2019 CIMA Professional Qualification Syllabus Future of Finance... · 2019-01-31 · 4 CIMA...
Transcript of 2019 CIMA Professional Qualification Syllabus Future of Finance... · 2019-01-31 · 4 CIMA...
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2 Foreword
3 Contents
4 TheCIMAProfessionalQualification
5 TheCIMAQualificationFramework
6 TheCGMACompetencyFramework
8 StructureoftheCIMASyllabus
10 LearningoutcomesandExamblueprints
12 CIMAassessmentstrategy
12 Suggestedorderofexams
14 Thesyllabusinthecontextofthefinancefunction
15 Summaryofthe2019Syllabus
16 TheOperationalLevel
20 E1:ManagingFinanceinaDigitalWorld
32 P1:ManagementAccounting
42 F1:FinancialReporting
52 TheManagementLevel
56 E2:ManagingPerformance
64 P2:AdvancedManagementAccounting
74 F2:AdvancedFinancialReporting
86 TheStrategicLevel
90 E3:StrategicManagement
104 P3:RiskManagement
114 F3:FinancialStrategy
124 Examinformationandtimetable
Contents
Challenges Performance Mindset and competencies
Learning systems
Realisethechallengesorganisationsfacewhichthreatentheir success
Comprehendtheperformanceneededfromthefinance teamtoaddressthosechallenges
Understand the competenciesandmindsetneededtoperformattherequiredlevel
Use learning to continuallyupdatetheircompetenciesandmaintainaflexiblemindsetfornewchallenges
Increasingly,therequiredskillsoffinanceprofessionalsaremovingintothe expert,
problem-solving arenaandtheymustadoptcompetenciesinvolvedininfluencingand
changemanagement. Thefinanceprofessionalneedsa mindset thatenablesthemtoadapt
through continuous learning.
They must …
Iampleasedtointroducethe2019CIMAProfessionalQualificationSyllabus,whichfurtherstrengthensourcommitmenttotheemployabilityneedsofbothbusinessandpeople,andunderpinstheCGMAdesignation.
Inanincreasinglydigitalworld,rapidchangesintechnologyarecreatingchallengesforthebusinessmodelsoforganisations.Itisalsomakingitdifficultforbusinessleadersandemployeestocreateandpreservesustainablevalue.Againstthisdigitalbackdrop,itisimperativethatfinanceprofessionalspossessrelevanttechnicalskills,asoundunderstandingoftheirorganisation,aswellastheabilitytoinfluenceandleadpeople.Thiswillmakethemcapableofprovidingtheinsighttheirorganisationsneedtocraftandsuccessfullyexecutetheirstrategies.
The2019syllabuscontinuestobridgetheskillsgapofnewlyqualifiedfinanceprofessionalsworldwide,meetingtheemployabilityneedsofbothbusinessandpeople.Indesigningthesyllabus,wesetouttoenhancetherelevanceofthesyllabustoemployers;ensuretherigouroftherelatedexaminationsandalignthelearningexperienceofcandidatestotherealworld.
Thechangesinthesyllabusarebasedonourthree-stageresearchapproachofemployerinterviews,roundtablesandaglobalsurveytoarangeofstakeholders.Wecontactedover6,500financeprofessionals,fromover2,000organisations,inover150countries.Wehaveusedthesameresearchmethodologyastheprevioussyllabus updatebutonalargerscaleandwithwiderparticipation.Thisresearchhasallowedustocapturethelatestviews offinanceprofessionalssothatwecanincorporatetheseintothesyllabus.
Importantly,theupdatedsyllabusincludeshowthedigitalworldaffectsfinance;thiscanbeseenthroughtheintroductionofdigitalcostinganddigitalstrategy.Topicssuchascybersecurityandbusinessmodelshavealsobeenincorporated.Existingareas,suchasintegratedreporting,havebeenexpandedtoreflecttheirgrowingprominence.Ultimately,thesetopicssupportCIMA’sdesiretoproducecompetentandconfidentmanagementaccountingprofessionalswhocanguideandleadtheirorganisationstosustainablesuccess.
IstronglyrecommendtheCIMAProfessionalQualificationtoemployersandtothosewishingtopursueasuccessfulandrewardingcareerinbusiness.
