6. Management (The syllabus detailed study guide)

MA1

A The nature and purpose of cost and management accounting

Nature of business organization and accounting systems

1. Describe the organization, and main functions, of an office as a center for information and administration.[K]
2. Describe the function and use of policies, procedures and best practices.[K]
3. Identify the main types of transactions undertaken by a business and the key people involved in initiating, processing and completing transactions.[K]
4. Explain the need for effective control over transactions.[K]
5. Explain and illustrate the principles and practice of double-entry book-keeping.[S]
6. Identify the key features of a computerised accounting system.[K]

Nature and purpose of management information

1. State the purpose of management information.[K]
2. Compare cost and management accounting with external financial reporting.[K]
3. Distinguish between data and information.[K]
4. Describe the features of useful management information.[K]
5. Describe and identify sources and categories of information including internal, external, primary and secondary.[K]
6. Explain the limitations of cost and management accounting information.[K]
7. Describe the role of a trainee accountant in a cost and management accounting system.[K]

B Transaction processing

Transaction processing systems

1. Describe the material control cycle (including the concept and calculation of ‘free’ inventory but excluding control levels and EOQ) and the processes necessary to order, receive, store and issue materials.[K]
2. Describe the systems used to ensure the correct authorization, analysis and recording of direct and indirect material costs.[K]
3. Describe the systems used to ensure the correct authorization, coding, analysis and recording of direct and indirect labour and expenses.[K]
4. Describe the systems used to ensure the correct analysis and recording of sales.[K]

Coding system

1. Explain and illustrate the use of codes in categorising and processing transactions.[S]
2. Explain and illustrate different methods of coding data (including sequential, hierarchical, block, faceted and mnemonic).[K]
3. Identify and correct errors in coding of revenue and expenses.[S]

C Cost classification and measurement

Cost classification and behaviour

1. Define cost classification and describe the variety of cost classifications used for different purposes in a cost accounting system, including by responsibility, function, behaviour, direct/indirect.[S]
2. Describe and illustrate the nature of variable, fixed, stepped fixed and mixed (semi-variable) costs.[S]
3. Describe and illustrate the classification of material and labour costs.[S]
4. Prepare and explain the nature and purpose of profit statements in absorption and marginal costing formats.[S]
5. Calculate the cost and profit of a product or service.[S]

Cost units, cost centres, profit centres and investment centres

1. Explain and illustrate the concept of cost units.[K]
2. Explain and illustrate the concept of cost centres.[K]
3. Explain and illustrate the concept of profit centres.[K]
4. Explain and illustrate the concept of investment centres.[K]
5. Describe and apply performance measures appropriate to cost, profit and investment centres.[S]

D Accounting for costs

Accounting for materials

1. Distinguish different types of material (raw material, work in progress and finished goods).[K]
2. Describe and illustrate the accounting for material costs.[S]
3. Calculate material requirements making allowance for sales and product/material inventory changes (control levels and EOQ are excluded).[S]
4. Explain and illustrate different methods used to price materials issued from inventory (FIFO, LIFO and periodic and cumulative weighted average costs).[S]

Accounting for labour

1. Describe and illustrate the accounting for labour costs (including overtime premiums and idle time).[S]
2. Prepare an analysis of gross and net earnings.[S]
3. Explain and illustrate labour remuneration methods.[S]
4. Calculate the effect of changes in remuneration methods and changes in productivity on unit labour costs.[S]

Accounting for other expenses

1. Explain the process of charging indirect costs to cost centres and cost units and illustrate the process of cost apportionment for indirect costs (excluding reciprocal service).[S]
2. Explain and illustrate the process of cost absorption for indirect costs including the analysis and interpretation of over/under absorption.[S]

Accounting for product costs

1. Job costing
   1. Describe the characteristics of job costing [K]
   2. Calculate unit costs using job costing.[S]
2. Batch costing
   1. Describe the characteristics of batch costing.[K]
   2. Calculate unit costs using batch costing.[S]
3. Process costing
   1. Describe the characteristics of process costing[K]
   2. Identify situations where the use of processing costing is appropriate.[K]
   3. Explain and illustrate the nature of normal and abnormal losses/gains.[K]

E Spreadsheets

Spreadsheets overview

1. Explain the purposes of a spreadsheet.[K]
2. Describe the components of a blank spreadsheet screen.[K]
3. Describe methods to use/activate spreadsheet features.[K]
4. Describe methods of selecting ranges of cells.[K]
5. Explain the role of spreadsheets in management accounting.[K]
6. Describe the advantages and limitations of spreadsheets.[K]

Creating and using spreadsheets

1. Explain factors which influence spreadsheet design and the features of a well-structured worksheet/workbook.[K]
2. Explain how to enter values, text and dates including automatically filling a range of cells and capturing data from another source.[K]
3. Identify and use formulae incorporating common arithmetic operators, use of brackets, absolute/relative cell references and simple functions (Sum, Average, Round, IF).[S]
4. Identify and use formulae in a workbook containing multiple worksheets and link cells from different workbooks.[S]
5. Describe how to move/copy and paste data and formulae.[S]
6. Describe, and select as appropriate, ways to edit data in a cell including the Find and Replace feature.[K]
7. Explain the causes of common error messages and how errors are corrected.[K]
8. Describe how to save, password protect and open spreadsheets.[S]

Presenting and printing spreadsheet data/information

1. Describe and illustrate appropriate formatting features for the display of numbers, text, cell borders and patterns and for cell/worksheet protection.[S]
2. Describe features which can be applied to rows or columns (changing height/width, inserting, deleting and hiding).[K]
3. Describe features which affect the onscreen view and can be particularly useful when working with large worksheets/workbooks.[K]
4. Use Sort and Filter to manipulate data.[K]
5. Describe how charts (line, column, bar, pie, scatter, area) can be created from spreadsheet data and interpret the data shown.[S]
6. Describe and illustrate the appropriate use of adding comments to a cell.[K]
7. Describe how to select the output to be printed.[K]
8. Select the combination of page layout/set-up options to achieve an effective, user-friendly printed output, especially for worksheets containing large amounts of data.[S]

MA2

A Management information

Management information requirements

1. Describe the purpose of management information: planning, control and decision-making.[K]
2. Describe the features of useful management Information.[K]
3. Describe the nature, source and importance of both financial and nonfinancial information for managers.[K]
4. Describe management responsibilities for cost, profit and investment and their effect on management information and performance measurement.[K]
5. Explain the role of the trainee accountant.[K]

Cost accounting systems

1. Describe the process of accounting for input costs and relating them to work done.[K]
2. Describe the systems and processes for different accounting transactions.[S]
3. Explain and illustrate the use of codes in categorising and processing transactions (including sequential, hierarchical, block, faceted and mnemonic coding methods).[K]
4. Explain and illustrate the concept of cost units.[S]
5. Describe the different methods of costing final outputs and their appropriateness to different types of business organisation.[S]
6. Identify the key features of a computerised accounting system.[K]

Cost classification

1. Describe the variety of cost classifications used for different purposes in a cost accounting system, including by responsibility, function, direct/indirect and behaviour.[K]
2. Explain and illustrate the nature of variable, fixed, stepped fixed and mixed (semi-variable) costs.[S]
3. Use the high-low method to separate semi-variable costs into their fixed and variable elements.[S]
4. Use variable, fixed and semi-variable costs in cost analysis.[S]
5. Analyze the effect of changing activity levels on unit costs.[S]

Information for comparison

1. Explain the purpose of making comparisons.[K]
2. Identify relevant bases for comparison: previous period data, corresponding period data, forecast/budget data.[S]
3. Explain the forecasting/budgeting process and the concept of feed-forward and feedback control.[K]
4. Explain and illustrate the concept of flexible budgets.[S]
5. Use appropriate income and expenditure data for comparison.[S]
6. Calculate variances between actual and historical/forecast data which may or may not be adjusted for volume change (note: standard costing is excluded).[S]
7. Identify whether variances are favorable or adverse.[S]
8. Identify possible causes of variances.[S]
9. Explain the concept of exception reporting.[K]
10. Explain factors affecting the decision whether to investigate variances.[K]

Reporting management information.

1. Describe methods of analyzing, presenting and communicating information.[K]
2. Identify suitable formats for communicating management information according to purpose and organisational guidelines.[S]
3. Use data visualisation to present information using tables, charts and graphs (bar charts, line graphs, pie charts and scatter graphs).[S]
4. Identify the general principles of distributing reports (e.g. procedures, timing, recipients) including the reporting of confidential information.[K]
5. Interpret information (including tables, charts and graphs) presented in management reports.[S]

B Cost recording

Accounting for materials

1. Describe the main types of material classification.[K]
2. Describe the systems used to ensure the correct authorisation, coding, analysis and recording of direct and indirect material costs.[K]
3. Explain, illustrate and evaluate the FIFO, LIFO and periodic and cumulative weighted average methods used to price materials issued from inventory.[S]
4. Describe and illustrate the accounting for material costs.[S]
5. Calculate material input requirements, and control measures, where wastage occurs.[S]
6. Describe the procedures required to monitor inventory and to minimise discrepancies and losses.[K]
7. Explain and illustrate the costs of holding inventory and of being without inventory.[S]
8. Explain, illustrate and evaluate inventory control levels (minimum, maximum, reorder).[S]
9. Calculate EOQ and interpret optimal order quantities.[S]
10. Explain the relationship between the materials costing system and the inventory control system.[K]

Accounting for labour

1. Explain, illustrate and evaluate labour remuneration methods.[S]
2. Describe the operation of a payroll accounting system.[K]
3. Distinguish between direct and indirect labour costs.[K]
4. Describe the systems used to ensure the correct coding, analysis and recording of direct and indirect labour.[K]
5. Describe and illustrate the accounting for labour costs.[S]
6. Explain the relationship between the labour costing system and the payroll accounting system.[K]
7. Explain the causes and costs of, and calculate, labour turnover.[S]
8. Describe and illustrate measures of labour efficiency and utilisation (efficiency, capacity utilisation, production volume and idle time ratios).[S]

