ICAP CAF common mistakes
ICAP CAF · Understand the traps and how to avoid them.
Prepares the income statement directly from the trial balance without first updating accruals, prepayments, depreciation and closing inventory.
Under exam time pressure candidates treat the trial balance as final and skip the adjustments column.
What to do instead
Use a two-column adjusted trial balance template and tick off every item of additional information before drafting the financial statements.
Uses accounting profit as taxable profit without adjusting for inadmissible expenses, accounting depreciation, tax depreciation and the relevant tax year.
Candidates memorise rates but not the architecture of a tax computation.
What to do instead
Write a standard tax computation proforma: accounting profit ± inadmissible/deductible items − tax depreciation = taxable income; state the tax year at the top.
Apportions overheads using one blanket rate or forgets to reapportion service department costs before calculating product cost.
They jump straight to product cost without completing the overhead distribution schedule.
What to do instead
Draw the cost flow: direct costs → production overheads → service department reapportionment → absorption; use separate cost drivers for each cost pool.
Answers a scenario by stating general legal principles without identifying the specific statute or section and without applying the facts to each legal element.
They write from memory and skip a structured legal analysis.
What to do instead
Use IRAC: Issue, Rule with section reference, Application to the facts, Conclusion.
In consolidation, adds parent and subsidiary balances without eliminating intra-group receivables/payables and unrealised profit, or calculates NCI and goodwill incorrectly.
They try to memorise consolidation entries rather than follow the worksheet sequence.
What to do instead
Prepare a consolidation worksheet with separate columns for parent, subsidiary, adjustments, eliminations and consolidated totals; compute goodwill and NCI before aggregating.
Calculates ratios using inconsistent definitions, such as closing instead of average receivables or profit before tax instead of after tax, and presents figures without interpretation.
They rely on memorised formulas without checking which data basis is being used.
What to do instead
Maintain a formula sheet with stated numerator and denominator definitions; apply the same basis consistently and add two lines of interpretation.
Confuses board and shareholder authority and the required resolution threshold, ordinary versus special, for share issues, appointments and borrowing.
They memorise lists of powers without linking each action to the organ and threshold.
What to do instead
Build a decision table: action → board or general meeting → ordinary or special resolution → filing requirement.
Writes vague audit procedures such as “check the invoices” without stating the assertion tested, sample selection or evidence expected.
They use vague verbs and do not link the risk to the audit response.
What to do instead
For each risk write: assertion → specific procedure → evidence/document → conclusion; use verbs such as inspect, recalculate, confirm, vouch and observe.
Treats all tax payments as final tax and ignores the distinction between withholding tax, advance tax, minimum tax and final tax liability.
Candidates carry conceptual confusion about tax credits and minimum tax into calculation questions.
What to do instead
Draw a tax liability bridge: gross tax → credits for withholding/advance tax → payable or refund; label minimum tax separately and state whether it is adjustable.
In process costing, calculates equivalent units without separately treating normal loss, abnormal loss or gain, and scrap value.
They memorise the equivalent-unit formula but not the treatment of losses and scrap.
What to do instead
Prepare a statement of equivalent units by cost element; show normal loss, abnormal loss/gain and scrap value as separate lines before computing cost per equivalent unit.