NoelTagoe,Ph.D.,FCMA,CGMA ExecutiveVicePresident—MAResearchandCurricula
Foreword
“Digitalisationistransformingallindustries.Thisiswhydigitalskillsshouldbeconveyedatalllevelsandinallformsofeducation.”JoeKaeser,PresidentandCEOSiemensAG
2 CIMA Professional Qualification Syllabus
4 CIMA Professional Qualification Syllabus 5
The CIMA Professional Qualification CIMA’sobjectiveindesigningthesyllabusistoenhancetheemployabilityofstudentsandmembers.Itintendstocreatealearningsystemthatenableslearnerstoacquireskills,competenciesandmindsetsthatareinhighdemandbyemployers.Thishasneverbeenmoreimportantwiththepaceofchangeincreasingandtraditionalrolesbeingredefinedbytechnologyand digitaladvances.
TheProfessionalQualificationcomprisesthreepillarsofdomainknowledgedividedintothreelevelsofachievement.ThepillarsareEnterprise,PerformanceandFinancial.ThelevelsareOperational,ManagementandStrategic.Whencombinedwiththerequiredpracticalexperience,CIMAqualifiedmemberswillbecapableofsupportingandleadingtheirorganisationsthroughthechallengingenvironmentofconstantchange.Thesyllabus,assessmentsandpracticalexperience
requirementsensuremembersarecompetentintheessentialaccounting,financeandbusiness-relatedskills.Italsoprovidesthemwiththeskillsrequiredtoleadthefinancefunctioninadigitalage.
TocompletetheCIMAqualification,andbeabletousetheCharteredGlobalManagementAccountant® (CGMA®)designation,studentsneedto:
• Meettheentryrequirementsoftheprofessional levelqualification.
• Studyforandcompletetherelevantprofessional levelassessments,culminatingintheStrategic CaseStudyExam.
• Completethreeyearsofrelevantpracticalexperience,whichcanbegainedbefore, duringand/orafterstudies.
The CIMA Qualification FrameworkThediagrambelowshowstheCIMAQualificationFramework.ThisincludestheCertificateinBusinessAccounting; theProfessionalQualification;AssessmentofPracticalExperience;andContinuingProfessionalDevelopment(CPD) intheformoflifelonglearning.
AWARD: CIMA Advanced Diploma in Management Accounting (CIMA Adv Dip MA)
AWARD: CIMA Diploma in Management Accounting (CIMA Dip MA)
AWARD: CIMA Certificate in Business Accounting (CIMA Cert BA)
Prac
tical
exp
erie
nce
/ life
long
lear
ning
Enterprise pillar
BA1Fundamentals of Business Economics
E1Managing Finance in a Digital World
E2Managing Performance
E3Strategic Management
BA2Fundamentals of Management Accounting
P1Management Accounting
P2Advanced Management Accounting
P3Risk Management
BA3Fundamentals of Financial Accounting
F1Financial Reporting
F2Advanced Financial Reporting
F3Financial Strategy
Management Level
Strategic Level
Operational Level
Certificate Level
Performance pillar Financial pillar
Assessment of practical experience requirements (PER)
Strategic Case Study Exam
Management Case Study Exam
Operational Case Study Exam
AWARD: Membership of the Chartered Institute of Management Accountants (ACMA/FCMA) and the CGMA® designation
BA4 Fundamentals of Ethics, Corporate Governance and Business Law
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The CGMA Competency Framework TheCGMACompetencyFrameworkwasfirstintroducedwiththe2015syllabus.Itsetouttheskillsandcompetenciesthatemployersidentifiedasessentialfortheirfinancestaffacrossarangeofindustries,organisationsizesandrolelevelswithinanorganisation.Toupdateboththesyllabusandcompetencyframework,weonceagainundertookglobalresearchtobetterunderstandwhatischangingforboththefinancefunctionwithintheorganisationandthefinanceprofessional,againstthebackdropofanever-increasingdigitalworld.
Ourthree-stageresearchapproachofemployerinterviews,roundtablesandaglobalsurveytoa rangeofstakeholders,meantthatwereachedout toover6,500financeprofessionals,fromover 2,000organisations,inover150countries,to answerthefollowingquestions;
• Howwillthefuturebedifferentforyourorganisation?