Accounting for other expenses

1. Describe the nature of expenses by function.[K]
2. Describe the systems used to ensure the correct authorisation, coding, analysis and recording of direct and indirect expenses.[K]
3. Describe and calculate asset and expenses items and illustrate the relevant accounting treatment.[K]
4. Calculate and explain depreciation charges using straight-line, reducing balance, machine hour and product units methods.[S]
5. Explain the relationship between the expenses costing system and the expense accounting system.[K]

C Costing techniques

Absorption costing

a) Explain the rationale for absorption costing.[K] b) Describe the nature of production and service cost centres and their significance for production overhead allocation, apportionment and absorption.[K] c) Describe the process of allocating, apportioning and absorbing production overheads to establish product costs.[K] d) Apportion overheads to cost centres using appropriate bases.[S] e) Re-apportion service cost centre overheads to production cost centres using direct and step-down methods.[S] f) Justify, calculate and apply production cost centre overhead absorption rates using labour hour and machine hour methods.[S] g) Explain the relative merits of actual and pre-determined absorption rates.[K] h) Describe and illustrate the accounting for production overhead costs, including the analysis and interpretation of over/under absorption.[S] i) Describe and apply methods of attributing non-production overheads to cost units.[S] j) Calculate product costs using the absorption costing method.[S]

Marginal costing

a) Explain and illustrate the concept of contribution.[S] b) Prepare profit statements using the marginal costing method.[S] c) Prepare profit statements using the absorption costing method.[S] d) Compare and contrast the use of absorption and marginal costing for period profit reporting and inventory valuation.[K] e) Reconcile the profits reported by absorption and marginal costing.[S] f) Explain the usefulness of profit and contribution information respectively.[K]

Job and batch costing

a) Identify situations where the use of job or batch costing is appropriate.[K] b) Calculate unit costs using job and batch costing.[S] c) Describe the control of costs in job and batch costing.[K] d) Apply cost plus pricing in job costing.[S]

Process costing

a) Identify situations where the use of process costing is appropriate.[K] b) Distinguish between joint products and by-products.[K] c) Explain the accounting treatment of joint products and by-products at the point of separation.[K] d) Apportion joint process costs using net realizable values and weight/volume of output respectively.[S] e) Evaluate the benefit of further processing.[S]

Service costing

a) Describe the characteristics of service costing.[K] b) Describe the practical problems relating to the costing of services.[K] c) Identify situations (cost centres and industries) where the use of service costing is appropriate.[S] d) Illustrate suitable cost units that may be used for a variety of services.[S] e) Calculate service unit costs in a variety of situations.[S]

D Decision-making

Cost-volume-profit analysis

1. Calculate contribution per unit and the contribution/sales ratio.[S]
2. Explain the concept of break-even and margin of safety.[K]
3. Use contribution per unit and contribution/sales ratio to calculate break-even point and margin of safety.[S]
4. Analyse the effect on break-even point and margin of safety of changes in selling price and costs.[S]
5. Use contribution per unit and contribution/sales ratio to calculate the sales required to achieve a target profit.[S]
6. Interpret break-even and profit/volume charts for a single product or business.[S]

Factors affecting short-term decision making

a) Explain the importance of the limiting factor concept.[K] b) Identify the limiting factor in given situations.[S] c) Formulate and determine the optimal production solution when there is a single resource constraint.[S] d) Solve make/buy-in problems when there is a single resource constraint.[S] e) Explain the concept of relevant costs.[K] f) Apply the concept of relevant costs in business decisions.[S]

Investment appraisal

a) Explain and illustrate the difference between simple and compound interest, and between nominal and effective interest rates.[S] b) Explain and illustrate compounding and discounting.[S] c) Explain the distinction between cash flow and profit and the relevance of cash flow to capital investment appraisal.[K]

d) Explain and illustrate the net present value (NPV) and internal rate of return (IRR) methods of discounted cash flow.[S] e) Calculate present value using annuity and perpetuity formulae.[S] f) Calculate payback (discounted and nondiscounted).[S] g) Interpret the results of NPV, IRR and payback calculations of investment viability.[S]

E Cash management

Nature of cash and cash flow

a) Define cash and cash flow.[K]

b) Outline the various sources of cash receipts and payments (including regular/exceptional asset/expenses receipts and payments, and drawings).[K]

c) Describe the relationship between cash flow accounting and accruals accounting.[K] d) Distinguish between the cash flow pattern of different types of organisations.[S] e) Explain the importance of cash flow management and its impact on liquidity and company survival (note: calculation of ratios is not required).[K]

Cash management

a) Outline the basic treasury functions.[K] b) Describe the procedures for the receipt and payment of cash, including automated methods.[K] c) Outline guidelines and legislation in relation to the management of cash balances in public sector organisations.[K] d) Describe how trends in the economic and financial environment can affect management of cash balances.[K]

Cash budgets

a) Explain the objectives of cash budgeting.[K] b) Explain and illustrate statistical techniques used in cash forecasting including moving averages and allowance for inflation.[S] c) Prepare a cash budget/forecast.[S] d) Explain and illustrate how a cash budget can be used as a mechanism for monitoring and control.[S]

Investing and financing

a) Explain how surplus cash and cash deficit may arise.[K] b) Explain the following types of short-term investments and the associated risks/returns:[K] (i) bank deposits (ii) money-market deposits (iii) certificates of deposit (iv)government stock (v) local authority stock c) Explain different ways of raising finance from a bank and the basic terms and conditions associated with each type of financing.[K]

FMA

A The nature, source and

purpose of management information

1. Accounting for management a) Describe the purpose and role of cost and management accounting within an organisation.[K] b) Compare and contrast financial accounting with cost and management accounting.[K] c) Outline the managerial processes of planning, decision-making and control.[K] d) Explain the difference between strategic, tactical and operational planning.[K] e) Distinguish between data and information.[K] f) Identify and explain the attributes of good information.[K] g) Explain the limitations of management information in providing guidance for managerial decision-making.[K]
2. Sources of data a) Describe the three main data sources: machine/sensor, transactional and human/social.[K] b) Describe and identify sources and categories of information including internal, external, primary and secondary.[K] c) Explain the uses and limitations of published information/data (including information from the internet).[K] d) Identify the data capture costs of management accounting information.[K]
3. Cost classification a) Explain and illustrate production and non-production costs.[K] b) Describe the different elements of nonproduction costs - administrative, selling, distribution and finance.[K] c) Describe the different elements of production costs - materials, labour and overheads.[K] d) Explain the importance of the distinction between production and non-production costs when valuing output and inventories.[K] e) Explain and illustrate with examples classifications used in the analysis of product/service costs including by function, direct and indirect, fixed and variable, stepped fixed and semi variable costs.[S] f) Explain and illustrate the use of codes in categorising transactions.[K] g) Identify and interpret graphical representations of different types of cost behaviour.[S] h) Explain and illustrate the concept of cost objects, cost units and cost centres.[S] i) Distinguish between cost, profit, investment and revenue centres.[K] j) Describe the differing needs for information of cost, profit, investment and revenue centre managers.[K]
4. Presenting information a) Prepare written reports representing management information in suitable formats according to purpose.[S] b) Use data visualisation to present information using tables, charts and

graphs (bar charts, line graphs, pie charts and scatter graphs).[S] c) Interpret information (including tables, charts and graphs) presented in management reports.[S]

B Data analysis and statistical

techniques

1. Sampling methods a) Explain sampling techniques (random, systematic, stratified, multistage, cluster and quota).[K] b) Choose an appropriate sampling method in a specific situation.[S] (Note: Derivation of random samples will not be examined)
2. Analytical techniques in budgeting and forecasting a) Explain the structure of linear functions and equations.[S] b) Use the high low method to separate the fixed and variable elements of total costs including situations involving semi variable and stepped fixed costs and changes in the variable cost per unit.[S] c) Explain the advantages and disadvantages of using the high low method to estimate the fixed and variable elements of costing.[K] d) Construct scatter diagrams and lines of best fit.[S] e) Analysis of cost data. (i) Explain the concepts of correlation coefficient and coefficient of determination.[K] (ii) Calculate and interpret the correlation coefficient and the coefficient of determination.[S] (iii) Establish a linear function using regression analysis and interpret the results.[S] f) Use linear regression coefficients to make forecasts of costs and revenues.[S] g) Adjust historical and forecast data for price movements.[S] h) Explain the advantages and disadvantages of linear regression analysis.[K] i) Explain the principles of time series analysis (cyclical, trend, seasonal variation and random elements).[K] j) Calculate moving averages.[S] k) Calculate the trend, including the use of regression coefficients.[S] l) Use trend and seasonal variation (additive and multiplicative) to make budget forecasts.[S] m) Explain the advantages and disadvantages of time series analysis.[K] n) Explain the purpose of index numbers.[K] o) Calculate simple and multi-item (weighted) index numbers for one or more variables, including Laspeyre and Paasche indices.[S] p) Describe the product life cycle and explain its importance in forecasting.[K]
3. Summarising and analysing data a) Describe the five characteristics of big data (volume, variety, velocity, value and veracity).[K] b Explain the three types of big data: structured, semi-structured and unstructured.[K] c) Describe the main uses of big data and data analytics for organisations.[K]

d) Describe the two types of data: categorical (nominal and ordinal) and numerical (continuous and discrete).[S]

e) Explain the terms descriptive analysis and inferential analysis.[K] f) Calculate the mean, mode and median for ungrouped data and the mean for grouped data.[S] g) Calculate measures of dispersion including the variance, standard deviation and coefficient of variation both grouped and ungrouped data.[S] h) Calculate expected values for use in decision making.[S] i) Explain the properties of a normal distribution.[S] j) Interpret normal distribution graphs and tables.[S] 4. Spreadsheets a) Explain the role and features of a computer spreadsheet system.[K] b) Identify applications for computer spreadsheets and their use in data analysis, cost and management accounting.[S]

