management advisory services syllabus

5/20/2018 Management Advisory Services Syllabus

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THE CPA LICENSURE EXAMINATION SYLLABUS

MANAGEMENT ADVISORY SERVICES

(Effective October !!" E#$%i&$tio&'

This subject tests the candidates' knowledge of, and proficiency in the concepts,

standards, techniques, and methodology applicable to management services

consultancy practice by CPs! management accounting! financial management"related

services! capital budgeting concepts and techniques! and project feasibility studies#

$ach e%amination will contain a minimum of & and a ma%imum of ( multiple

choice questions, allocated to the different subject areas, as indicated below#

)! M$&$*e%e&t Acco+&ti&*,Re-$te. Service/

)#) *ole, historical perspective, and direction of management accounting

a# +bjectives, scope, relationship with financial accounting and cost

accounting! role and activities of management accountant! controller as top

management accountant! organiation structure and management

accountant! the changing role and e%panding role of management

accountant#

b# -anagement ccounting .nformation ystem -anagement functions and

accounting! information needs of managers and other users for planning and


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control 0value chain and enhancing the value of management accounting

system1! international aspects of management accounting

c# -anagement ccounting and $thical Conduct $thical behavior and code of

conduct of management accountants! Code of conduct on the international

level

d# Current focus of -anagement ccounting .mpact on organiation

structure! focus on the customer! cross"functional teams! computer

integrated manufacturing! product life cycles and diversity! time"based

competition! global competition! information and communication technology

management! just"in"time inventory! total quality management! continuous

improvement and benchmarking! cost management system! computer"aided

design and manufacturing automation! e"commerce#

e# Certification available to -anagement ccounting The .nstitute of

-anagement ccountants and C- Certification

)#2 3oundations of management accounting

a# 4nderstanding and analysis and interpretation of financial statements

)# +bjectives, general approach, limitations and steps in financial

statements analysis

2# .dentification of matters for further interpretation of information

produced! assessment of the impact of price level changes in financial

analyses

5# nalysis of business performance and financial position such as

comparative financial statements, trend percentages, common"sie

financial statements, financial ratios! cash flow analysis and gross

profit variation analysis

b# Cost terms and concepts / cost behavior / design of cost and management

accounting systems


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)# 6ature and classification of costs

2# 7asics of cost behavior! cost classification on financial statements!

flow of costs in manufacturing, commercial, trading or service

companies

5# plitting mi%ed costs " high"low method, least"squares regression,

scatter graph

8# ystem design9 :ob order costing and process costing

ystem design9 ctivity"based costing and management! rationale,

advantages, limitations and design of an 7C system#

c# ;ariable costing and absorption costing

)# 4nderlying concepts, advantages and disadvantages of variablecosting

2# Comparison between variable costing and absorption costing

5# Preparation of financial statements under variable and absorption

costing including reconciliation of net income

d# 7usiness planning

)# +bjectives and uses of a business plan

2#


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2# C;P analysis with changes in cost structure! C;P analysis for a

multi"product firm

5# Concept of margin of safety, operating leverage and profit planning

b# *esponsibility accounting, transfer pricing, performance evaluation, andbalanced scorecard

)# =oal congruence and motivation

2# Types of responsibility centers 0revenue, cost, profit andinvestment1! transfer pricing " rationale and need! alternative transferpricing schemes and multinational transfer pricing

5# dvanced analysis and appraisal of performance9 financial and non"financial performance measures

8# Performance measurement in multinational companies!distinguishing performance of managers from performance oforganiation units! e%ecutive performance measures andcompensation! environmental and ethical responsibilities

6ature of the balanced scorecard! perspectives of the balancedscorecard! aligning the balanced scorecard to strategy! features of agood balanced scorecard! pitfalls when implementing a balanced

scorecard

># $valuation of the success of strategy! strategic analysis of operatingincome

c# 3unctional and activity"based budgeting

)#


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@# The budget period

)# 7udget cycle of a manufacturing firm

))# teps in developing a master budget

)2# Comprehensive budget illustrated

)5# 3le%ible budgeting

)8# 3i%ed and fle%ible budget variance compared

d# tandard costing and variance analysis

)# *ationale, users, benefits, limitations of standard costs!international uses of standard cost! how standards are set!