• Whatarethedriversofchangeforyourorganisation?
• Whataretheimplicationsforfinance?
• Howshouldfinanceprepareforthechanges?
Thedigitalworld,inwhichorganisationsnowoperate,ischangingrapidlyandinunpredictableways.Ourresearchshowsthattechnologyisseenasthekeydriverofchangeforbothorganisationsandtheirfinancefunctions.Technologyistransformingwhatfinanceprofessionalsdo,andrevolutionisinghowthefinancefunctionisbeingdeployed.
Thecompetencyframeworkreflectsourfindingsonhowfinanceprofessionalsareexpectedtoapplyaccountingandfinanceskillswithinthecontextofthebusiness/organisationsinwhichtheyoperate.Italsoreflectsforthefirsttimehowtechnologyandadigitalmindsetwillberequiredtoaffectandinfluencetheirowndecisions,actionsandbehavioursandthoseoftheircolleagueswithinthewiderorganisation.Tobeabletodothis, fivesetsofskillshavebeenidentified—technicalaccountingandfinanceskills;businessskills;peopleskills;leadershipskillsanddigitalskills—andadigitalmindsetunderpinningthecategories.
Theknowledge,skillsandbehaviourswithineachareaoftheCGMACompetencyFrameworkknowledgeareasare:
Technical skillsFinancialaccountingandreporting;costaccountingandmanagement;businessplanning;managementreportingandanalysis;corporatefinanceandtreasurymanagement;riskmanagementandinternalcontrol;accountinginformationsystems;andtaxstrategy,planningandcompliance.
Business skillsStrategy;businessmodels;marketandregulatoryenvironment;processmanagement;business relations;businessecosystemsmanagement; projectmanagement;andmacroeconomicanalysis.
People skillsInfluence;negotiationanddecision-making,communication;andcollaborationandpartnering.
Leadership skillsTeambuilding;coachingandmentoring;drivingperformance;changemanagement;andability tomotivateandinspire.
Digital skillsInformationanddigitalliteracy;digitalcontent creation;problem-solving;datastrategyand planning;dataanalytics;anddatavisualisation.
Theseremainunderpinnedbyethics, integrity and professionalism.
Basedonthesurveyresponses,thegraphbelowshowstheactivitiesinwhichrespondentscurrentlyspendtheirtime,dependingontheirrolewithintheorganisation.Itisanticipatedthatthesewillalterastechnologyanddigitalisationcontinuetoaffecttheroleofthefinanceprofessional.
Digital skills
Technical skills
Business skills
Leadership skills
People skills
50
45
40
35
30
25
20
15
10
5
0Entrylevel
Points(0
to100
)rep
rese
nttimesp
ento
nac
tivities
ineac
hkn
owledg
earea
.
Position held within the organisation
Manager Seniormanager CFO
Technicalaccounting Business People Leadership
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Structure of the CIMA SyllabusTheCIMASyllabuscomprisesninesubjectsthatareorganisedinthreepillarsandthreelevels.
The pillarsThethreepillarsrepresentspecificareasofknowledge.
Thecontentofeachpillardevelopsasstudentsmoveupthequalification.Thethreepillarsareinterlinkedtoprovideacoherentbodyofknowledgethatwillequipsuccessfulstudentswiththecompetenciestheyrequire.
The Enterprise Pillarfocusesontheroleofthefinancefunctionandhowitinteractswiththeorganisationusingdataandtechnology.Itlooksatbusinessmodelsandthemanagementofpeopleandprojectstoachieveorganisationalgoals.Itdealswiththeformulationandtheeffectiveimplementationofstrategy.
The Performance Pillarusesthetoolsandtechniquesofmanagementaccountingandriskmanagementtoensurethatstrategyisrealisticandtomonitoritsimplementation.Itshowsstudentshowtousetheirunderstandingofcoststoconstructbudgets,makedecisionsaboutpricesandcapitalexpenditure,managecostsandmanageperformance.Digitalcostingisintroducedalongsidetraditionalcostingtechniquesandcostmanagementisexpandedtoreflectitsgrowingimportanceinanincreasinglycompetitiveenvironment
fororganisations.Itdevelopstheabilityofstudentstoprogressivelyidentify,classifyandevaluatevariousriskstoanorganisation,includingenterpriserisk,strategicriskandcyberriskandmanagetheseriskspredominantlythroughinternalcontrols.
