CMA Syllabus

Subject : Strategic Cost Management

Objectives :

On completion of this subject students should have developed skills of analysis, evaluation and synthesis in cost and management accounting and, in the process, created an awareness of current developments and issue in the area. The subject covers the complex modern industrial organisations within which the various facets of decision-making and controlling operations take place; the subject includes discussion of costing systems and activity based costing, activity management, and implementation issues in modern costing systems.

Synopsis :

•identify the basic conventions and doctrines of managerial and cost accounting and other generally accepted principles which may be applied in the contemporary cost management models. •identify major contemporary issues that have emerged in managerial accounting. •discuss a number of issues relating to the design and implementation of cost management models in modern firms.

Topics Covered :
Topic 1: Management Control Systems

The role of accounting is often stated to be providing information for decisions. Management accountingand howeverand fulfils a much broader role in organisations. As well as providing a framework for planningand management accounting has an important role in management control. This topic introduces the concept of management control and considers the role of management accounting within such a control framework. The design of management accounting systems is also considered.

Topic 2: Lean Manufacturing and Quality Control

This topic introduces the traditional production management techniques and strategies. The 5-P’s of production are specifically considered; i.e. the productand plantand processand programand and people. The three traditional types of production; i.e. Job; Batch; and Flow production are also studiedand and concepts such as quality and reliability are also introduced. Modern production management techniques originating from Japanand such as Flexible Manufacturing Systems (FMS); and Total Quality Management (TQM) are also considered.

Topic 3: Cost Accounting and Cost Management in a Lean Environment

This topic continues to look at production management techniques and strategiesand especially the more modern production philosophies originating from Japanand such as Just-In-Time production (JIT). The strategic management accounting issues raised by such philosophies and techniques and aspects of the influence of the philosophy on production and purchasing are also covered.

Topic 4: Life Cycle Costing Systems

This topic overviews the complexity that exists in modern industrial settingsand and why the conventional management accounting techniques may provide misleading information in such environments. It is shown that indirect costs make up the largest percentage of total costs in such complex firmsand and that there are many challenges in allocating such indirect costs. Methods of identifying ‘obsolete’ cost systems and of improving cost control are also discussed. Whole of Life Costingand i.e. costing beforeand during and after manufacturing is considered within a complex and competitive industrial setting.

Topic 5: Benchmarking

This topic discusses in depth “benchmarking”; which is the formal process of measuring and comparing a company’s operationsand productsand and services against those of top performersand both within and outside that company’s primary industry.

Topic 6: Activity Based Cost Allocation Systems

This topic focuses on the principles of Activity Based Costing (ABC)and which is shown as the response to the challenge of complexity. Aspects such as “volume”and “structural” and “introductory” costs are specifically considered.

Topic 7: Customer Profitability Analysis

This topic moves the focus from analysis to action. Methods of finding profitable customers and products are consideredand as is the area of account management.

Topic 8: Process Control and Activity Based Management

Here the areas of process control and activity based management are discussed. Monitoring systemsand and the concepts of frequencyand timeliness and accuracy are consideredand especially in relation to white-collar departments.

Topic 9: Implementing Cost Analysis and Control Systems

This outlines the implementation process of activity based costing. Behavioural aspectsand especially in creating motivation are discussed. Long-term cost management models are also considered.

Topic 10: Strategic Performance Management Systems

This topic looks at Strategic Performance Measurement Systemsand especially the linking of financial control systems with process based control systems. Some Key Questions to ask in the strategic refocusing of Performance Measurement Systems are discussedand and the recognition of how tangible and intangible assets combine in the implementation of organisational strategies that ultimately enhances organisational value is specifically considered.

Topic 11: Environmental and Social Management Accounting

Environmental and Social Management Accounting [also known as Corporate Social Responsibility (CSR) and Triple Bottom-line Accounting (TBL)] is changing the way organisations go about their business. This topic explores what is meant by the "triple bottom line" and what it means for organisationsand now and in the future. The need for integrated management accounting reports are discussed; and the impact of climate change and carbon emissions trading on Cost and Management Accounting is specifically considered.

Topic 12: Strategic Governance and the Strategic Audit

This topic first overviews the corporate governance structure which specifies the distribution of rights and responsibilities among different participants in the corporationand such asand the boardand managersand shareholders and other stakeholdersand and spells out the rules and procedures for making decisions on corporate affairs. Areas of both structural governance and strategic governance are compared and contrasted. Finallyand it considers assurance issues using ‘leading’ rather than ‘lagging’ indicatorsand via the Strategic Audit.

Subject : Strategic Business Analysis

Objectives :

On successful completion of this subject, a student should be able to identify the basic conventions and doctrines of managerial and cost accounting and other generally accepted principles which may be strategically applied across the various functions of a business organisation; discuss a number of cost and management accounting issues relating to the design and implementation of strategic, marketing, value analysis and other management models in modern firms; and identify major contemporary issues that have emerged in business accounting. This subject provides an advanced study of the interface between modern managerial accounting and the business functions of strategic planning, marketing, manufacturing and human resource management. The accountant’s role in the marketing decision areas are specifically considered.