C Cost accounting techniques

4. Accounting for material, labour and overheads a) Accounting for materials (i) Describe the systems necessary for the ordering, receiving and issuing of materials from inventory.[K] (ii) Describe the control procedures used to monitor physical and ‘book’ inventory and to minimise discrepancies and losses.[K] (iii) Interpret the entries and balances in the material inventory account.[S] (iv) Identify, explain and calculate the costs of ordering and holding inventory (including buffer inventory).[S] (v) Calculate and interpret optimal reorder quantities.[S] (vi) Calculate and interpret optimal reorder quantities when discounts apply.[S] (vii) Produce calculations to minimise inventory costs when inventory is gradually replenished.[S] (viii) Describe and apply appropriate methods for establishing reorder levels where demand in the lead time is constant.[S] (ix) Calculate the value of closing inventory and material issues using LIFO, FIFO and average methods.[S] (x) Explain Just in Time (JIT) as an inventory management approach.[K] b) Accounting for labour (i) Calculate direct and indirect costs of labour.[S] (ii) Explain the systems used to capture and record labour effort.[K] (iii) Prepare the journal and ledger entries to record labour cost inputs and outputs.[S] (iv) Describe different remuneration methods: time-based systems, piecework systems and individual and group incentive schemes.[K] (v) Calculate the level and analyse the costs and causes of labour turnover.[S] (vi) Explain and calculate labour efficiency, capacity and production volume ratios.[S] (vii) Interpret the entries in the labour account.[S]

c) Accounting for overheads (i) Explain the different treatment of direct and indirect expenses.[K] (ii) Describe the procedures involved in determining production overhead absorption rates.[K] (iii) Allocate and apportion production overheads to cost centres using an appropriate basis.[S] (iv) Reapportion service cost centre costs to production cost centres (including using the reciprocal method where service cost centres work for each other).[S]

(v) Select, apply and discuss appropriate bases for absorption rates.[S] (vi) Prepare journal and ledger entries for manufacturing overheads incurred and absorbed.[S] (vii) Calculate and explain the under and over absorption of overheads.[S] 2. Absorption and marginal costing a) Explain the importance of, and apply, the concept of contribution.[S] b) Demonstrate and discuss the effect of absorption and marginal costing on inventory valuation and profit determination.[S] c) Calculate profit or loss under absorption and marginal costing.[S] d) Reconcile the profits or losses calculated under absorption and marginal costing.[S] e) Describe the advantages and disadvantages of absorption and marginal costing.[K] 3. Cost accounting methods a) Job and batch costing: (i) Describe the characteristics of job and batch costing.[K] (ii) Describe the situations where the use of job or batch costing would be appropriate.[K] (iii) Prepare cost records and accounts in job and batch costing situations.[S] (iv) Establish job and batch costs from given information.[S] b) Process costing (i) Describe the characteristics of process costing.[K] (ii) Describe the situations where the use of process costing would be appropriate.[S] (iii) Explain the concepts of normal and abnormal losses and abnormal gains.[K] (iv) Distinguish between by-products and joint products.[K] (v) Value by-products and joint products at the point of separation.[S] (vi) Evaluate the benefit of further processing.[S] c) Service/operation costing (i) Define the characteristics of service organisations.[K] (ii) Identify situations where the use of service/operation costing is appropriate.[K] (iii) Illustrate suitable unit cost measures that may be used in different service/operation situations.[S] (iv) Carry out service cost analysis in simple service industry situations.[S] 4 Alternative cost accounting principles a) Explain alternative cost management techniques (activity-based costing (ABC), target costing and life-cycle costing).[K] b) Differentiate alternative cost management techniques from the traditional costing techniques (note: calculations are not required).[K]

D Budgeting

2. Nature and purpose of budgeting a) Explain why organisations use budgeting.[K] b) Describe the planning and control cycle in an organisation.[K] c) Explain the administrative procedures used in the budgeting process.[K] d) Describe the stages in the budgeting process (including sources of relevant data, planning and agreeing draft budgets and purpose of forecasts and how they link to budgeting).[K]
3. Budget preparation a) Explain the importance of the principal budget factor in constructing a budget.[K]

b) Prepare sales budgets.[S] c) Prepare functional budgets (production, raw materials usage and purchases, labour, variable and fixed overheads).[S] d) Prepare cash budgets.[S] e) Prepare master budgets (statement of profit or loss and statement of financial position).[S] f) Explain and illustrate ‘what if’ analysis and scenario planning.[S] g) Describe the impact of the general economic environment on costs/revenue in budgeting.[K] h) Explain the importance of considering sustainability in budget preparation.[K] 3. Flexible budgets a) Explain the importance of flexible budgets in control.[K] b) Explain the disadvantages of fixed budgets in control.[K] c) Identify situations where fixed or flexible budgetary control would be appropriate.[S] d) Flex a budget to a given level of volume.[S] 4. Asset budgeting and investment appraisal a) Discuss the importance of investment planning and control.[K] b) Define and distinguish between asset and expense items.[K] c) Outline the issues to consider and the steps involved in the preparation of an asset expenditure budget.[K] d) Explain and illustrate the difference between simple and compound interest, and between nominal and effective interest rates.[S] e) Explain and illustrate compounding and discounting.[S] f) Explain the distinction between cash flow and profit and the relevance of cash flow to investment appraisal.[K] g) Identify and evaluate relevant cash flows for individual investment decisions.[S] h) Explain and illustrate the net present value (NPV) and internal rate of return (IRR) methods of discounted cash flow.[S] i) Calculate present value using annuity and perpetuity formulae.[S] j) Calculate NPV, IRR and payback (discounted and non-discounted).[S] k) Interpret the results of NPV, IRR and payback calculations of investment viability.[S] 5. Budgetary control and reporting a) Calculate simple variances between flexed budget, fixed budget and actual sales, costs and profits.[S] b) Discuss the relative significance of variances.[K] c) Explain potential action to eliminate variances.[K] d) Define the concept of responsibility accounting and its significance in control.[K] e) Explain the concept of controllable and uncontrollable costs.[K] f) Prepare control reports suitable for presentation to management (to include recommendation of appropriate control action).[S] 6. Behavioural aspects of budgeting a) Explain the importance of motivation in performance management.[K]

b) Identify factors in a budgetary planning and control system that influence motivation.[S] c) Explain the impact of targets on motivation.[K] d) Discuss managerial incentive schemes.[K] e) Discuss the advantages and disadvantages of a participative approach to budgeting.[K] f) Explain top down and bottom up approaches to budgeting.[K]

E Standard costing

1. Standard costing a) Explain the purpose and principles of standard costing.[K] b) Explain and illustrate the difference between standard, marginal and absorption costing.[K] c) Establish the standard cost per unit under absorption and marginal costing.[S] 2 Variance calculations and analysis a) Calculate sales price and volume variance.[S] b) Calculate materials total, price and usage variance.[S] c) Calculate labour total, rate and efficiency variance.[S] d) Calculate variable overhead total, expenditure and efficiency variance.[S] e) Calculate fixed overhead total, expenditure and, where appropriate, volume, capacity and efficiency variance.[S] f) Interpret the variances.[S] g) Explain factors to consider before investigating variances, explain possible causes of the variances and recommend control action.[S] h) Explain the interrelationships between the variances.[K] i) Calculate actual or standard figures where the variances are given.[K] 3 Reconciliation of budgeted and actual profit a) Reconcile budgeted profit with actual profit under standard absorption costing.[S] b) Reconcile budgeted profit or contribution with actual profit or contribution under standard marginal costing.[S]

F Performance measurement

Performance measurement - overview

1. Discuss the purpose of mission statements and their role in performance measurement.[K] b) Discuss the purpose of strategic, operational and tactical objectives and their role in performance measurement.[K] c) Discuss the impact of economic and market conditions on performance measurement.[K] d) Explain the impact of government regulation on performance measurement.[K] e) Explain the impact of sustainability on performance measurement.[K] 2 Performance measurement - application a) Discuss and calculate measures of financial performance (profitability, liquidity, efficiency and gearing) and nonfinancial measures.[S] b) Perspectives of the Balanced Scorecard

(i) discuss the advantages and limitations of the balanced scorecard.[K] (ii) describe performance indicators for financial, customer, internal business process and innovation and learning.[K] (iii) discuss critical success factors and key performance indicators and their link to objectives and mission statements.[K] (iv) establish critical success factors and key performance indicators in a specific situation.[S] c) Economy, efficiency and effectiveness (i) explain the concepts of economy, efficiency and effectiveness.[K] (ii) describe performance indicators for economy, efficiency and effectiveness.[K] (iii) establish performance indicators for economy, efficiency and effectiveness in a specific situation.[S] (iv) discuss the meaning of each of the efficiency, capacity and activity ratios.[K] (v) calculate the efficiency, capacity and activity ratios in a specific situation.[S] d) Resource utilisation (i) describe measures of performance utilisation in service and manufacturing environments.[K] (ii) establish measures of resource utilisation in a specific situation.[S] e) Profitability (i) calculate return on investment and residual income.[S] (ii) explain the advantages and limitations of return on investment and residual income.[K] f) Quality (i) distinguish performance measurement issues in service and manufacturing industries.[K] (ii) describe performance measures appropriate for service industries.[K] (iii) Explain total quality management (TQM) as a quality management technique.[K]

Cost reductions and value

enhancement a) Compare cost control and cost reduction.[K] b) Describe and evaluate cost reduction methods.[S] c) Describe and evaluate value analysis.[S] 4 Monitoring performance and reporting a) Discuss the importance of non-financial performance measures.[K] b) Discuss the relationship between shortterm and long-term performance.[K] c) Discuss the measurement of performance in service industry situations.[K] d) Discuss the measurement of performance in non-profit seeking and public sector organisations.[K] e) Discuss measures that may be used to assess managerial performance and the practical problems involved.[K] f) Discuss the role of benchmarking in performance measurement.[K] g) Produce reports highlighting key areas for management attention and recommendations for improvement.[S]

