The CMA program is the flagship program of the ICMA. On completion, participants will have developed advanced skills of analysis, evaluation and synthesis in the areas of strategic cost and management accounting and business analysis; and, in the process, obtained an in-depth awareness of the current developments in the profession.
The programme can only be taken by a Graduate or Associate member of the Institute; or a student member who has met the pre-requisite entry requirements of the program.
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The CMA Programme consists of two post-graduate level subjects, namely:
Strategic Cost Management (SCM)
Strategic Business Analysis (SBA)
It is expected that accredited bodies and recognised providers of the CMA programme will incorporate a research component in both the CMA papers. This research component will usually be either via an assignment, case study, role-playing simulation, individual project or group-learning exercise covering one or more of the topic areas of each of the two CMA programme subjects. The research components of each of the two subjects could also be combined to form a comprehensive project. It is expected that this research component will carry a weight of 50 percent of the total assessment for each subject.
This is an advanced level course that covers the role of the management accountant in complex modern industrial organisations within which the various facets of decision-making and controlling operations take place. The course includes the discussion of management control systems, costing systems and activity-based costing, activity management, and implementation issues in modern costing systems.
Emerging Issues that are vital to the modern value-creating accountant such as environmental, social, governance and empowerment issues are also covered. The course is designed to prepare students for careers as professional management accountants.
- Describe 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.
- Critically evaluate a number of issues relating to the design and implementation of cost management models in modern firms.
- Explain the management accountant’s role in the implementation of cost management systems for product costing and decision-making purposes.
Topics Covered :
Topic 1: Management Control Systems
The role of accounting is often stated to be providing information for decisions. Management accounting, however, fulfils a much broader role in organisations. As well as providing a framework for planning, management accounting has an important role in management control. This topic will introduce the concept of management control and consider the role of management accounting in management control together with some issues in the design of management accounting systems, the types of control, and how the various levers of control can be integrated.
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 product, plant, process, program, and people. The three traditional types of production; i.e. Job; Batch; and Flow production are also studied, and concepts such as quality and reliability are also introduced. Modern production management techniques originating from Japan, such as Flexible Manufacturing Systems (FMS); and Total Quality Management (TQM) are also considered. It is shown that concepts and techniques used in manufacturing can also be used in service industries. The technologies that are disrupting today’s manufacturing and service environments and the technology trends that will change the way organisations create and deliver a product or service in the near future are also discussed.
Topic 3: Cost Accounting and Cost Management in a Lean Environment
This topic continues to look at production management techniques and strategies, especially the Leaner production philosophies originating from Japan, 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. ‘Backflush Costing Systems’ are introduced in this topic, as an alternative to job-order and process costing systems.
Topic 4: Life Cycle Costing Systems
This topic overviews the complexity that exists in modern industrial settings, 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 firms, 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 Costing, i.e. costing before, during and after manufacturing or service delivery is considered within a complex and competitive industrial setting. A part of Life Cycle Costing, called Target Costing, i.e. the techniques of controlling pre-production design costs, is considered in detail.
Topic 5: Benchmarking
This topic discusses in depth ‘Benchmarking’ which is the formal process of measuring and comparing a company’s operations, products and services against those of top performers, both within and outside that company’s primary industry. Benchmarking approaches such as internal, competitive, functional and generic are specifically considered, as are measures used to evaluate performance.
Topic 6: Activity Based Cost Allocation Systems
This topic focuses on the principles of Activity Based Costing (ABC), which is shown as the response to the challenge of complexity. Aspects such as “volume”, “structural” and “introductory” costs are specifically considered. The differences between manufactured products and services are highlighted, and the question is asked whether such differences warrant a separate costing system for service industries. Other approaches to cost allocation, such as TDABC, are considered.
Topic 7: Customer Profitability Analysis
This topic moves the focus from analysis to action. Methods of finding profitable customers and products are considered, as is the area of account management and Customer Relationship Management (CRM). The topic also considers the impact of big data analytics and social networks on the company’s CRM, and how these have evolved into Social CRMs.
Topic 8: Process Control and Activity Based Management
This topic discusses the areas of process control and activity management; and shows how cost drivers obtained for cost allocations can be used as performance measures of process efficiency and effectiveness. Monitoring systems, and the concepts of frequency, timeliness and accuracy are also considered, especially in relation to white-collar departments.
Topic 9: Implementing Cost Analysis and Control Systems
This topic outlines the implementation stage of activity-based cost management systems. Behavioural aspects, especially in creating motivation are discussed. Long-term cost management models are also considered. The topic also considers the issues that arise when moving from ‘project’ to ‘steady state’; especially the factors that will ensure the long-term sustainability of a re-engineered ABC system.
