On ICAG’s March 2025 Management Accounting paper, the Chief Examiner wrote: “Most candidates were unable to compute the net profit probably because of the calculation of the bonus.” One sentence, describing a failure that quietly undid an otherwise strong performance on an otherwise well-answered question. If you’re preparing for any paper that tests performance measurement or incentive schemes, this is worth understanding in full — because the trap sitting inside it will reappear in different disguises for as long as you sit exams that use “notional” figures.
What the Report Actually Said
This diet was, on the whole, a strong one for ICAG Management Accounting candidates — the examiner’s general comments described performance as “better than the previous diets” and “one of the best in recent times.” Question One, however, carried one specific weak spot inside an otherwise well-handled question: requirement (a), financial performance and competitiveness, which depended on a correctly computed net profit figure that most candidates never reached.
The Governing Principle
Vovome Advisory Limited (VAL) is a professional advisory firm with 50 advisers, each paid a GH¢100,000 salary plus an equal share of an annual bonus. The real bonus rule, quoted directly from the question: the bonus equals “50% of the amount by which fee income generated exceeds budget minus the revenue forgone as a result of having to give workshops for clients,” with that revenue forgone “assessed at a notional daily rate of GH¢1,200 per adviser/day.”
The governing principle is this: a “notional” figure is not a figure to be ignored because no cash physically changes hands. It is the examiner explicitly telling you what to build into your formula. VAL’s advisers gave two kinds of no-fee time — one-day consultations to win new business (a separate marketing-budget item) and two-day “workshops” to help existing clients implement advice already given (the item written into the bonus formula). In 2024, the firm actually ran 165 of these workshops.
Working the real numbers: actual revenue of GH¢10,450,000 against a budget of GH¢9,760,000 gives excess revenue of GH¢690,000. The notional revenue forgone from the workshops is 165 workshops × 2 days × GH¢1,200 = GH¢396,000. Net excess revenue, after subtracting that notional figure, is GH¢690,000 − GH¢396,000 = GH¢294,000. The bonus is 50% of that net figure: GH¢147,000 — not 50% of the unadjusted GH¢690,000, which would incorrectly give GH¢345,000, a GH¢198,000 overstatement.
That overstatement matters because it flows directly into net profit. The correct calculation: revenue of GH¢10,450,000, less basic salaries of GH¢5,000,000, less the correct bonus of GH¢147,000, less operating expenses of GH¢3,100,000, gives a net profit of GH¢2,203,000, against a budgeted GH¢1,960,000. Every ratio, every piece of financial-performance commentary requirement (a) asked for, depends on that one number being right.
Exam Tip: Whenever a question uses the word “notional” — a notional rate, a notional cost, a notional revenue — treat it as an instruction, not a footnote. The examiner is defining a number that must enter your formula even though no actual cash moved. Skipping it because “there’s no real cost here” is one of the most common and most expensive misreadings in performance-measurement questions.
Conclusion
The candidates who lost marks on this question mostly weren’t weak at financial analysis — the same report praises how well requirements (b) and (c) were handled. They lost marks because one formula, read too quickly, let a “free” line item slip past the computation it was actually meant to be part of. Read every incentive or bonus formula slowly, identify every notional figure by name, and match every rate to the exact line item the question describes — not the line item that merely looks similar.
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