PM

A Management information systems and data analytics

1. Management information systems a) Explain the role of information systems in organisations. [2] b) Discuss the costs and benefits of information systems.[2] c) Explain the uses of the internet, intranet, wireless technology and networks.[2] d) Identify the accounting information requirements and describe the different types of information systems used for strategic planning, management control and operational control and decisionmaking. [2] e) Define and discuss the main characteristics of transaction processing systems; management information systems; executive information systems; enterprise resource planning systems and customer relationship management systems.[2]
2. Uses and control of information a) Demonstrate how principal sources of management information might be used for control purposes.[2] b) Discuss the principal controls required in generating and distributing internal information.[2] c) Discuss the controls and procedures which may be necessary to ensure the security of highly confidential information that is not for external consumption.[2] d) Discuss the importance of data visualisation in the presentation of management information.[2]
3. Big data and data analytics a) Describe the characteristics (volume, velocity, variety, veracity and value) of big data.[2] b) Explain the purpose of the big data pyramid (data, information, knowledge, wisdom). [2] c) Explain the uses and benefits of big data, data mining and data analytics, e.g., predictive analytics for planning, costing, decision-making and performance management. [2] d) Discuss the challenges and risks of implementing and using big data and data analytics in an organisation.[2]

B Specialist cost and

management accounting techniques 4. Activity-based costing (ABC) a) Identify appropriate cost drivers under ABC. [1] b) Calculate costs per driver and per unit using ABC.[2] c) Compare ABC and traditional methods of overhead absorption based on production units, labour hours or machine hours.[2] 5. Target costing a) Derive a target cost in manufacturing and service industries.[2] b) Explain the difficulties of using target costing in service industries.[2] c) Suggest how a target cost gap might be closed.[2]

6. Life-cycle costing a) Identify the costs involved at different stages of the life-cycle.[2] b) Derive a life-cycle cost or profit in manufacturing and service industries.[2] c) Identify the benefits of life-cycle costing.[2]
7. Throughput accounting a) Discuss and apply the theory of constraints.[2] b) Calculate and interpret a throughput accounting ratio (TPAR).[2] c) Suggest how a TPAR could be improved.[2] d) Apply throughput accounting to a multiproduct decision-making problem.[2]
8. Accounting for environmental and sustainability factors a) Discuss the issues organisations face in the management of environmental costs.[1] b) Describe the different methods an organisation may use to account for its environmental costs.[1] c) Discuss the issues organisations face in accounting for environmental and sustainability factors.[1] d) Discuss the role of the management accountant in supporting the business to develop sustainable practices.[1]

C Decision-making techniques

6. Relevant cost analysis a) Explain the concept of relevant costing.[2] b) Identify and calculate relevant costs for specific decision situations from given data.[2] c) Explain and apply the concept of opportunity costs.[2]
7. Cost-volume-profit analysis (CVP) a) Explain the nature of CVP analysis.[2] b) Calculate and interpret the break-even point and margin of safety.[2] c) Calculate the contribution to sales ratio, in single and multi-product situations, and demonstrate an understanding of its use.[2] d) Calculate target profit or revenue in single and multi-product situations and demonstrate an understanding of its use.[2] e) Interpret break-even charts and profitvolume charts and interpret the information contained within each, including multi-product situations.[2] f) Discuss the limitations of CVP analysis for planning and decision-making.[2]
8. Limiting factors a) Identify limiting factors in a scarce resource situation and select an appropriate technique.[2] b) Determine the optimal production plan where an organisation is restricted by a single limiting factor, including within the context of make-or-buy decisions.[2] c) Formulate and solve multiple scarce resource problems using both linear programming graphs and using simultaneous equations as appropriate.[2] d) Explain and calculate shadow prices (dual prices) and discuss their implications for decision-making and performance management.[2]

e) Calculate slack and explain the implications of the existence of slack for decision-making and performance management.[2] (Excluding simplex and sensitivity to changes in objective functions) 4. Pricing decisions a) Explain the factors that influence the pricing of a product or service.[2] b) Calculate and explain the price elasticity of demand.[1] c) Derive and manipulate a straight line demand equation. Derive an equation for the total cost function (including volumebased discounts).[2] d) Calculate the optimum selling price and quantity for a product, equating marginal cost and marginal revenue.[2] e) Evaluate a decision to increase production and sales levels, considering incremental costs, incremental revenues and other factors.[2] f) Determine prices and output levels for profit maximisation using the demandbased approach to pricing (both tabular and algebraic methods).[2] g) Explain different price strategies, including:[2] i) All forms of cost-plus ii) Skimming iii) Penetration iv) Complementary product v) Product-line vi) Volume discounting vii) Discrimination viii) Relevant cost h) Calculate a price from a given strategy using cost-plus and relevant cost.[2] 5. Make-or-buy and other short-term decisions a) Explain the issues surrounding make-orbuy and outsourcing decisions.[2] b) Calculate and compare “make” costs with “buy-in” costs.[2] c) Compare in-house costs and outsource costs of completing tasks and consider other issues surrounding this decision.[2] d) Apply relevant costing principles in situations involving shut down, one-off contracts and the further processing of joint products.[2] 6. Dealing with risk and uncertainty in decision-making a) Suggest research techniques to reduce uncertainty e.g., focus groups, market research.[2] b) Explain the use of simulation, expected values and sensitivity.[1] c) Apply expected values and sensitivity to decision-making problems.[2] d) Apply the techniques of maximax, maximin, and minimax regret to decisionmaking problems including the production of profit tables.[2] e) Interpret a decision tree and use it to solve a multi-stage decision problem.[2] f) Calculate the value of perfect and imperfect information.[1]

D Budgeting and control

4. Budgetary systems and types of budget a) Explain how budgetary systems fit within the performance hierarchy.[2] b) Select and explain appropriate budgetary systems for an organisation, including top-down, bottom-up, rolling, zero-based, activity-based, incremental and feedforward control.[2] c) Describe the information used in budget systems and the sources of the information needed.[2] d) Indicate the usefulness and problems with different budget types (including fixed, flexible, zero-based, activity- based, incremental, rolling, top-down, bottomup, master, functional).[2] e) Prepare flexed budgets, incremental budgets, rolling budgets and activitybased budgets.[2] f) Explain the beyond budgeting model, including the benefits and problems that may be faced if it is adopted in an organisation.[2] g) Discuss the issues surrounding setting the difficulty level for a budget.[2] h) Explain the benefits and difficulties of the participation of employees in the negotiation of targets.[2] i) Explain the difficulties of changing a budgetary system or type of budget used.[2] j) Explain how budget systems can deal with uncertainty and volatility in the environment.[2] k) Discuss ethical and sustainability considerations when setting budgets.[2]
5. Analytical techniques in budgeting and forecasting a) Analyse fixed and variable cost elements from total cost data using high-low method.[1] b) Explain and apply analysis techniques including correlation, regression and time series.[2] c) Estimate the learning rate and learning effect.[2] d) Apply the learning curve model to a budgetary problem, including calculations on steady states [2] e) Discuss the benefits and limitations of correlation, regression and time series techniques, and also the reservations with the learning curve model.[2]
6. Standard costing a) Explain the use of standard costs.[2] b) Outline the methods used to derive standard costs and discuss the different types of cost possible.[2] c) Explain and illustrate the importance of flexing budgets in performance management.[2] d) Explain and apply the principle of controllability in the performance management system.[2]
7. Material mix and yield variances a) Calculate, identify the cause of, and explain material mix and yield variances.[2] b) Explain the wider issues involved in changing material mix e.g., cost, quality and performance measurement issues.[2] c) Identify and explain the relationship of the material usage variance with the material mix and yield variances.[2] d) Suggest and justify alternative methods of controlling production processes.[2]
8. Sales mix and quantity variances a) Calculate, identify the cause of, and explain sales mix and quantity variances.[2] b) Identify and explain the relationship of the sales volume variances with the sales mix and quantity variances.[2]
9. Planning and operational variances a) Calculate a revised budget.[2] b) Identify and explain those factors that could and could not be allowed to revise an original budget.[2] c) Calculate, identify the cause of and explain planning and operational variances for: [2] i) sales, including market size and market share; ii) materials; iii) labour, including the effect of the learning curve. d) Explain and discuss the manipulation issues involved in revising budgets.[2]
10. Performance analysis a) Analyse and evaluate past performance using the results of variance analysis.[2] b) Use variance analysis to assess how future performance of an organisation can be improved.[2] c) Identify the factors which influence behaviour.[2] d) Discuss the effect that variances have on staff motivation and action.[2] e) Describe the dysfunctional nature of some variances in the modern environment of JIT and TQM.[2] f) Discuss the behavioural problems resulting from using standard costs in rapidly changing environments.[2]

E Performance measurement

and control 11. Performance analysis in private sector, public sector and not-for-profit organisations a) Describe, calculate and interpret suitable financial performance indicators (FPIs) for example profitability, liquidity, efficiency and gearing.[2] b) Describe, calculate and interpret suitable non-financial performance indicators (NFPIs).[2] c) Analyse past performance and suggest ways for improving financial and nonfinancial performance.[2] d) Explain the causes and problems created by short-termism and financial manipulation of results.[2] e) Discuss the issues organisations face by favouring short-term financial gain over long-term sustainability.[2] f) Explain and interpret the Balanced Scorecard, and the Building Block model proposed by Fitzgerald and Moon.[2] g) Discuss the difficulties of target setting in qualitative areas.[2] h) Explain the need to allow for external considerations in performance management, including stakeholders, market conditions and allowance for competitors.[2] i) Interpret performance in the light of external considerations and the need to consider sustainability.[2] 12. Divisional performance and transfer pricing a) Explain and illustrate the basis for setting a transfer price using variable cost, full cost and the principles behind allowing for intermediate markets.[2] b) Explain how transfer prices can distort the performance assessment of divisions and decisions made.[2] c) Explain the meaning of, and calculate, Return on Investment (ROI) and Residual Income (RI), and discuss their shortcomings.[2] d) Compare divisional performance and recognise the problems of doing so.[2] 13. Specific performance analysis issues in not-for-profit organisations and the public sector a) Comment on the problems of having non-quantifiable objectives in performance management.[2] b) Comment on the problems of having multiple objectives in not-for-profit organisations and the public sector.[2] c) Explain how performance could be measured in not-for-profit organisations and the public sector.[2] d) Explain Value for Money (VFM) as a public sector objective and how the 3Es can be used to achieve VFM.[1]