The Financial Pillarfocusisthefinancialaccountingandreportingobligationsoftheorganisation.Thisincludesanunderstandingoftheregulatoryframeworkandexternalreportingrequirements,includingintegratedreporting.Theabilitytoconstructandevaluatecomplexfinancialstatements,includingthoserelatingtogroupaccountstoshowthefinancialpositionandperformanceofanorganisationisessential.Theprinciplesoftaxationandthetaximplicationsoffinancingdecisionsarecovered.Italsolooksatformulatingfinancialstrategy,whichislinkedtotheformulationoforganisationalstrategyintheEnterprisePillarandassessingriskinthePerformancePillar.
Thesubjectsineachlearningpillararedesignedtobesequential,fromOperationaltoStrategicLevel,encouragingtheprogressivedevelopment ofknowledge,techniquesandskills.
The levelsThesyllabusisalsodividedintothreelevelsofachievement.StudentsprogressfromtheOperationalLeveltotheManagementLevelandfinallytotheStrategicLevel.Ateachlevelstudentsstudysubjectsacrossthethreepillars.
The Operational Levelfocusesontheshorttermandtheimplementationofdecisions.Studentswillbeabletoworkwithothersintheorganisationanduseappropriatedataandtechnologytotranslatemedium-termdecisionsintoshort-termactionableplans.
The Management Levelfocusesontranslating long-termdecisionsintomedium-termplans.Candidateswillbeabletousedataandrelevanttechnologyto
manageorganisationalandindividualperformance,allocateresourcestoimplementdecisions;monitorandreportimplementationofdecisions;aswellasprepareandinterpretfinancialstatementstoshowperformance.
The Strategic Levelfocusesonlong-termstrategicdecision-making.Candidateswillbeabletosupportorganisationalleaderstocraftstrategy;evaluateandmanagerisksthatmightpreventorganisationsfromsuccessfullyimplementingstrategy;valueorganisations;andsourcefinancialresourcesrequiredtoimplement thestrategy.
E3: Strategic ManagementA.ThestrategyprocessB.Analysingthe
organisational ecosystem
C.Generatingstrategic options
D.Makingstrategic choices
E.StrategiccontrolF.Digitalstrategy
P3: Risk ManagementA.EnterpriseriskB.StrategicriskC.InternalcontrolsD.Cyberrisks
F3: Financial StrategyA.FinancialpolicydecisionsB.Sourcesoflong-term
fundsC.FinancialrisksD.Businessvaluation
E2: Managing PerformanceA.Businessmodelsand
valuecreationB.Managingpeople
performanceC.Managingprojects
P2: Advanced Management Accounting
A.Managingthecostsof creatingvalue
B.Capitalinvestment decision-making
C.Managingandcontrolling theperformanceof organisational units
D.Riskandcontrol
F2: Advanced Financial Reporting
A.FinancingcapitalprojectsB.Financialreporting
standardsC.GroupaccountsD.IntegratedreportingE.Analysingfinancial
statements
E1: Managing Finance in a Digital World
A.Roleofthefinance function
B.Technologyinadigitalworld
C.Dataandinformationin a digital world
D.Shapeandstructure ofthefinancefunction
E.Financeinteractingwiththe organisation
P1: Management AccountingA.Costaccountingfor
decisionandcontrolB.Budgetingandbudgetary
controlC.Short-termcommercial
decision-makingD.Riskanduncertaintyin
theshortterm
F1: Financial ReportingA.Regulatoryenvironment
offinancialreportingB.FinancialstatementsC.PrinciplesoftaxationD.Managingcashand
workingcapital
Enterprise Pillar
Articulateavisionin adigitalworld.
Howdowearticulatetheroleofthefinancefunctioninadigitalworld?
Howdowemanageperformancethroughpeopleandprojects?
Howdowedevelop andmanagestrategy?
Performance Pillar
Makethevisionareality
Howdoweusecostingandbudgetingforshort-termdecision-making?
Howdowemonitorandcontrolactivitytoensureperformance?
Howdoweidentify,mitigateagainstandmanageriskstotheorganisation?
