Professional Skills
1 Introduction
From September 2022, the AFM exam will include 20 Professional Skills marks: 10 in the case study Q1 in Section A and 5 in each of the 25-mark questions in Section B. The four professional skills relevant to AFM are: Communication; Analysis and Evaluation; Scepticism; Commercial Acumen.
All four skills will be examined in Section A
Each question in Section B will examine a minimum of two professional skills but not communication.
2 Communication
Q1 will always ask for a report to address key financial management matters facing the organisation.
Professional marks will be available for:
General report format and structure – use of headings/sub-headings and an introduction
Style, language and clarity – includes:
appropriate layout
tone of report response
presentation of calculations
appropriate use of the CBE tools
Effectiveness of communication - answer is relevant, specific rather than general and focused to the requirement
Adherence to the specific requests made by the requested of the report (e.g. the chief executive) in the scenario.
3 Analysis and Evaluation
All questions will include this professional skill. It is common for AFM questions to include significant amounts of calculation consisting of the use of models or methods to evaluate financial strategy decisions.
Remember: Any analysis or evaluation must be in context of the organisation’s situation.
Analysis can be demonstrated by:
Appropriate use of the data:
to determine suitable calculations and/or
to support discussion and draw appropriate conclusions
Appraisal of information objectively to make a recommendation
Identifying where data appears to be omitted or where further analysis is needed to make a recommendation
An evaluation is a balanced appraisal to determine the impact of a course of action (e.g. changing a company’s organisational or capital structure). Part of that is to demonstrate reasoned judgement to consider relevant factors, decide what to prioritise and then come to a suitable and justified conclusion.
4 Scepticism
Having a questioning approach is key for this skill; it leads to effective challenges of information, evidence provided and assumptions stated. This includes the ability to identify contradictory evidence and remaining sceptical about information that has been provided in the scenario.
In the real world, effective challenge is the backbone of risk management for financial institutions. It provides a framework for performing critical analysis by utilising informed individuals who can objectively identify limitations and assumptions, as well as produce appropriate changes.
AFM often uses theoretical models which include assumptions and also can include stakeholders in question scenarios making statements about their beliefs and perceptions – you need to be able to challenge those statements. These challenges, however, cannot simply be in the abstract. Reasons for issues and problems with any assumptions/statements are needed before challenges can be upheld and deemed appropriate.
All of this means that you need to apply professional judgement to draw conclusions and make properly informed decisions which are appropriate to the organisation.
5 Commercial Acumen
All questions are set within a commercial scenario – most will be for-profit organisations, but they can include public sector organisations and also not-for-profit organisations. Whatever the context, you need to understand what will and will not work; any advice or recommendations have to be practical and plausible in the given situation.
To demonstrate this skill you must use examples from the scenario information and/or other practical commercial considerations to illustrate the points being made.
Organisations do not operate in a vacuum so you need to be able to recognise external constraints and opportunities where relevant and also consider the validity/reasonableness of any assumption that the organisation may be working under, given the external environment. Awareness of internal constraints within an organisation should also be accounted for.
6 Resources
In the Practice Platform on the ACCA website you will find the following:
AFM Specimen from September 2022 onwards
AFM Practice Exam 1 from September 2022 onwards
AFM Practice Exam 2 from September 2022 onwards