FM

A Financial management

function

1. The nature and purpose of financial management a) Explain the nature and purpose of financial management.[1] b) Explain the relationship between financial management and financial and management accounting.[1]
2. Financial objectives and the relationship with corporate strategy a) Discuss the relationship between financial objectives, corporate objectives and corporate strategy.[2] b) Identify and describe a variety of financial objectives, including:[2] i) shareholder wealth maximisation ii) profit maximisation iii) earnings per share growth.
3. Stakeholders and impact on corporate objectives a) Identify the range of stakeholders and their objectives.[2] b) Discuss the possible conflict between stakeholder objectives.[2] c) Discuss the role of management in meeting stakeholder objectives, including the application of agency theory.[2] d) Describe and apply ways of measuring achievement of corporate objectives including:[2] i) ratio analysis, using appropriate ratios such as return on capital employed, return on equity, earnings per share and dividend per share ii) changes in dividends and share prices as part of total shareholder return. e) Explain ways to encourage the achievement of stakeholder objectives, including:[2] i) managerial reward schemes such as share options and performance- related pay. ii) regulatory requirements such as corporate governance codes of best practice and stock exchange listing regulations.
4. Financial and other objectives in notfor-profit organisations a) Discuss the impact of not-for-profit status on financial and other objectives.[2] b) Discuss the nature and importance of Value for Money as an objective in not-forprofit organisations.[2] c) Discuss ways of measuring the achievement of objectives in not-for-profit organisations.[2]

B Financial management

environment 5. The economic environment for business a) Identify and explain the main macroeconomic policy targets.[1] b) Define and discuss the role of fiscal, monetary, interest rate and exchange rate policies in achieving macroeconomic policy targets.[1] c) Explain how government economic policy interacts with planning and decisionmaking in business.[2] d) Explain the need for, and the interaction with, planning and decision-making in business of: i) competition policy [1] ii) government assistance for business [1] iii) green policies and sustainability [1] iv) corporate governance regulation.[2] 6. The nature and role of financial markets and institutions a) Identify the nature and role of money and capital markets, both nationally and internationally.[2] b) Explain the role of financial intermediaries.[1] c) Explain the functions of a stock market and a corporate bond market.[2] d) Explain the nature and features of different securities in relation to the risk/return trade-off.[2] e) Explain the impact of Fintech in changing the nature and role of financial markets and institutions.[1] 7. The nature and role of money markets a) Describe the role of the money markets in:[1]

i) providing short-term liquidity to the private sector and the public sector ii) providing short-term trade finance iii) allowing an organisation to manage its exposure to foreign currency risk and interest rate risk. b) Explain the role of banks and other financial institutions in the operation of the money markets.[2] c) Explain and apply the characteristics and role of the principal money market instruments:[2] i) interest-bearing instruments ii) discount instruments iii) derivative products.

C Working capital management

1. The nature, elements and importance of working capital a) Describe the nature of working capital and identify its elements.[1] b) Identify the objectives of working capital management in terms of liquidity and profitability, and discuss the conflict between them.[2] c) Discuss the central role of working capital management in financial management.[2]
2. Management of inventories, accounts receivable, accounts payable and cash a) Explain the cash operating cycle and the role of accounts payable and accounts receivable.[2] b) Explain and apply relevant accounting ratios, including:[2] i) current ratio and quick ratio ii) inventory turnover ratio, average collection period and average payable period iii) sales revenue/net working capital ratio. c) Discuss, apply and evaluate the use of relevant techniques in managing inventory, including the Economic Order Quantity model and Just-in-Time techniques.[2] d) Discuss, apply and evaluate the use of relevant techniques in managing accounts receivable, including: i) assessing creditworthiness [1] ii) managing accounts receivable [1] iii) collecting amounts owing [1] iv) offering early settlement discounts [2] v) using factoring and invoice discounting [2] vi) managing foreign accounts receivable.[2] e) Discuss and apply the use of relevant techniques in managing accounts payable, including: i) using trade credit effectively [1] ii) evaluating the benefits of early settlement and bulk purchase discounts [2] iii) managing foreign accounts payable.[1] f) Explain the various reasons for holding cash, and discuss and apply the use of relevant techniques in managing cash, including:[2] i) preparing cash flow forecasts to determine future cash flows and cash balances ii) assessing the benefits of centralised treasury management and cash control iii) cash management models, such as the Baumol model and the MillerOrr model iv) investing short-term.
3. Determining working capital needs and funding strategies a) Calculate the level of working capital investment in current assets and discuss the key factors determining this level, including:[2] i) the length of the working capital cycle and terms of trade ii) an organisation’s policy on the level of investment in current assets iii) the industry in which the organisation operates. b) Evaluate and discuss the key factors in determining working capital funding strategies, including: i) the distinction between permanent and fluctuating current assets [2] ii) the relative cost and risk of short- term and long-term finance [2] iii) the matching principle [2] iv) the relative costs and benefits of aggressive, conservative and matching funding policies [2] v) management attitudes to risk, previous funding decisions and organisation size.[1]

D Investment appraisal

1. Investment appraisal techniques

a) Identify and calculate relevant cash flows for investment projects.[2] b) Calculate payback period and discuss its usefulness as an investment appraisal method.[2] c) Calculate discounted payback and discuss its usefulness as an investment appraisal method.[2] d) Calculate return on capital employed (accounting rate of return) and discuss its usefulness as an investment appraisal method.[2] e) Calculate net present value and discuss its usefulness as an investment appraisal method.[2] f) Calculate internal rate of return and discuss its usefulness as an investment appraisal method.[2] g) Discuss the superiority of discounted cash flow (DCF) methods over non-DCF methods.[2] h) Discuss the relative merits of NPV and IRR.[2] 2. Allowing for inflation and taxation in DCF a) Apply and discuss the real-terms and nominal-terms approaches to investment appraisal.[2] b) Calculate the taxation effects of relevant cash flows, including the tax benefits of tax-allowable depreciation and the tax liabilities of taxable profit.[2] c) Calculate and apply before- and after-tax discount rates.[2] 3. Adjusting for risk and uncertainty in investment appraisal a) Describe and discuss the difference between risk and uncertainty in relation to probabilities and increasing project life.[2] b) Apply sensitivity analysis to investment projects and discuss the usefulness of sensitivity analysis in assisting investment decisions.[2] c) Apply probability analysis to investment projects and discuss the usefulness of probability analysis in assisting investment decisions.[2] d) Apply and discuss other techniques of adjusting for risk and uncertainty in investment appraisal, including: i) simulation [1] ii) adjusted payback [1] iii) risk-adjusted discount rates.[2] 4. Specific investment decisions (Lease or buy, asset replacement, capital rationing) a) Evaluate leasing and borrowing to buy using the before- and after-tax costs of debt.[2] b) Evaluate asset replacement decisions using equivalent annual cost and equivalent annual benefit.[2] c) Evaluate investment decisions under single-period capital rationing, including:[2] i) the calculation of profitability indexes for divisible investment projects ii) the calculation of the NPV of combinations of non-divisible investment projects iii) a discussion of the reasons for capital rationing.

E Business finance

2. Sources of, and raising, business finance a) Identify and discuss the range of shortterm sources of finance available to businesses, including:[2] i) overdraft ii) short-term loan iii) trade credit iv) lease finance. b) Identify and discuss the range of longterm sources of finance available to businesses, including:[2] i) equity finance ii) debt finance iii) lease finance iv) venture capital. c) Identify and discuss methods of raising equity finance, including:[2] i) rights issue ii) placing iii) public offer iv) stock exchange listing. d) Identify and discuss methods of raising short- and long-term Islamic finance, including:[1]

i) major differences between Islamic finance and the other forms of business finance. ii) the concept of riba (interest) and how returns are made by Islamic financial securities. iii) Islamic financial instruments available to businesses including: i) murabaha (trade credit) ii) ijara (lease finance) iii) mudaraba (equity v) sukuk (debt finance) v) musharaka (venture capital). (note: calculations are not required) e) Identify and discuss internal sources of finance, including:[2] i) retained earnings ii) increasing working capital management efficiency iii) the relationship between dividend policy and the financing decision iv) the theoretical approaches to, and the practical influences on, the dividend decision, including legal constraints, liquidity, shareholder expectations and alternatives to cash dividends. 2. Estimating the cost of capital a) Estimate the cost of equity including:[2] i) application of the dividend growth model, its assumptions, advantages and disadvantages. ii) explanation and discussion of systematic and unsystematic risk iii) relationship between portfolio theory and the capital asset pricing model (CAPM) iv) application of the CAPM, its assumptions, advantages and disadvantages. b) Estimating the cost of debt:[2] i) irredeemable debt ii) redeemable debt iii) convertible debt iv) preference shares v) bank debt. c) Estimating the overall cost of capital including:[2] i) distinguishing between average and marginal cost of capital ii) calculating the weighted average cost of capital (WACC) using book value and market value weightings. 3. Sources of finance and their relative costs a) Describe the relative risk-return relationship and the relative costs of equity and debt.[2] b) Describe the creditor hierarchy and its connection with the relative costs of sources of finance.[2] c) Identify and discuss the problem of high levels of gearing.[2] d) Assess the impact of sources of finance on financial position, financial risk and shareholder wealth using appropriate measures, including:[2] i) ratio analysis using statement of financial position gearing, operational and financial gearing, interest coverage ratio and other relevant ratios ii) cash flow forecasting iii) leasing or borrowing to buy. e) Impact of cost of capital on investments including:[2] i) the relationship between company value and cost of capital. ii) the circumstances under which WACC can be used in investment appraisal iii) the advantages of the CAPM over WACC in determining a project-specific cost of capital. iv) the application of the CAPM in calculating a project-specific discount rate. 4. Capital structure theories and practical considerations a) Describe the traditional view of capital structure and its assumptions.[2] b) Describe the views of Miller and Modigliani on capital structure, both without and with corporate taxation, and their assumptions.[2] c) Identify a range of capital market imperfections and describe their impact on the views of Miller and Modigliani on capital structure.[2] d) Explain the relevance of pecking order theory to the selection of sources of finance.[1] 5. Finance for small and medium sized entities (SMEs) a) Describe the financing needs of small businesses.[2] b) Describe the nature of the financing problem for small businesses in terms of the funding gap, the maturity gap and inadequate security.[2] c) Explain measures that may be taken to ease the financing problems of SMEs, including the responses of government departments and financial institutions.[1] d) Identify and evaluate the financial impact of sources of finance for SMEs, including sources already referred to in syllabus section E1 and also [2] i) Business angel financing ii) Government assistance iii) Supply chain financing iv) Crowdfunding / peer-to-peer funding.

