ICAM CA(M) common mistakes
ICAM CA(M) · Understand the traps and how to avoid them.
Treating the trial balance as the final answer: producing a statement of profit or loss and statement of financial position by copying trial balance figures straight into the statements without making year-end adjustments for accruals, prepayments, depreciation, closing inventory, or irrecoverable debts.
Candidates learn double entry through the trial balance and then, under time pressure, assume every figure is already correct. They also confuse the trial balance's arithmetical agreement with accounting accuracy, so they never ask which adjustments the question has deliberately left for them to post.
What to do instead
Before writing any statement, list every adjusting item in the question on a working sheet and post each one to both a profit or loss line and a statement of financial position line. Build a one-page adjustment checklist (accrual, prepayment, depreciation, disposal, inventory, bad debt, tax, dividends) and tick each item off against the question text. Practise by taking a trial balance plus five adjustments and reconciling your adjusted profit figure to the model answer before looking at the statements.
Applying the wrong recognition or measurement rule to a transaction because the candidate identifies the topic by keyword rather than by substance: for example, treating a lease as a simple operating expense, capitalising repairs, recognising revenue on a bill-and-hold or consignment arrangement, or classifying a convertible instrument wholly as equity.
Revision is organised by standard, so candidates pattern-match on words like 'lease' or 'revenue' and reach for a memorised rule. They rarely practise the judgement step of reading the contract terms and asking what control, obligation, or right has actually transferred.
What to do instead
For every scenario question, write one sentence stating what the entity controls or owes and when, before choosing a treatment. Drill the decision tests explicitly: whether the lessee obtains substantially all economic benefits and the right to direct use; whether the customer has obtained control (present right to payment, legal title, physical possession, significant risks and rewards); whether a contractual obligation to deliver cash exists. Keep a one-page 'substance tests' sheet and apply it to mixed-topic questions rather than single-standard ones.
Presenting consolidated financial statements by adding parent and subsidiary line items and stopping there, without eliminating intra-group balances, intra-group sales and unrealised profit in inventory, or without calculating goodwill and non-controlling interest correctly at acquisition.
The mechanics of addition feel productive and produce a full-looking set of statements, so candidates run out of time before the elimination work. Unrealised profit and fair value adjustments are also conceptually harder, so they are avoided under exam pressure.
What to do instead
Work to a fixed consolidation sequence: acquisition-date fair value adjustments, goodwill and NCI, then post-acquisition results, then eliminations, then unrealised profit, then group retained earnings. Do the elimination workings before drafting the statements, and always show the goodwill and NCI workings even if the final figures are wrong, since method marks are available. Practise at least five full consolidations with intra-group trading timed at exam pace.
Answering audit-risk questions with generic assertions such as 'the financial statements may be misstated' or listing risks without linking them to a specific account balance, assertion, and the evidence that would address it.
Candidates memorise risk categories but never practise converting a scenario fact into a precise risk statement. They also confuse business risk with risk of material misstatement, so the answer drifts to commercial commentary rather than audit consequences.
What to do instead
Use a rigid three-part sentence for every risk: the scenario fact, the account and assertion affected, and the direction and reason for the misstatement (for example, capitalised development costs may be overstated because capitalisation criteria are not evidenced, affecting the valuation assertion). Then state one specific procedure that would test it, naming the document to be inspected or the person to be asked. Build the habit by rewriting ten generic risks from a past scenario into this format.
Designing audit procedures that are directions rather than actions: writing 'check the valuation' or 'review the provision' instead of specifying the document inspected, the party confirmed with, the recalculation performed, or the analytical comparison made.
Candidates know the assertion names and assume naming the assertion is the procedure. They have not internalised that markers reward observable audit actions that a junior could actually perform.
What to do instead
Force every procedure into a verb-plus-evidence structure: inspect, recalculate, confirm externally, observe, enquire of a named role, or compare to an independent source. Ban the verbs 'check', 'review', and 'ensure' from your answers and replace each with a specific action and evidence source. Practise by taking one balance such as trade receivables and writing six procedures that each name a different evidence source.
Confusing the objectives of an external audit with those of internal audit, or recommending an audit opinion and report modification without first assessing whether the matter is material and pervasive.
The concepts overlap in wording, and candidates remember that both provide assurance without retaining who the report is addressed to and what it covers. On reporting questions, they jump to the conclusion instead of applying the two-dimensional materiality and pervasiveness test.
What to do instead
Memorise a short comparison table covering objective, recipient, scope, and reporting line for external and internal audit, and test yourself on it weekly. For opinions, always write the materiality judgement and the pervasiveness judgement as two explicit steps before naming the opinion, and practise mapping four scenarios to unmodified, qualified, adverse, and disclaimer outcomes with a one-line justification each.
Computing taxable income by starting from accounting profit and adjusting only the obvious items, missing capital allowances, disallowable expenditure, exempt income, and the correct treatment of capital gains or losses.
Candidates treat the tax computation as a single formula rather than a reconciliation with a defined adjustment set. They also mix rules from different periods or jurisdictions because study material spans several regimes, and they do not distinguish accounting depreciation from tax depreciation.
What to do instead
Build a standard reconciliation proforma with fixed sections: accounting profit, add disallowables, deduct exempt and non-taxable items, deduct capital allowances, then apply losses and rates. Always remove accounting depreciation and replace it with the capital allowance figure rather than adding both. State the tax rate and period you are applying at the top of each computation so a regime mix-up is visible, and practise full computations from a set of draft accounts rather than from pre-listed adjustments.
Answering tax planning or ethics-style tax questions with a calculation only, ignoring the compliance and administration dimension: filing deadlines, penalties, disclosure obligations, or the distinction between tax avoidance and evasion.
Candidates equate taxation with arithmetic and skip the narrative parts of the syllabus. Where the question asks for advice, they produce numbers without a recommendation or without flagging the legal limits of a planning scheme.
What to do instead
For every tax scenario, add a short closing paragraph covering the compliance position and the advice: what must be filed, by when, what the consequence of getting it wrong is, and whether the arrangement is acceptable. Keep a one-page sheet of deadlines and penalty regimes for the relevant jurisdiction and revise it alongside the computational rules so the two are retrieved together.
Producing a variance computation that reconciles arithmetically but then explains the variance with generic statements such as 'better cost control' or 'higher prices', without separating price and usage effects or distinguishing planning and operational causes.
Candidates can apply the formulas but have not practised the interpretation layer, and they fear committing to a specific cause. The result is an answer that shows numbers but earns no marks for analysis.
What to do instead
For each variance, write one sentence naming the responsible manager and one sentence naming a plausible operational cause that the scenario supports, then state what further information would confirm it. Split mixed variances into their planning element (for example, a market-wide price change) and operational element (for example, a purchasing decision) before commenting. Practise by taking one material variance and writing three distinct possible causes with the evidence that would distinguish them.
Treating an investment appraisal or financing decision as a single-number calculation: quoting an NPV or WACC without checking relevant cash flows, incremental basis, tax and working capital effects, or without interpreting the result against the decision criterion.
Candidates focus on getting the discounting mechanics right and overlook the inputs. Sunk costs, allocated fixed overheads, and financing costs get included, while working capital and tax cash flows get left out, and the final figure is never converted into a recommendation.
What to do instead
Before discounting, list the cash flows and strike out anything not incremental, not future, or not a cash flow. Add a standard tail to every appraisal answer: state the decision rule, the recommendation, and the sensitivity of the result to the key assumption. For cost of capital questions, show the weighting and the source of each component before computing, and comment on whether the resulting rate is appropriate for the project's risk.