Management Accounting : Case Study

Society of Certified Management Accountants of Sri Lanka

Case Study IFAC’s IES 6: Test

on professional capabilities and competence

Test on Management Accounting skills

Test on Strategic skills

Evaluation Criteria

1. Management Accounting - 20 MarksSound technical knowledge in Management Accounting

2. Application of theories - 20 Marks

Diverse knowledge clearly applied in an analytical and practical manner in solving the problems in the case

3. Prioritisation - 10 MarksIssues to be prioritised in a logical manner with a clear rationale

4. Decision making skills - 20 Marks

Ability to recognise and present appropriate alternative solutions and take effective judgment in a logical & rational manner

5. Logical arguments - 20 MarksAbility to communicate effectively with realistic recommendations in a concise and logical fashion

6. Communication skills – 10 Marks

How Case Study works

Scenario 1 will be released two months before the exam

Scenario 2 will be given on the exam date. This will be the continuation of scenario 1,

but with more twists Students will be given a ‘Question’ on the

exam date

Students cannot take their analysis with them into the exam room. A fresh scenario 1 will be given on the exam day

Answers will be marked against the set evaluation criteria. Students should be informed about the marks allocated for each evaluation criterion.

How NOT to prepare recommendations

A few one or two lines in bullet point format

Half a page of brief unjustified recommendations

No recommendations on the identified top priorities

Ask for more time, more data etc before a recommendation can be made

Unethical recommendations

Management Accounting skills

Advanced calculations Relevant Interpretation Assumptions to be questioned&

changed Sensitivity analysis Clear workings

General guidelines

Students should not repeat the basic facts without adding value

Lack of information cannot be given as an excuse for not taking decisions

Clear understanding of the ‘Role’

Report Writing

What makes a good report?

Achieve your objective Logical structure Easy to follow Interesting to read Clearly set out Short and simple as possible Clear conclusions/recommendations Good to look at

Logical structure

The story should unfold as the reader progresses through the document.

This is achieved by going from the general to the specific, with the background material preceding the technical expose, which should lead logically to the conclusions.

Outline report format

Title Page Contents Terms of Reference The body of the report Conclusions - summary Recommendations - Actions Appendices – Technical

Body of the report A good Case Study answer,

should be like a good book, has a beginning, middle and an end. Together with a clear ‘story­line’ linking them together.

Beginning - Introduction Facts/Present/Past situation. This will set

the scene (can link to the terms of reference).

Summarises the background to the problem (or the company) and how it has arisen. Outlines the present position of the organisation, and the approach that you plan to take.

Your introduction may be very brief, as the recipients of the document may already know much of the back ground.

Middle An evaluation - What was your decision criterion.

What tools did you use and what did they indicate.

Remember you are the expert and need to interpret the results for others.

What were your findings and what other alternatives did you consider?

Investigate and assess the key issues or options that are relevant. These should be dealt with in a logical sequence and there should be a ‘storyline’.

Signpost intentions - The use of headings white space and appropriate language all help to make the report easier to read and navigate.

End Conclusions. This section should round off your

arguments, and summarise the balance of them. Try to end positively at least with some power and

authority. It gives you an opportunity to say how you feel, in general terms, about the situation.

Recommendations should be clearly identified, even if they are simply guidance as to what additional analysis is necessary before a decision can be made. There will always be a need for further action as a consequence of your analysis.

Terms of Reference

Objective of the report Who asked for it and why? Who did the work? Any constraints imposed Basis of information

The body of the report

Introduction - background to the report - the facts of the case

Evaluation: Identify key issues dependant on objective

and if feasible, rank in order (best first) Analysis of results List each alternative course of action Show pros and cons for each State why rejected

Conclusions

Separate from recommendations Reservations – missing information

– further work needed Summary of thoughts - logic of /

balance of argument

Recommendations

Action (or non-action) recommended as a result of the conclusions reached

Include a timescale for completion of major areas

If asked for a recommendation, give one. Shows you could make the decision yourself

They must be developed and justified using available information; stating the need for more information, and further investigation will not suffice

Appendices

If possible, put all major details into appendices. This includes PEST/SWOTS as well as NPV’s and any financial evaluation.

Ensure cross references to the text in the report.

How to write

Your own writing style Writing style is something that develops

over time. It is influenced by your education and experiences. To some it comes easy, they enjoy words but you are not looking to win any prizes in literature.

It’s about putting facts, ideas and opinions in a clear, concise, logical fashion. Generally write, as you would talk.

Who is reading the report

Failure to pitch the level correctly will also inevitably result in failure to communicate your ideas effectively, since the reader will either be swamped with complexity, or bored with blandness.

Understandable

Using the right words are you writing about recommendations or

options

are you writing about objectives or strategies?

What you should doActionsWhat you could do

Possibilities

Route to achieving objectives

Desired results

Simple

One main point per sentence:

Short Short words Short sentences Short phrases Short paragraphs

Tactful Tactless The directors have clearly made errors Tactful There were other options open to the board that

with hindsight would have been beneficial Tactless The marketing director is responsible for this

disastrous change in strategy Tactful The board should consider where this went

wrong? It would appear that the marketing department may have made some mistakes

Things to avoid

Poor punctuation - Don’t go mad. Follow the breathing rule.

Tautology - (unnecessary repetition) “I, myself, personally”. Do not “export

overseas”. “Green in colour”. Ask the question, as opposed to what?

Oxymoron - word combinations that are contradictory. “I never make predictions; and I never will”. “I have told you a million times don’t exaggerate”.

Spelling. This may seem a small an unimportant

point, but poor spelling makes a document seem sloppy and may convey an impression that the content is as loose as the general appearance!

But starting with And, But and Because is OK.

And so are split infinitives. (Any word between to and the verb) . To travel. To eat. “To boldly go”. “To fully understand”.