F Business valuations

2. Nature and purpose of the valuation of business and financial assets a) Identify and discuss reasons for valuing businesses and financial assets.[2] b) Identify information requirements for valuation and discuss the limitations of different types of information.[2]
3. Models for the valuation of shares a) Discuss and apply asset-based valuation models, including:[2] i) net book value (statement of financial position) basis ii) net realisable value basis iii) net replacement cost basis. b) Discuss and apply income-based valuation models, including:[2] i) price/earnings ratio method ii) earnings yield method. c) Discuss and apply cash flow-based valuation models, including:[2] i) dividend valuation model and the dividend growth model ii) discounted cash flow basis.
4. The valuation of debt and other financial assets a) Discuss and apply appropriate valuation methods to:[2] i) irredeemable debt ii) redeemable debt iii) convertible debt iv) preference shares.
5. Efficient Market Hypothesis (EMH) and practical considerations in the valuation of shares a) Distinguish between and discuss weak form efficiency, semi-strong form efficiency and strong form efficiency.[2] b) Discuss practical considerations in the valuation of shares and businesses, including:[2] i) marketability and liquidity of shares ii) availability and sources of information iii) market imperfections and pricing anomalies iv) market capitalisation. c) Describe the significance of investor speculation and the explanations of investor decisions offered by behavioural finance.[1]

G Risk Management

2. The nature and types of risk and approaches to risk management a) Describe and discuss different types of foreign currency risk:[2] i) translation risk ii) transaction risk iii) economic risk. b) Describe and discuss different types of interest rate risk:[1] i) gap exposure ii) basis risk.
3. Causes of exchange rate differences and interest rate fluctuations a) Describe the causes of exchange rate fluctuations, including: i) balance of payments [1] ii) purchasing power parity theory [2] iii) interest rate parity theory [2] iv) four-way equivalence.[2] b) Forecast exchange rates using:[2] i) purchasing power parity ii) interest rate parity. c) Describe the causes of interest rate fluctuations, including:[2] i) structure of interest rates and yield curves ii) expectations theory iii) liquidity preference theory iv) market segmentation.
4. Hedging techniques for foreign currency risk a) Discuss and apply traditional and basic methods of foreign currency risk management, including: i) currency of invoice [1] ii) netting and matching [2] iii) leading and lagging [2] iv) forward exchange contracts [2] v) money market hedging [2] vi) asset and liability management.[1] b) Compare and evaluate traditional methods of foreign currency risk management.[2] c) Identify the main types of foreign currency derivatives used to hedge foreign currency risk and explain how they are used in hedging.[1] (No numerical questions will be set on this topic)
5. Hedging techniques for interest rate risk a) Discuss and apply traditional and basic methods of interest rate risk management, including: i) matching and smoothing [1] ii) asset and liability management [1] iii) forward rate agreements.[2] b) Identify the main types of interest rate derivatives used to hedge interest rate risk and explain how they are used in hedging.[1] (No numerical questions will be set on this topic)

AFM

A Role of the senior financial

adviser in the multinational organisation

1. The role and responsibility of senior financial executive/advisor a) Develop strategies for the achievement of the organisational goals in line with its agreed policy framework.[3] b) Recommend strategies for the management of the financial resources of the organisation such that they are utilised in an efficient, effective and transparent way.[3] c) Advise the board of directors or management of the organisation in setting the financial goals of the business and in its financial policy developmentwith particular reference to:[3] i) Investment selection and capital resource allocation ii) Minimising the cost of capital iii) Distribution and retention policy iv) Communicating financial policy and corporate goals to internal and external stakeholders v) Financial planning and control vi) The management of risk.
2. Financial strategy formulation a) Assess organisational performance using methods such as ratios and trends.[3] b) Recommend the optimum capital mix and structure within a specified business context and capital asset structure.[3] c) Recommend appropriate distribution and retention policy.[3] d) Explain the theoretical and practical rationale for the management of risk.[3] e) Assess the organisation’s exposure to business and financial risk including operational, reputational, political, economic, regulatory and fiscal risk.[3] f) Develop a framework for risk management, comparing and contrasting risk mitigation, hedging and diversification strategies.[3] g) Establish capital investment monitoring and risk management systems.[3] h) Advise on the impact of behavioural finance on financial strategies / securities prices and why they may not follow the conventional financial theories.[3]
3. Corporate environmental, social, governance (ESG) and ethical issues a) Assess an organisation’s commitment to ESG criteria when undertaking business, financial and investment decisions, and discuss and recommend how conflicts between the criteria may be resolved.[3] b) Assess the impact on the physical environment and the sustainability of natural resources arising from alternative organisational business, financial and investment decisions.[3] c) Examine how the organisation manages its stakeholder groups as part of its social responsibilities.[3] d) Assess and advise on the impact of investment and financing strategies and decisions on the organisation’s stakeholders.[3] e) Explore the areas within the ethical and governance framework of the organisation which may be undermined by agency issues and/or stakeholder conflicts and establish strategies for dealing with them.[3] f) Recommend appropriate strategies for the resolution of stakeholder conflict in specific situations and advise on alternative approaches that may be adopted.[3] g) Assess the impact of ethical and governance issues on the financial management of the organisation.[3] h) Recommend an ethical and governance framework for the development of an organisation’s financial management policies, which is grounded in the highest standards of probity and is fully aligned with the ethical principles of the Association.[3]
4. Management of international trade and finance a) Advise on the theory and practice of free trade and the management of barriers to trade.[3] b) Demonstrate an up to date understanding of the major trade agreements and common markets and, on the basis of contemporary circumstances, advise on their policies and strategic implications for a given business.[3] c) Discuss how the actions of the World Trade Organisation, the International Monetary Fund, The World Bank and Central Banks can affect a multinational organisation.[2] d) Discuss the role of international financial institutions within the context of a globalised economy, with particular attention to (the Fed, Bank of England, European Central Bank and the Bank of Japan).[2] e) Discuss the role of the international financial markets with respect to the management of global debt, the financial development of the emerging economies and the maintenance of global financial stability.[2] f) Discuss the significance to the organisation, of latest developments in the world financial markets such as the causes and impact of the recent financial crisis; growth and impact of dark pool trading systems; the removal of barriers to the free movement of capital; and the international regulations on money laundering.[2] g) Demonstrate an awareness of new developments in the macroeconomic environment, assessing their impact upon the organisation, and advising on the appropriate response to those developments both internally and externally.[2]
5. Strategic business and financial planning for multinationals a) Advise on the development of a financial planning framework for a multinational organisation taking into account:[3] i) Compliance with national regulatory requirements (for example the London Stock Exchange admission requirements) ii) The mobility of capital across borders and national limitations on remittances and transfer pricing iii) The pattern of economic and other risk exposures in the different national markets iv) Agency issues in the central coordination of overseas operations and the balancing of local financial autonomy with effective central control.
6. Dividend policy in multinationals and transfer pricing a) Determine a corporation’s dividend capacity and its policy given: [3] i) The corporation’s short- and long- term reinvestment strategy ii) The impact of capital reconstruction programmes such as share repurchase agreements and new capital issues on free cash flow to equity. iii) The availability and timing of central remittances iv) The corporate tax regime within the host jurisdiction. v) The organisational policy on the transfer pricing of goods and services across international borders. b) Advise, in the context of a specified capital investment programme, on an organisation’s current and projected dividend capacity.[3]

B Advanced investment

appraisal 7. Discounted cash flow techniques a) Evaluate the potential value added to an organisation arising from a specified capital investment project or portfolio using the net present value (NPV) model.[3] Project modelling should include explicit treatment and discussion of: i) Inflation and specific price variation ii) Taxation including tax allowable depreciation and tax exhaustion iii) Capital rationing. Multi-period capital rationing limited to discussion only iv) Probability analysis and sensitivity analysis when adjusting for risk and uncertainty in investment appraisal v) Risk adjusted discount rates vi) Project duration as a measure of risk. b) Outline the application of Monte Carlo simulation to investment appraisal.[2]

Candidates will not be expected to undertake simulations in an examination context but will be expected to demonstrate an understanding of: i) The significance of the simulation output and the assessment of the likelihood of project success ii) The measurement and interpretation of project value at risk. c) Establish the potential economic return (using internal rate of return (IRR) and modified internal rate of return) and advise on a project’s return margin. Discuss the relative merits of NPV and IRR.[3] 2. Application of option pricing theory in investment decisions a) Apply the Black-Scholes Option Pricing (BSOP) model to financial product valuation and to asset valuation:[3]

i) Determine and discuss, using published data, the five principal drivers of option value (value of the underlying, exercise price, time to expiry, volatility and the risk-free rate) ii) Discuss the underlying assumptions, structure, application and limitations of the BSOP model. b) Evaluate embedded real options within a project, classifying them into one of the real option archetypes.[3] c) Assess, calculate and advise on the value of options to delay, expand, redeploy and withdraw using the BSOP model.[3] 3. Impact of financing on investment decisions and adjusted present values a) Identify and assess the appropriateness of the range of sources of finance available to an organisation including equity, debt, hybrids, lease finance, venture capital, business angel finance, private equity, asset securitisation and sale, Islamic finance and security token offerings. Including assessment on the financial position, financial risk and the value of an organisation.[3 b) Discuss the role of, and developments in, Islamic financing as a growing source of finance for organisations; explaining the rationale for its use, and identifying its benefits and deficiencies.[2] c) Discuss the role of green finance for organisations pursuing an environmental/sustainable agenda.[2] d) Calculate the cost of capital of an organisation, including the cost of equity and cost of debt, based on the range of equity and debt sources of finance. Discuss the appropriateness of using the cost of capital to establish project and organisational value, and discuss its relationship to such value.[3] e) Calculate and evaluate project specific cost of equity and cost of capital, including their impact on the overall cost of capital of an organisation. Demonstrate detailed knowledge of business and financial risk, the capital asset pricing model and the relationship between equity and asset betas.[3] f) Assess an organisation’s debt exposure to interest rate changes using the simple Macaulay duration and modified duration methods.[3] g) Discuss the benefits and limitations of duration including the impact of convexity.[3] h) Assess the organisation’s exposure to credit risk, including:[3] i) Explain the role of, and the risk assessment models used by the principal rating agencies ii) Estimate the likely credit spread over risk free iii) Estimate the organisation’s current cost of debt capital using the appropriate term structure of interest rates and the credit spread. i) Assess the impact of financing and capital structure upon the organisation with respect to:[3] i) Modigliani and Miller propositions, before and after tax ii) Static trade-off theory iii) Pecking order propositions iv) Agency effects. j) Apply the adjusted present value technique to the appraisal of investment decisions that entail significant alterations in the financial structure of the organisation, including their fiscal and transactions cost implications.[3] k) Assess the impact of a significant capital investment project upon the reported financial position and performance of the organisation taking into account alternative financing strategies.[3]

