Before appearing for Part 1: Financial Reporting, Planning, Performance, And Control section of the CMA examination, you will need to build an in depth knowledge about the syllabus. If you are yet to register and are still considering whether or not to go for CMA, then the following information will help you to get an idea about the CMA Course Content of the first part of the exams.
CMA course content for part 1
The CMA course content for Part 1 includes subjects like external financial reporting decisions, planning budgeting and forecasting, cost management and internal controls. There are basically 5 sections for which the candidate is required to study in detail. The percentages given for each of the sections shows the emphasis that needs to be given for each section in the CMA part 1 exams:
- External financial reporting decisions – 15%
- Planning budgeting and forecasting – 30%
- Cost management – 20%
- Performance management – 20%
- Internal control – 15%
Now let us look at each section one by one.
External financial reporting decisions (15%)
This section of the CMA course content covers the basics of financial reporting that includes preparation of financial statements; valuation of liabilities and assets; operating and capital leases; revenue recognition; the impact of equity transactions; income measurement; major differences between U.S. GAAP and IFRS, etc.
To prepare for this exam, you have to familiarize yourself thoroughly with the balance sheet, income statement and cash flow statement. You must know every item that appears in these statements, and how they relate to each other. If you have studied accounting as a subject will find this section quite easy.
The candidates are tested on the following topics:
- Recognition measurement valuation and disclosure
- Financial statements
Planning budgeting and forecasting (30%)
This section is the lengthiest and largest section of the exam, and its importance is manifested by the largest weight of 30% among all other sections.
The candidates are tested on topics like:
- Budgeting concepts
- Types of budgets
- Strategic planning process
- Annual profit plans
- Top level planning and analysis
The paper covers several quantitative methods, so you can expect questions that will require you to use techniques like regression and learning curve analysis.
You might find that the concepts covered in this paper are not very difficult to understand. However, multiple choice questions related to budgeting can be very lengthy. So you should understand and read the question paper carefully before you start answering.
Performance management (20%)
As the name suggests, this section pertains to performance evaluation and management of companies. There is a major focus on standard costing and variance analysis.
The coverage of this section includes:
- Evaluation of revenue, cost and profits for measuring the performance of companies.
- Analysis of Variance using flexible budgets and standard costs
- Responsibility accounting
- Key performance indicators (KPI)
- Balanced scorecards.
Those who work in a job role related to costing or management accountancy and those who have studied the same in college or any other professional degree will find this section familiar and easier to crack.
Cost management (20%)
This is another vital section of the CMA course content, that represents about 20% of the CMA part 1 exam is cost management. This section will require you to develop a deep understanding of the cost concepts, flow and terminology. The next part that the candidate needs to be acquainted with-
- Alternative cost objectives
- Cost accumulation systems
- Cost measurement concepts
- Overhead cost allocation
- Supply chain management and business process performance
In this section, a major emphasis is given to a large number of costing techniques like process costing, job order costing and activity based costing. You should be able to solve problems related to these concepts and also answer theoretical questions on ERP, value chain analysis, lean manufacturing, ABM, continuous improvement, efficient accounting processes, etc.
Internal controls (15%)
This is the last section of the CMA Part 1 exam. It covers topics like:
- Internal control risk
- Corporate governance
- Internal control environment, procedures, and standards
- Responsibility and authority for internal auditing
- Types of audits
- Assessing the adequacy of the accounting information system controls; and
- Business continuity planning
Most of the questions that will come in this section will require you to apply your concepts of these topics. However, sometimes understanding which topic the question relates to can become difficult. So clear your concepts thoroughly, so that you do not have any problems in answering the questions.
Knowledge level required:
The candidates are expected to reach Knowledge Level C in each part of the exams.
As per ICMA, Level C requires all six skill levels, knowledge, comprehension, application, analysis, synthesis, and evaluation. This means that they will have to develop a thorough understanding of the essential concepts and also gain the ability to apply the knowledge. (You can read the complete description here).
This level is the most advanced level, and you cannot pass this by simply memorizing the concepts. So keep applying what you learn during the preparation process, develop an analytical thinking and practice answering practical problems. This will ensure that you will be able to tackle the conceptual questions in the exams confidently.
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