, as income in the profit and loss account, or treats a capital repayment of a loan as an expense.
Both involve cash entering or leaving the business, and candidates equate cash movement with income or expense. They also fail to distinguish capital expenditure that enhances an asset from revenue expenditure that maintains it.
What to do instead
Ask two questions of every transaction: does it change an asset or liability rather than the owner's wealth in the period, and will the benefit extend beyond the current period? If yes, it is capital. Record asset purchases and loan receipts against the balance sheet, and split loan repayments into the interest element (expense) and the principal element (liability reduction).
When preparing a statement of cash flows the candidate starts from the profit after tax and adjusts for every item in the accounts, including non-cash items already dealt with, and classifies interest paid, dividends paid and tax paid in the wrong section.
Candidates memorise a list of adjustments without understanding the purpose of each, and they confuse the classification rules used for interest and dividends under the chosen framework. Working capital movements are also entered with the wrong sign.
What to do instead
Start from profit before tax, add back depreciation, amortisation, and any profit on disposal (deduct any loss), then adjust for the movement in each working capital item with the sign checked against the direction of cash. Classify interest paid and dividends paid consistently with the framework you are told to use, and put tax paid under operating activities. Reconcile the net cash flow to the movement in cash and cash equivalents as a final check.
In ratio analysis or interpretation the candidate computes the ratio correctly but then interprets it in isolation, ignoring the trend over time, the comparator, and the accounting policies that drive it, and offers generic comments such as 'the ratio has improved' without saying why or what it implies.
Candidates treat interpretation as a description of arithmetic rather than an assessment of performance and position, and they do not link ratios to the underlying transactions or to the business context given in the scenario.
What to do instead
For each ratio state the formula, compute it, then write one sentence on what it measures, one on the movement and its likely cause, and one on the limitation or policy effect. Always compare across years and against a stated benchmark, and cross-check related ratios (for example, a rising gross margin alongside falling inventory turnover may indicate obsolete stock rather than improved pricing).