4. Valuation and the use of free cash flows a) Apply asset based, income based and cash flow based models to value equity. Apply appropriate models, including term structure of interest rates, the yield curve and credit spreads, to value corporate debt.[3] b) Forecast an organisation’s free cash flow and its free cash flow to equity (pre and post capital reinvestment).[3] c) Advise on the value of an organisation using its free cash flow and free cash flow to equity under alternative horizon and growth assumptions.[3] d) Explain the role of option pricing models, such as the BSOP model, in the assessment of the value of equity, the value of debt and of default risk.[2]
5. International investment and financing decisions a) Assess the impact upon the value of a project of alternative exchange rate assumptions.[3] b) Forecast project or organisation free cash flows in any specified currency and determine the project’s net present value or organisation value under differing exchange rate, fiscal and transaction cost assumptions.[2] c) Evaluate the significance of exchange controls for a given investment decision and strategies for dealing with restricted remittance.[3] d) Assess and advise on the costs and benefits of alternative sources of finance available within the international equity and bond markets.[3]

C Acquisitions and mergers

4. Acquisitions and mergers versus other growth strategies a) Discuss the arguments for and against the use of acquisitions and mergers as a method of corporate expansion.[2] b) Evaluate the corporate and competitive nature of a given acquisition proposal.[3] c) Advise upon the criteria for choosing an appropriate target for acquisition.[3] d) Discuss the reasons for the frequent failure of acquisitions to enhance shareholder value as expected, including the problem of overvaluation.[3] e) Evaluate, from a given context, the potential for synergy separately classified as:[3] i) Revenue synergy ii) Cost synergy iii) Financial synergy. f) Evaluate the use of alternative methods as a way of obtaining a stock market listing; including special purpose acquisition companies (SPACs), direct listings, dutch auctions and reverse takeovers.[3]
5. Valuation for acquisitions and mergers a) Estimate the potential near-term and continuing growth levels of a corporation’s earnings using both internal and external measures.[3] b) Discuss, assess and advise on the value created from an acquisition or merger of both quoted and unquoted entities using models such as:[3] i) ’Book value-plus’ models ii) Market based models iii) Cash flow models, including free cash flows. Taking into account the changes in the risk profile and risk exposure of the acquirer and the target entities

c) Apply appropriate methods, such as: riskadjusted cost of capital, adjusted net present values and changing priceearnings multipliers resulting from the acquisition or merger, to the valuation process where appropriate.[3] d) Demonstrate an understanding of the procedure for valuing high growth startups and loss making companies.[2] 3. Regulatory framework and processes a) Demonstrate an understanding of the principal factors influencing the development of the regulatory framework for mergers and acquisitions globally and, in particular, be able to compare and contrast the shareholder versus the stakeholder models of regulation.[2] b) Identify the main regulatory issues which are likely to arise in the context of a given offer and i) assess whether the offer is likely to be in the shareholders’ best interests ii) advise the directors of a target entity on the most appropriate defence if a specific offer is to be treated as hostile.[3] 4. Financing acquisitions and mergers a) Compare the various sources of financing available for a proposed cash-based acquisition.[3] b) Evaluate the advantages and disadvantages of a financial offer for a given acquisition proposal using pure or mixed mode financing and recommend the most appropriate offer to be made.[3] c) Assess the impact of a given financial offer on the reported financial position and performance of the acquirer.[3]

D Corporate reconstruction and

re-organisation 5. Financial reconstruction a) Assess an organisational situation and determine whether a financial reconstruction is an appropriate strategy for a given business situation.[3] b) Assess the likely response of the capital market and/or individual suppliers of capital to any reconstruction scheme and the impact their response is likely to have upon the value of the organisation.[3] 6. Business re-organisation a) Recommend, with reasons, strategies for unbundling parts of a quoted company.[3] b) Evaluate the likely financial and other benefits of unbundling.[3]

c) Advise on the financial issues relating to a management buy-out and buy-in.[3]

E Treasury and advanced risk

management techniques

1. The role of the treasury function in multinationals a) Discuss the role of the treasury management function within:[3] i) The short term management of the organisation’s financial resources ii) The longer term maximisation of corporate value iii) The management of risk exposure. b) Discuss the operations of the derivatives market, including:[3] i) The relative advantages and disadvantages of exchange traded versus OTC agreements ii) Key features, such as standard contracts, tick sizes, margin requirements and margin trading iii) The source of basis risk and how it can be minimised. iv) Risks such as delta, gamma and theta, and how these can be managed.
2. The use of financial derivatives to hedge against forex risk a) Assess the impact on an organisation to exposure in translation, transaction and economic risks and how these can be managed.[3] b) Evaluate, for a given hedging requirement, which of the following is the most appropriate strategy, given the nature of the underlying position and the risk exposure:[3] i) The use of the forward exchange market and the creation of a money market hedge ii) Synthetic foreign exchange agreements (SAFEs) iii) Exchange-traded currency futures contracts iv) Currency swaps v) FOREX swaps vi) Currency options.

c) Advise on the use of bilateral and multilateral netting and matching as tools for minimising FOREX transactions costs and the management of market barriers to the free movement of capital and other remittances.[3] 3. The use of financial derivatives to hedge against interest rate risk a) Evaluate, for a given hedging requirement, which of the following is the most appropriate given the nature of the underlying position and the risk exposure:[3] i) Forward Rate Agreements (FRAs) ii) Interest rate futures iii) Interest rate swaps iv) Interest rate options (including collars).

F Professional skills

3. Communication a) Inform concisely, objectively and unambiguously, adopting a suitable style and format, using appropriate technology.[3] b) Persuade using compelling and logical arguments, demonstrating the ability to counter argue where appropriate.[3] c) Clarify and simplify complex issues to convey relevant information in a way that adopts an appropriate tone and is easily understood by and reflects the requirements of the intended audience.[3]
4. Analysis and evaluation a) Investigate relevant information from a range of sources, using appropriate analytical techniques to estimate outcomes, assist in decision-making and to identify opportunities or solutions.[3] b) Consider information, evidence and findings carefully, reflecting on their implications and how they can be used in the interests of the wider organisational goals.[3] c) Assess and apply appropriate judgement when considering organisational issues, problems or when making financial management decisions; taking into account the implications of such decisions on the organisation and those affected.[3] d) Appraise information objectively with a view to balancing the costs, risks, benefits and opportunities, before recommending appropriate solutions or decisions.[3]
5. Scepticism a) Explore the underlying reasons for a given situation, applying the attitude of an enquiring mind, beyond what is immediately apparent.[3] b) Question opinions, assertions and assumptions, by seeking justifications and obtaining sufficient evidence for either their support and acceptance or rejection.[3] c) Challenge and critically assess the information presented or decisions made, where this is clearly justified, in the wider professional, ethical, organisational, or public interest.[3]
6. Commercial acumen a) Demonstrate awareness of organisational and external factors, which will affect the financial management decisions of an organisation.[3] b) Recognise key issues in a given scenario and use judgement in proposing and recommending commercially viable solutions.[3] c) Show insight and perception in understanding financial issues and wider organisational matters, demonstrating acumen in arriving at appropriate recommendations.[3]

APM

A Strategic planning and control

1. Strategic management accounting a) Explain the role of strategic performance management in strategic planning and control.[2]

b) Discuss the role of performance measurement in checking progress towards the corporate objectives.[2]

c) Compare planning and control between the strategic and operational levels within a business entity.[2] d) Discuss the scope for potential conflict between strategic business plans and short-term localised decisions.[2]

e) Evaluate how models such as SWOT analysis, PEST, Boston Consulting Group, balanced scorecard, Porter’s generic strategies and 5 Forces may assist in the performance management process.[3]

f) Apply and evaluate the methods of benchmarking performance.[3]

g) Evaluate how risk and uncertainty play an important role in planning, decisionmaking and reporting of performance at all levels of an organisation, including the impact of the different risk appetites of stakeholders. [3] 2. Performance hierarchy a) Discuss how the purpose, structure and content of a mission statement impacts on performance measurement and management.[2]

b) Discuss how strategic objectives are cascaded down the organisation via the formulation of subsidiary performance objectives.[2]

c) Apply critical success factor analysis in developing performance metrics from business objectives.[3]

d) Identify and discuss the characteristics of operational performance.[2]

e) Discuss the relative significance of planning activities as against controlling activities at different levels in the performance hierarchy.[3]

f) Explain the performance ‘planning gap’ and evaluate alternative strategies to fill that gap.[3] 3. Performance management and control of the organisation a) Evaluate the strengths and weaknesses of alternative budgeting models and compare such techniques as fixed and flexible, rolling, activity based, zero based and incremental.[3] b) Evaluate different types of budget variances and how these relate to issues in planning and controlling organisations.[3] c) Evaluate the increased use of nontraditional profit-based performance measures in controlling organisations (e.g. beyond budgeting). [3] 4. Changes in business structure and management accounting a) Identify and discuss the particular information needs of organisations adopting a functional, divisional or network form and the implications for performance management.[2]

b) Assess the changes to management accounting systems to reflect the needs of modern service orientated businesses compared with the needs of a traditional manufacturing industry.[3] c) Assess the influence of Business Process Re-engineering on systems development and improvements in organisational performance.[3]

d) Analyse the role that performance management systems play in business integration using models such as the value chain and McKinsey’s 7S’s.[3]

e) Discuss how changing an organisation’s structure, culture and strategy will influence the adoption of new performance measurement methods and techniques.[3]

f) Assess the need for businesses to continually refine and develop their management accounting and information systems if they are to maintain or improve their performance in an increasingly competitive and global market.[3]