Financial Pillar
Communicateandreport onthevisionthroughafinanciallens.
Howdoweprepare financialstatements?
Howdoweinterpret financialstatements andusethemtosupportstrategy?
Howdoesfinancialstrategydrivetheambitionsoftheorganisation?
Operational (Implement)
• Implementation ofdecisions.
• Translatemedium-termdecisionsintoshort-termactionableplans;thenreportonperformance.
Strategic (Decide)
• Makestrategicdecisions.
• Formulateandcreatestrategywhilstmanagingtheassociatedrisks.
Management (Monitor)
• Monitor implementation ofdecisions.
• Monitor,manageandanalyseperformance.
The CIMA Syllabus
10 CIMA Professional Qualification Syllabus 11
Learning outcomes Eachsyllabussectioncontainsoneormoreleadlearningoutcomes,relatedcomponentlearningoutcomes,topicstobecoveredandexplanatorynotesthathelpprovidethecontextforthattopicarea.
Eachleadlearningoutcomedefinestheskillorabilitythatawell-preparedstudentshouldbeabletodemonstrateattheendoftheperiodoflearning.
Theleadlearningoutcomesarepartofahierarchyoflearningobjectives.Theverbsusedatthebeginningofeachlearningoutcomerelatetoaspecificlearningobjective.
Eg,‘Analysethefeaturesofinternalcontrolsystems’.Theverb‘analyse’indicatesahigh-levellearningobject(level4).Becauselearningobjectivesarehierarchical,itisexpectedthatatthislevel,studentswillbeabletoexamineandcommunicatetherole,featuresandpurposeofinternalcontrolsinmanagingorganisationalrisks.
Thefollowingtableliststhelearningobjectivesandtheverbsthatappearinthesyllabuslearningoutcomes.
Examination blueprints Forthefirsttime,from2019examinationsonwards,CIMAwillpublishexaminationblueprintsbasedonthesyllabus.Itwillsetoutindetailwhatisexaminableineachoftheobjectivetestsandcasestudyexaminationsforagivenperiodandwillprovideinformationabouttheformat,structureandweightingsoftheassessments.Itisintendedthatblueprintswillbeupdatedandpublishedannually.
Formoreinformation,gotocimaglobal.com/examblueprints.
Levels Learning objective Verbs used Definition
EvaluationHowyouareexpected touseyourlearning toevaluate,make decisionsor recommendations
AdviseAssessEvaluateRecommendReview
Counsel,informornotifyEvaluateorestimatethenature,abilityorqualityofAppraiseorassessthevalueofProposeacourseofactionAssessandevaluateinorder,tochangeifnecessary
AnalysisHowyouare expectedtoanalyse the detail of what youhavelearned
AlignAnalyseCommunicateCompareandcontrastDevelopDiscussExamineInterpretMonitorPrioritiseProduce
ArrangeinanorderlywayExamineindetailthestructureofShareorexchangeinformationShowthesimilaritiesand/ordifferencesbetweenGrowandexpandaconceptExamineindetailbyargumentInspectthoroughlyTranslateintointelligibleorfamiliartermsObserveandchecktheprogressofPlaceinorderofpriorityorsequenceforactionCreateorbringintoexistence
ApplicationHowyouare expectedtoapply yourknowledge.
ApplyCalculateConductDemonstratePrepareReconcile
PuttopracticaluseAscertainorreckonmathematicallyOrganiseandcarryoutProvewithcertaintyorexhibitbypracticalmeansMakeorgetreadyforuseMakeorproveconsistent/compatible
ComprehensionWhatyouare expected tounderstand.
DescribeDistinguishExplainIdentifyIllustrate
CommunicatethekeyfeaturesofHighlightthedifferencesbetweenMakeclearorintelligible/statethemeaningorpurposeofRecognise,establishorselectafterconsiderationUseanexampletodescribeorexplainsomething
KnowledgeWhatyouare expectedtoknow.
ListStateDefineOutline
MakealistofExpress,fullyorclearly,thedetails/factsofGivetheexactmeaningofGiveasummaryof
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CIMA assessment strategyEachleveloftheCIMAProfessionalQualificationculminatesinacasestudyexamination,whichintegratestheknowledge,skillsandtechniquesfromacrossthethreepillarsintoonesynopticcapstoneexamination.