Synopsis :

•identify the basic conventions and doctrines of managerial and cost accounting and other generally accepted principles which may be strategically applied across the various functions of a business organisation. •identify major contemporary issues that have emerged in strategic management accounting. •discuss a number of cost and management accounting issues relating to the design and implementation of strategic, marketing, strategic value and other management models in modern firms. •to appreciate the management accountant’s role in the implementation of cost management systems for marketing decision making.

Topics Covered :
Topic 1: Strategic Thinking

This topic overviews the concepts and development of strategic thinking in modern business enterprises. The traditional areas of corporate strategy; such as strategic objectives and strategic planning decision models are first introduced to the student. The state of strategic thinking in the current environment is then consideredand especially in relation to multiple approaches to analysing corporate strategy.

Topic 2: Strategic Marketing Analysis and Budgeting

Here the marketing concept is introduced and the links between marketing and strategic business analysis are illustrated. It is shown how concepts such as the product life cycle and product portfolio matrix are linked to managerial accounting techniques such as budgeting and life cycle costing to provide relevant information for strategic decision making. A comprehensive strategic segmental marketing budget is developed in this topic.

Topic 3: Financial Analysis in Product Portfolio Management

This topic looks at the interface between management accounting and marketing related “product management” especially in competitive environments. The “product” is the first “P” in the 4-Ps of marketingand the others being priceand promotion and place distributionand which will be discussed in detail in later topics. It is shown that as a product moves through various stages of its life cycleand there are differing financial aspects that need to be focused on for competitive positioning. It is demonstrated that the company’s management accountant possesses the tools and techniques required to provide the product managers with decision-orientated information.

Topic 4: Pricing Methods and Strategies

Here the various aspects of pricing decisions are coveredand especially in competitive environments. Pricing methods and pricing strategies are specifically contrastedand and the use of such techniques as CVP analysis and linear programming in the pricing area are discussed. Risk averse pricing strategies and their limitations are also covered in this topic.

Topic 5: Financial Dimensions of Pricing in International Business Strategies

This topic extends the discussion of the previous section on pricingand and considers within a competitive international market. It is shown that setting a selling price in a foreign market hasand in addition to strategic marketing considerationsand some unique international financial dimensionsand especially due to the lengthening of the channels of distribution and the impact of multiple currencies.

Topic 6: Promotion: Push Strategy and Human Resource Management

Here the principal ways of communicating with the marketand referred to collectively as the “promotional mix” are overviewed. The objective of this mix is to make a saleand either by “pulling” customers towards the product (using advertising) or by “pushing” the product to the customer (using personal selling). It is shown that the management accountant has a significant role “push strategy”and especially in the human resource management areas of controlling field sales operations and evaluating sales force performance.

Topic 7: Promotion: Pull Strategy and Integrated Marketing Communication

This topic continues with the discussion on promotionand and specifically looks at “pull strategy” and integrated marketing communication (IMC) with its heavy reliance on advertising. It is demonstrated that the management accountant has a significant role in formulating advertising budgetsand especially using specific budget modelsand and in the difficult areas of controlling advertising outlays and evaluating advertising effectiveness.

Topic 8: Supply Chain Management and the Place-Distribution Decision

This topic considers the last “P” of the 4-P’s of marketing; i.e. place (or physical distribution). It is shown that the control of the supply-chain distribution function involves a “trade-off” between maximising customer service and minimising distribution costsand and that the management accountant has a significant role to play in achieving this balance. The various accounting techniques useful in distribution cost analysis and control are highlighted in this topic.

Topic 9: Performance Valuation and Strategic Financial Structures

This topic introduces Business Performance Measures and provides a link as to how these measures are interrelated with the capital structure of the firm. The impact of financial structure on planning performance evaluation is consideredand specifically the relative measures (ratios) used in financial statement analysis. Investment and Financing issues are separated; and capital structure and its role is obtaining an appropriate discount rate for capital projects is particularly considered.

Topic 10: Strategic Value Analysis

This topic introduces the concepts in a relatively new areaand Strategic Value Managementand and compares these concepts to the more traditional concepts in financial managementand especially capital budgeting and net present value. It is demonstrated that the concepts of ‘value’ and ‘strategic value’ can be quantified for planning purposes.

Topic 11: Risk Management - Corporate Radar and Early Warning Systems

Here the approaches to risk management using short-term (weekly) and long-term (annual) corporate radar systems are consideredand in order to determine the health of a business organisation. Bankruptcy prediction models (such as Z-scores) are specifically considered.

Topic 12: Strategic Scorecards

This topic focuses on corporate successand and the role of non-financial indicators in measuring and controlling this success. The importance of monitoring both the internal and external environment is highlightedand especially in terms of a firm’s ‘critical success factors’. The impact of intangible assets and capabilities on strategic scorecards is specifically considered.

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