5. Environmental, social and governance factors a) Discuss the ways in which stakeholder groups operate and how they influence an organisation and its performance measurement and performance management systems (e.g. using Mendelow’s matrix).[3]

b) Discuss the social and ethical issues that may impact on strategy formulation and evaluate the role of the management accountant in the collection of data, measurement and reporting of social and environmental factors, such as are used to demonstrate a wider view of performance in reporting, for example, sustainability.[3]

c) Discuss, evaluate and apply environmental management accounting using for example lifecycle costing, inputoutput analysis and activity-based costing.[3]

B Performance management

information systems and developments in technology

1. Performance management information systems a) Discuss, with reference to performance management, ways in which the information requirements of a management structure are affected by the features of the structure.[2]

b) Evaluate the compatibility of management accounting objectives and the management accounting information systems.[3] c) Discuss the issue of data silos and the problems they present for the accounting function. [2] d) Discuss the integration of management accounting information within an overall information system, for example the use of enterprise resource planning systems.[2]

e) Evaluate whether the management information systems are lean and the value of the information that they provide (e.g. using the 5 Ss).[3] f) Evaluate the external and internal factors (e.g. anticipated human behaviour) which will influence the design and use of a management accounting system.[3]

2. Sources of management information a) Discuss the principal internal and external sources of management accounting information, their costs and limitations.[2]

b) Demonstrate how the information might be used in planning and controlling activities e.g. benchmarking against similar activities.[3] 3. Recording and processing systems and technologies a) Demonstrate how the type of business entity will influence the recording and processing methods.[2]

b) Discuss how IT developments may influence management accounting systems (e.g. unified corporate databases, process automation, the internet of things, RFIDs, cloud and network technology.[3]

c) Explain how information systems provide instant access to previously unavailable data that can be used for benchmarking and control purposes and help improve business performance (e.g., through the use of artificial intelligence (AI), enterprise resource planning, knowledge management and customer relationship management systems and also, data warehouses).[3]

d) Discuss the difficulties associated with recording and processing data of a qualitative nature.[2]

4. Data analytics a) Discuss the development of big data and its impact on performance measurement and management, including the risks and challenges it presents.[3] b) Discuss the impact of big data and data analytics on the role of the management accountant.[3] c) Demonstrate and evaluate different methods of data analysis (e.g. descriptive, diagnostic, predictive and prescriptive analytics). [3] d) Discuss the use of alternative methods of data analytics (e.g. text, image, video and voice analytics and sentiment analysis. [2] e) Discuss the ethical issues related to information collection and processing (e.g. the use of ‘black box’ algorithms and large-scale data collection and mining.[2]
5. Management reports a) Evaluate the output reports of an information system in the light of.[3] i) best practice in presentation; ii) the objectives of the report/organisation; iii) the needs of the readers of the report; and iv) avoiding the problem of information overload v) the use of presentation techniques such as data visualisation b) Advise on common mistakes and misconceptions in the use of numerical data used for performance measurement.[3] c) Explore the role of the management accountant in providing key performance information for integrated reporting to stakeholders.[2]

C Strategic performance

measurement 6. Strategic performance measures in the private sector a) Demonstrate why the primary objective of financial performance should be primarily concerned with the benefits to shareholders.[2]

b) Discuss the appropriateness of, and apply different measures of performance, including:[3]

i) Gross profit and operating profit ii) Return on Capital Employed (ROCE) iii) Return on Investment (ROI) iv) Earnings Per Share (EPS) v) Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) vi) Residual Income (RI) vii) Net Present value (NPV) viii)Internal rate of return and modified internal Rate of Return (IRR, MIRR) ix) Economic Value Added (EVATM) c) Discuss why indicators of liquidity and gearing need to be considered in conjunction with profitability and apply the concepts of financial and operational gearing within the context of a scenario.[3]

d) Compare and contrast short and long run financial performance and the resulting management issues.[3]

e) Assess the appropriate benchmarks to use in assessing performance.[3]

2. Divisional performance and transfer pricing issues a) Describe, compute and evaluate performance measures relevant in a divisionalised organisation structure including ROI, RI and Economic value added (EVATM). [3]

b) Discuss the need for separate measures in respect of managerial and divisional performance.[2]

c) Discuss the circumstances in which a transfer pricing policy may be needed and discuss the necessary criteria for its design.[2]

d) Demonstrate and evaluate the use of alternative bases for transfer pricing.[3]

e) Explain and demonstrate issues that require consideration when setting transfer prices in multinational companies.[2]

3. Strategic performance measures in notfor-profit organisations a) Highlight and discuss the potential for diversity in objectives depending on organisation type.[3]

b) Discuss the difficulties in measuring outputs when performance is not judged in terms of money or an easily quantifiable objective.[2]

c) Discuss the use of benchmarking in public sector performance (league tables) and its effects on operational and strategic management and client behaviour.[3]

d) Discuss how the combination of politics and the desire to measure public sector performance may result in undesirable service outcomes e.g. the use of targets.[3]

e) Assess ‘value for money’ service provision as a measure of performance in not-forprofit organisations and the public sector.[3]

4. Non-financial performance indicators a) Discuss the interaction of non-financial performance indicators with financial performance indicators.[3]

b) Identify and discuss the significance of non-financial performance indicators in relation to employees and product/service quality e.g. customer satisfaction reports, repeat business ratings, customer loyalty, access and availability.[3]

c) Discuss the difficulties in interpreting data on qualitative issues.[2]

d) Discuss the significance of brand awareness, brand loyalty and company profile and their potential impact on business performance.[3] 5. The role of quality in management information and performance measurement systems a) Discuss and evaluate the application of Japanese business practices and management accounting techniques, including:[3] Kaizen costing, Target costing, Just-in-time, and Total Quality Management. b) Assess the relationship of quality management to the performance management strategy of an organisation including the costs of quality.[3]

c) Justify the need and assess the characteristics of quality in management information systems.[3]

d) Discuss and apply Six Sigma as a quality improvement method using tools such as DMAIC for implementation.[2] 6. Performance measurement and strategic Human Resource Management issues a) Advise on the relationship of HR management to performance measurement (performance rating) and suitable remuneration methods.[3]

b) Advise on the link between achievement of the corporate strategy and the management of human resources (e.g. through the Building Block model).[2] c) Discuss and evaluate different methods of reward practices, including the potential beneficial and adverse consequences of linking reward to performance measurement.[3]

7. Other behavioural aspects of performance measurement a) Discuss the accountability issues that might arise from performance measurement systems.[3] b) Assess the statement; ‘What gets measured, gets done’ in the context of performance management and apply it in the context of a performance management scenario.[3] c) Demonstrate how management style needs to be considered when designing an effective performance measurement system (e.g. Hopwood’s management styles).[3]

D Performance evaluation

7. Alternative views of performance measurement and management a) Apply and evaluate the ‘balanced scorecard’ approach as a way in which to improve the range and linkage between performance measures.[3]

b) Apply and evaluate the ‘performance pyramid’ as a way in which to link strategy, operations and performance.[3] c) Apply and evaluate the work of Fitzgerald and Moon that considers performance measurement in business services using building blocks for dimensions, standards and rewards.[3]

d) Discuss and evaluate the application of activity-based management.[3] e) Evaluate and apply the value-based management approaches to performance management.[3] 2. Strategic performance issues in complex business structure a) Discuss the problems encountered in planning, controlling and measuring performance levels, e.g. productivity, profitability, quality and service levels, in complex business structures.[3] b) Discuss the impact on performance management of the use of business models involving strategic alliances, joint ventures and complex supply chain structures.[3]

E Professional skills

1. Communication a) Inform concisely, objectively and unambiguously, adopting a suitable style and format, using appropriate technology.[3] b) Advise using compelling and logical arguments, demonstrating the ability to counter argue where appropriate.[3] c) Clarify and simplify complex issues to convey relevant information in a way that adopts an appropriate tone and is easily understood by and reflects the requirements of the intended audience.[3]
2. Analysis and evaluation a) Investigate relevant information from a range of sources, using appropriate analytical techniques, to establish reasons and causes of issues, assist in decision-making and to identify opportunities or solutions.[3] b) Consider information, evidence and findings carefully, reflecting on their implications and how they can be used in the interests of the individual, business function, division and the wider organisational goals.[3] c) Assess and apply appropriate judgement when considering organisational plans, initiatives or issues when making decisions; taking into account the implications of such decisions on the organisation and those affected.[3] d) Appraise information objectively with a view to balancing the costs, risks, benefits and opportunities, before advising on or recommending appropriate solutions or decisions.[3]
3. Scepticism a) Explore the underlying reasons for key organisational plans, issues and decisions, applying the attitude of an enquiring mind, beyond what is immediately apparent.[3] b) Question opinions, assertions and assumptions, by seeking justifications and obtaining sufficient evidence for either their support and acceptance or rejection.[3] c) Challenge and critically assess the information presented or decisions made, where this is clearly justified, in the wider professional, ethical, organisational, or public interest.[3]
4. Commercial acumen a) Demonstrate awareness of organisational and external factors, which will affect the measurement and management of an organisation’s strategic objectives and operational activities.[3] b) Recognise key issues in determining how to address or resolve problems and use judgement in proposing and recommending commercially viable solutions.[3] c) Show insight and perception in understanding behavioural responses, process and system-related issues and wider organisational matters, demonstrating acumen in offering advice and arriving at appropriate recommendations.[3]