performance measurement using variances! operating performanceevaluation

2# nalysis of variances

0a1


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# Binear programming9 nature and application, steps in

formulation

of a linear program, computational methods of linearprogramming

0graphic and simple%1! hadow prices

(# ensitivity analysis

?# Aueuing theory

@# Program evaluation and review techniques 0P$*T19 basic

underlying

concepts, e%pected activity time, concept of critical path,cost

estimating, crashing the network, P$*T " cost network, variationin

activity time, variation along a path, accountant's role in P$*T,

benefits and limitations of P$*T

)# Bearning curve

b# 4sing accounting information in decision making, relevant costsandbenefits

)#


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shutdown or continue operations, pricing products and services,

andother business decisions requiring quantitative

analysis

c# Capital budgeting decisions

)#


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2# 6et investment, net cash returns, cost of capital, screening

capital

budgeting projects

5# 6on"discounted cash flow methods " payback, payback

reciprocal,bailout, accounting and average rate of return

8#


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0iii1 rbitrarily dividing common costsamong

segments

)#& dvanced management control and strategic performance

measurement

a# dvanced analysis and appraisal of performance9 financial andnon"

financial


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)# 3inancial and nonfinancial performance measures

2# teps in designing accounting"based performance measures

5# Performance measurement in multinational companies

8# Computation of foreign division's *+.

# 3inancial and nonfinancial incentives

b# -anaging productivity and marketing effectiveness

)# -anaging productivity

2# -easuring productivity

0a1 Partial productivity

0a1 Partial operational productivity0b1 Partial financial productivity

0c1 dvantages / limitations of partial productivity measures

0b1 Total productivity

0)1 7enefits and limitations of total productivity measures

5# -anaging marketing effectiveness

8# ummary of variance analysis to assess marketing effectiveness

c# $%ecutive performance measures

)# +bjectives of management compensation2# $%ecutive performance measures and compensation

5# Cash compensation

8# 6oncash compensation 7onus plans

0a1 7ases for bonus compensation

0b1 7onus compensation pools

0c1 7onus payment options

2# Performance measures at the individual activity level


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5# Performing tasks

8# Team"based compensation arrangements

$nvironmental and ethical responsibilities

)! M$&$*e%e&t Co&/+-t$&c0 Pr$ctice b0 CPA/

n overview

a# $volution of -, developing trends, future prospects

b# 6ature of - by independent accounting firms, rationale of using

management consultants, independent accounting firm's role in - and

CP's objective engaging in -

c# reas of -anagement dvisory ervices

reas of - practice9 traditional and emerging!


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1)! 2i&$&ci$- M$&$*e%e&t,Re-$te. Co&/+-t$&c0 Service/

5#) 3inancial forecasting

a# *ole of financial management

b# +bjectives of the firm

c# 6ature of financial forecasting d# teps in financial forecasting

d# Projected financial statement method

5#2 orking capital management and financing decision

a# 7asic concepts and significance of working capital management

b# orking capital policy, advantages of adequate working capital,

disadvantages of inadequate or e%cessive working capital, alternative

current asset investment and financing policies, risk" return trade off,e%ternal financing needed 0$361

5#5 -anagement of current assets

a# +bjectives of current assets management! cash conversion cycle

b# Cash and marketable securities management

)# +bjectives, reasons for holding cash, cash management techniques

2# *easons for holding marketable securities, factors influencing thechoice of marketable securities

c# *eceivables management

)# +bjectives, factors in determining accounts receivable policy, costsassociated with accounts receivable, summary of trade"offs in credit

and collection policies

2# -arginal or incremental analysis of credit policies

d# .nventory management

)# +bjectives, reasons for carrying inventories

2# .nventory management techniques

5# .nventory control systems

5#8 hort"term credit for financing current assets


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a# 3actors in selecting source of short" term funds

b# $stimating costs of short term funds

c# ources of short"term funds

d# ecured short"term financing " pledging of accounts receivable, factoring

accounts receivable! inventory financing

5#& Bong"term financing decisions

a# 7asic concepts, basic tools of capital structure management

b# 3actors influencing capital structure decisions

c# .ncorporating capital structure into capital budgeting! weighted averagecost of capital 0CC1 d# $ffects of operating leverage and financial leverageon capital structure! optimal capital structure

5#> ources of financing

a# .ntermediate and long"term financing

)# Principal sources of funds

2#


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5# Convertibles

8# +ption

arrants

3)! Pre4$r$tio& of Pro5ect 2e$/ibi-it0 St+.ie/ E&*$*e%e&t/

8#) 6ature, purpose and component, development and analysis of project revenue

costs under specific assumptions

8#2 Procedures in the preparation of projected financial statements

8#5 nalysis of financial projections

6)! I&for%$tio& S0/te%/ E&*$*e%e&t/

) -anagement .nformation ystems $ngagement

a# 3undamentals of computer"based processing


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>#) +perational auditing

a# 6ature

b# $ffectiveness versus efficiency! economy

c# +bjectives of operational audits

d# cope of operational audit

e#


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a# 7usiness cycles and reasons for business fluctuations

b# $conomic measures and reasons for changes in the economy, such asinflation, deflation and interest rate changes

c# -arket influences on business strategies, including selling, supply chainand customer management strategies d# .mplication to business of dealings

in foreign currencies, hedging and e%change rate fluctuations

a# FTo be effective in the October 2007 Examination b#

management advisory services syllabus

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