ICAN Professional Case Study common mistakes
ICAN Professional Case Study · Understand the traps and how to avoid them.
Presenting a single-entity financial statement analysis when the case requires consolidated group reporting, ignoring intercompany eliminations, non-controlling interests, and uniform accounting policies.
Candidates often default to the familiar single-company format and overlook the group structure described in the case, especially when the case provides separate entity data and asks for group-level conclusions.
What to do instead
Before writing, map the group structure and identify all subsidiaries, associates, and joint arrangements. Apply IFRS 10 consolidation steps: eliminate intercompany balances and transactions, adjust for non-controlling interests, and align accounting policies. Reconcile the group figures to the sum of entity figures and explain differences.
Calculating WACC or capital structure using book values of debt and equity, or using the coupon rate instead of the yield to maturity for the cost of debt, and ignoring the tax shield on debt.
Candidates rely on balance sheet figures because they are readily available, and they confuse the coupon rate with the market cost of debt. They also forget that interest is tax-deductible, which lowers the effective cost of debt.
What to do instead
Use market values of equity (share price × shares outstanding) and market value of debt (present value of future cash flows discounted at the market yield). Use the yield to maturity on traded debt or the current borrowing rate for non-traded debt. Multiply the cost of debt by (1 – tax rate) to capture the tax shield. Show all inputs and sources clearly.
Ignoring deferred tax implications when accounting for asset revaluations, provisions, or tax losses, and failing to distinguish between current and deferred tax in the financial statements.
Candidates focus on the current tax computation and overlook temporary differences that arise from accounting treatments that differ from tax treatments. They also forget that unused tax losses can create deferred tax assets subject to recoverability assessment.
What to do instead
Identify all temporary differences by comparing the carrying amount of assets and liabilities with their tax base. Calculate deferred tax using the expected manner of recovery (sale or use) and the tax rates enacted or substantively enacted by the reporting date. Assess recoverability of deferred tax assets based on probable future taxable profits. Present current and deferred tax separately in the statement of profit or loss and other comprehensive income.
Conducting a SWOT or PESTLE analysis without linking it to the specific strategic decision in the case, and failing to quantify the financial impact of strategic options.
Candidates treat strategy frameworks as generic checklists and produce lists that are not tailored to the case facts. They also separate qualitative analysis from quantitative evaluation, missing the integration required at the professional level.
What to do instead
Start with the decision criteria implied by the case (e.g., maximize shareholder value, manage risk, align with mission). For each strategic option, identify specific strengths, weaknesses, opportunities, and threats that affect the option, and quantify the financial outcomes using NPV, payback, or scenario analysis. Conclude with a clear recommendation that weighs both qualitative and quantitative factors.
Identifying ethical issues only in obvious conflicts of interest and failing to recognize threats to objectivity, confidentiality, and professional competence when providing non-assurance services to an audit client.
Candidates focus on blatant dishonesty and miss subtler ethical threats such as self-review, advocacy, familiarity, and intimidation. They also overlook the IESBA Code’s conceptual framework and the need to apply safeguards.
What to do instead
Apply the IESBA conceptual framework: identify threats (self-interest, self-review, advocacy, familiarity, intimidation), evaluate their significance, and address them by eliminating the circumstances, applying safeguards, or declining the engagement. For audit clients, specifically consider prohibitions on non-assurance services and fee dependence. Document the analysis and conclusion.
Failing to identify and apply the relevant regulatory requirements (e.g., IFRS, local company law, listing rules, anti-money laundering obligations) and instead relying on general accounting knowledge.
Candidates underestimate the depth of regulatory knowledge required and do not systematically link case facts to specific regulations. They may also be unaware of recent amendments or local regulatory nuances.
What to do instead
Build a checklist of applicable regulations based on the case’s jurisdiction and industry. For each issue, cite the specific standard or regulation, explain its requirements, and apply it to the facts. Stay current with amendments by reviewing the standard-setter’s website and professional updates. In the exam, explicitly reference the regulation to demonstrate compliance.
Producing an integrated analysis that treats financial, strategic, and ethical issues in separate silos, without showing how they interrelate or affect the overall conclusion.
Candidates are used to answering questions in discrete technical areas and find it challenging to synthesize across domains. They may also run out of time and fail to integrate.
What to do instead
Use a structured approach: identify the key issues from all domains, map their interdependencies (e.g., how a strategic expansion affects financial forecasts and tax positions), and evaluate the combined impact. In the report, explicitly link sections-for example, show how a proposed acquisition affects the group’s gearing, deferred tax, and ethical due diligence. Conclude with a holistic recommendation.
Writing a report that lacks a clear structure, executive summary, and actionable recommendations, and using technical jargon without explaining it for the intended audience.
Candidates focus on demonstrating technical knowledge and neglect the communication purpose. They may also be uncertain about the audience’s level of expertise and default to academic-style writing.
What to do instead
Adopt a professional report format: executive summary, introduction, analysis (with headings), conclusion, and recommendations. Tailor language to the audience-for example, explain technical terms briefly for non-financial board members. Use tables and bullet points for clarity. Ensure recommendations are specific, measurable, and assigned to responsible parties.
Incorrectly computing or interpreting financial ratios and trends, such as using average balances inconsistently, mixing accrual and cash figures, or ignoring the effect of accounting policy changes.
Candidates memorize formulas but do not understand the underlying concepts, leading to mechanical application without adjusting for distortions. They also fail to read the notes to the financial statements for changes in estimates or policies.
What to do instead
Before calculating ratios, adjust the financial statements for non-recurring items, accounting policy changes, and off-balance-sheet items. Use consistent bases (e.g., average balances for return ratios) and state assumptions. Interpret ratios in the context of the industry and economic environment, and cross-check with cash flow trends. Explain the limitations of ratio analysis.
Ignoring the impact of taxation on business decisions such as investment appraisal, financing choices, and dividend policy, and failing to consider tax planning opportunities and anti-avoidance rules.
Candidates treat tax as a compliance matter rather than a decision variable. They may also be unfamiliar with tax incentives, double tax treaties, and controlled foreign company rules.
What to do instead
In investment appraisal, use after-tax cash flows and include tax allowances, capital allowances, and tax payments timing. For financing, compare after-tax cost of debt and equity. For dividends, consider dividend tax and withholding taxes. Identify legitimate tax planning opportunities (e.g., group relief, R&D credits) and evaluate anti-avoidance implications. Quantify the tax effects in all recommendations.