CHARTERED LEVEL C2 - Strategic Management Accounting

Size: px

Start display at page:

Download "CHARTERED LEVEL C2 - Strategic Management Accounting"

Horace Perry
6 years ago
Views:

1 SYLLBS 2016 ICMP CHRTERE LEVEL C2 - Strategic Management ccounting Weightage Part- Cost nalysis and Techniques 15% Part- Part-E Part- Part-B Part-B Strategic ecision Making 15% Part-C Capital Budgeting/ Investment ecisions 35% Part-C Part- Pricing and Product ecisions 25% Part-E Responsibility Centre and Performance Management 10% Syllabus Overview: This course is aimed to develop further key aspects introduced in previous courses of management accounting stream and relate the basic skills from a more strategic and operational planning perspective. The syllabus provides knowledge to students about the strategic role of management accounting for planning and controlling performance so that strategic objectives can be set, monitored and controlled adequately. Moreover, the strategic context of management accounting and impact of wider factors, the issues relating to performance measurement systems and their design are also covered in it. Furthermore, the strategic aspects of management accounting and operational systems for the measurement and control of performance in a variety of contexts are part of this syllabus, hence, the students are expected to synthesise this knowledge in the role of an advisor to senior management or independent clients on how to assess and control the performance of an entity, including the recognition of whether a business is facing difficulties or possibly failure. Finally, the syllabus deals with current developments in the field of management accounting and with emerging issues as they might affect or influence the management of performance within organisations. This course also enables the management accountant to identify the deviation during performance measurement of cost centres, revenue and profit centres for taking remedial action of the management. Learning Outcomes: On completion of this course, students will be able to: se different cost analysis and cost management techniques like activity based costing (BC), total quality management and supply chain management nderstand strategic decision making by using CF techniques Get acquainted with risk and uncertainty in decision making, probability analysis and expected values, decision trees and sensitivity analysis se effectively the linear programming technique for determination of the best use of available resources for profit and revenue maximising evelop cost management information to facilitate the principal management function and strategic management Generate information on the basis of pricing decision and pricing strategies like demand base pricing, full cost pricing and marginal costplus/mark-up pricing Measure the performance in divisionalised businesses Get acquainted with transfer pricing Institute of Cost and Management ccountants of Pakistan (Constituted under Cost and Management ccountants ct, 1966) 115

2 ICMP SYLLBS Cost nalysis and Management Techniques etailed Contents Weightage Level of in % Study Required PRT-: COST NLYSIS N TECHNIQES Learning Curve Target Costing Functional nalysis dvantages and disadvantages of ctivity Based Costing (BC) se of ctivity Base Management (BM) in improving activities irect Product Profitability (PP) Customer Profitability nalysis (CP) istribution Channel Profitability ctivity-based Profitability nalysis Variance analysis in an activity based costing system 15 Pareto nalysis Total Quality Management Techniques Traditional vs Modern Manufacturing Philosophy Kaizen Costing, concept of continuous improvement and cost of quality reporting Business Process Re-engineering to eliminate non value added activities and their cost The Value Chain Supply Chain Management Outsourcing Partnering, Incentives and Gain-Sharing rrangements Time and Motion Study Lean ccounting Value nalysis & Functional nalysis Value dded Statement Responsibility ccounting including the link to controllable and uncontrollable cost Human Resource ccounting 2. Strategic ecision Making by using CF Techniques PRT B: STRTEGIC ECISION MKING pplication of time value of money compounding discounting, nnuities and perpetuities Initiation of project Non-financial considerations (quantitative vs. qualitative) Identifying relevant cash flows Methods for appraisal of Capital Investment ecisions: Return on capital employed 15 Payback period iscounted Payback Period Net Present Value Internal Rate of Return Comparison between NPV and IRR Modified IRR NPV Index Capital rationing and Effect of tax and inflation on investment decisions, & 116 Institute of Cost and Management ccountants of Pakistan (Constituted under Cost and Management ccountants ct, 1966)