Topic 10: Strategic Performance Management Systems
This topic looks at Strategic Performance Measurement Systems, 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 discussed, and the recognition of frameworks such as the Balanced Scorecard in linking financial and strategic performance measures are specifically considered.
Topic 11: Environmental and Social Management Accounting
Environmental and Social Management Accounting [also known as Corporate Social Responsibility (CSR)] is changing the way organisations go about their business. This topic explores what ESMA is, and what it means for organisations, 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 different approached to corporate governance, which specifies the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. The development of Enterprise governance systems, incorporating both structural governance and strategic governance are then compared and contrasted. Finally, it considers assurance issues using ‘leading’ rather than ‘lagging’ indicators, via the Strategic Audit.
This subject seeks to provide specialisation-level knowledge to accountants and financially motivated general managers in the interface areas between accounting and the other business functions. The subject is an advanced level course that enables students to apply the basic conventions and doctrines of managerial and cost accounting and other generally accepted managerial principles, in order to strategically analyse business situations across the various functions of a business organisation. A number of cost and management accounting issues relating to the design and implementation of strategic, marketing, risk management, value analysis and other management models in modern firms are discussed, and major contemporary issues that have emerged in business accounting in recent years are identified. 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 is specifically considered.
- Describe the basic conventions and doctrines of managerial and cost accounting and other generally accepted principles that may be strategically applied across the various functions of a business organisation.
- Identify major contemporary issues that have emerged in strategic management accounting.
- Critically evaluate 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.
- Explain the management accountant’s role in the implementation of cost management systems for marketing decision-making and business valuation.
Topics Covered :
Topic 1: Strategic Thinking
This topic overviews the concepts and development of strategic planning 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 considered, especially in relation to multiple approaches to analysing corporate strategy. The use of Big Data in strategic planning and thinking is specifically considered.
Topics 2 Strategic Marketing Analysis and Budgeting
Here the marketing concept is introduced and the links between marketing and strategic business analysis are illustrated; and the impact of Big Data analytics in customer-data driven marketing strategies is considered. 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 or services management” especially in competitive environments. The “product” is the first “P” in the 4-Ps of marketing, the others being price, promotion and place distribution, which will be discussed in detail in later topics. It is shown that as a product/service moves through various stages of its life cycle, 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/service managers with decision-orientated information, especially in financing technological innovation in the digital age.
Topic 4: Pricing Methods and Strategies
Here the various aspects of pricing decisions are covered, especially in competitive environments. Pricing methods and pricing strategies are specifically contrasted, 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 topic on pricing, and considers pricing within a competitive international market. It is shown that setting a selling price in a foreign market has, in addition to strategic marketing considerations, some unique international financial dimensions, 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 market, referred to collectively as the “promotional mix” are overviewed. The objective of this mix is to make a sale, 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”, 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 promotion, and specifically looks at “pull strategy” and integrated marketing communication (IMC) with its heavy reliance on advertising; especially via digital marketing platforms. It is demonstrated that the management accountant has a significant role in formulating advertising budgets, especially using specific budget models, 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 costs, and that the management accountant has a significant role to play in achieving this balance. The tools and techniques of distribution cost analysis and control that are used in providing customers value and maintaining efficient cost management in the digital world 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 considered, specifically the relative measures (ratios) used in financial statement analysis. Investment and Financing issues are separated; and capital structure and its role in obtaining an appropriate discount rate for capital projects is particularly considered. The topic also covers the more recent approaches to project and corporate funding such as venture capital and crowdfunding.
Topic 10: Strategic Value Analysis
This topic overview the different approaches to ‘value investing’; and introduces the concept of Strategic Value Analysis. The topic compares this concept to the more traditional concept of net present value; and demonstrates the impact of ‘free-cash flows’ on operational value, business value, and shareholder value. It is demonstrated that the concepts of ‘value’ and ‘strategic value’ can be quantified for planning purposes, and in valuing companies.
Topic 11: Risk Management – Corporate Radar and Early Warning Systems
Here the concept of risk; and the approaches to risk management using short-term (weekly) and long-term (annual) corporate radar systems are considered, in order to determine the health of a business organisation. Popular bankruptcy prediction models (such as Z-scores) and their reliability and relevance in the 2000s are specifically considered.
Topic 12: Strategic Scorecards
This topic focuses on corporate success, and the role of non-financial indicators in measuring and controlling this success. The importance of monitoring both the internal and external environment is highlighted, especially in terms of a firm’s ‘critical success factors’. The strategic consequences of having intangible assets such as Brands and Human Capital on strategic scorecards is also considered. Finally, a strategic scorecard that recognises the seven underlying principles of ‘sustainable value creation’ in the design and marketing of products and services is highlighted.