3 SYLLBS 2016 ICMP PRT C: CPITL BGETING/ INVESTMENT ECISIONS 3. Capital Budgeting Overview of Capital Budgeting process and Estimating Generating Investment Project Proposals Cash Flows Estimating Project after Tax Incremental Operating Cash Flows Calculating incremental cash flows (asset 4. Capital Budgeting expansion, asset replacement) Project Evaluation and Selection: lternative Methods Techniques Potential difficulties Capital Rationing Sensitivity nalysis Project Monitoring 5. Risk and Managerial The problem of Project risk (Real) Options in Total Project risk Capital Budgeting Probability Tree approach Simulation approach Contribution to total firm risk: Firm-Portfolio approach Managerial (Real) Options 6. Investment Inflation and Specific price variation: Real and ppraisal - Further Nominal discount factors Techniques The multiple IRR problem: Modified Internal rate of 35 return (MIRR) Capital Rationing: Soft, hard; single period, multi-period Sensitivity analysis Equivalent annual cost ifferent types of real options Risk adjusted WCC djusted present value (PV) 7. International Introduction to international finance Investment ppraisal Risks in international expansion: Lease or buy decisions ecisions for Mutually exclusive projects with unequal lives ecision to launch new product Capacity Requirements Planning ecision to establish new production facility ecision to invest in new fixed assets to improve or enhance production ecision for replacement of fixed assets Project abandonment Post Completion udit Translation, transaction and economic risks Exchange rates, price quotations Purchasing power parity, Interest rate parity, International Fisher effect se of interest rate parity to forecast future exchange rates Forecasting Cash Flows from overseas projects Basic Foreign Project ppraisal dditional complexities in foreign NPV calculations Financing international investments Monticorlo Simulation & Institute of Cost and Management ccountants of Pakistan (Constituted under Cost and Management ccountants ct, 1966) 117

4 ICMP SYLLBS Implementation and Control Procedures The investment cycle Project Implementation and Control Post-completion audit of capital project 9. Risk and uncertainty in Long Term ecisions Risk and uncertainty in decision making Business risk and financial risk Risk adjusted discount rate Probabilities and risk based decisions ata tables The maximin, maximax and minimax regret basis for decision making sing the standard deviation to measure risk ecision trees The value of information Sensitivity analysis and use of 'What if' analysis based on different levels of price, volume and cost, the factors that may have significant impact on decisions Concept of Simulation models Bayles theorem & & 10. Pricing ecisions and Pricing Strategies 11. Transfer pricing 12. Linear Programming (The Graphical Method & Simplex Method) PRT : PRICING N PROCT ECISIONS Basis of Pricing ecision emand base pricing Other issues that influence pricing decisions eriving the demand curve Profit maximizing price Short Term Pricing ecisions Long Term Pricing ecisions Full cost pricing Marginal cost-plus/mark-up pricing Pricing based on mark-up per unit of limiting factor 25 Pricing strategies for new products Other pricing strategies, & Basic principles of transfer pricing General rules se of market price as a basis for transfer prices & Transfer pricing with an imperfect external market Transfer pricing when there is no external market for the transferred item Transfer pricing and changing costs/prices Identifying the optimal transfer price Negotiated transfer prices International transfer pricing ecision Making with limiting factors ddressing the situation with more than one limiting factors Linear programming for situations involving & multiple constraints Need and purpose of linear programming & Principles of Graphical method and simplex method Graphical method and using of simultaneous equations & Shadow prices & Benefits of sing linear programming & 118 Institute of Cost and Management ccountants of Pakistan (Constituted under Cost and Management ccountants ct, 1966)

5 SYLLBS 2016 ICMP PRT E: RESPONSIBILITY CENTRE N PERFORMNCE MNGEMENT 13. Performance Types of Responsibility Centres Measurement and Evaluate performance of responsibility centres Evaluation Return on Investment (ROI) ROI and ecision Making Residual Income (RI) Profitability Index (PI) Economic Value dded (EV) 10 advantages and disadvantages of performance measurement systems The Balanced Scorecard Benchmarking Ethical Issues relating to the preparation, presentation and interpretation of information for the management Performance Reports TOTL WEIGHTGES 100 & NOTE:- = nderstanding = pplication = ecision Institute of Cost and Management ccountants of Pakistan (Constituted under Cost and Management ccountants ct, 1966) 119

Certified Cost Controller TM

Certified Cost Controller TM Email: info@iabfm.org Web: www.iabfm.org Tel: + 852 685 40145/+86 756 2216205 5 Key Business Benefits 1. Control and manage ALL of your organisation s costs 2. Fully understand