Thecasestudyexaminationisarolesimulation,requiringcandidatestorespondtoauthenticwork-basedactivitiespresentedduringtheexamination,drawingtogetherlearningfromeachofthethreesubjectstoprovidesolutionstotheissuesandchallengespresented.
Casestudymaterialsareprovidedinadvanceoftheexaminationtoallowcandidatestimetoimmersethemselvesinthefictionalorganisationandindustrywithinwhichthesimulationwilloccurandtoundertakeanalysisoftheorganisation’scurrentpositionpriortotheexamination.
Thecasestudyexaminationateachlevelsimulatesthejobrolelinkedtothelevelandfocusesonthecoreactivitieswhichemployersexpectcompetentindividualsinthoserolestoroutinelyperform.
Objectivetestsforeachoftheindividualsubjects ensuretheacquisitionofthebreadthofknowledge, skillsandtechniqueswhichprovidethefoundation forapproachingthecasestudyexamination.
Moredetailsofbothtypesofassessmentcan befoundintheexaminationblueprintsat cimaglobal.com/examblueprints.
AllassessmentsarecomputerisedandCIMAworksinpartnershipwithPearsonVUE,whohaveover20yearsofexperienceinofferingelectronictesting.Therearecurrentlyover5,000PearsonVUEtestcentresin 180countries.LocationsofPearsonVUEtestcentrescanbefoundviatheCIMAwebsite.
Suggested order of examinationsThecasestudyexaminationcanonlybeattempted afterallobjectivetestsforthelevelhavebeen completedsuccessfully.
Withineachlevel,studentsarefreetostudyandtakeobjectivetestsinanyordertheywish.CIMA’ssuggestedorderofstudyistobeginwiththeEnterprisePillarsubject,thenmovetothePerformancePillarsubjectandthentotheFinancialPillarsubject.Thesyllabushasbeendesignedsothat,ateachlevel,theEnterprisePillargivesthebroadcontextinwhichtheFinanceand
PerformancePillarsoperate.ThePerformance Pillarprovidesthecontextofwhatmanagementaccountantsdowithinanorganisation,andthe FinancePillarconsidersthereportingandtheimplicationsofthisactivity.Itisforthesereasons thatthisorderissuggested.
Forexample,CIMAwouldrecommendstudentsstudyingtheOperationalLeveltostartwithE1,thenmoveto P1andthentoF1beforesittingtheOperationalCaseStudyexamination.
AWARD: CIMA Advanced Diploma in Management Accounting (CIMA Adv Dip MA)
AWARD: CIMA Diploma in Management Accounting (CIMA Dip MA)
Enterprise pillar
E1Managing Finance in a Digital World
E2Managing Performance
E3Strategic Management
P1Management Accounting
P2Advanced Management Accounting
P3Risk Management
F1Financial Reporting
F2Advanced Financial Reporting
F3Financial Strategy
Management Level
Strategic Level
Operational Level
Performance pillar Financial pillar
Assessment of practical experience requirements (PER)
Strategic Case Study Exam
Management Case Study Exam
Operational Case Study Exam
AWARD: Membership of the Chartered Institute of Management Accountants (ACMA/FCMA) and the CGMA® designation
Enterprise Pillar Performance Pillar Financial Pillar
14 CIMA Professional Qualification Syllabus 15
Syllabusinthecontextofthestructure andshapeofthefinancefunction
Management Level
Operational Level
Beyond the scope of the syllabus; covered by CPD
Strategic Level and covered by Continued Professional Development (CPD)
Strategic leadership of the finance team
to achieve desired impact
Technical specialists generate insights about value creation and preservation in
their respective areas
Managing processes and applying accounting rules to assemble and extract data to
provide information and insight
Strategic partnership through interaction with internal and external stakeholders to influence and shape how the organisation creates and preserves value
Summary of 2019 Syllabus
The syllabus in context
E3: Strategic Management
A.TheStrategyprocess
B.Analysingtheorganisational ecosystem
C.Generatingstrategicoptions
D.Makingstrategicchoices
E.Strategiccontrol
F.Digitalstrategy
P3: Risk Management
A.Enterpriserisk
B.Strategicrisk
C.Internalcontrols
D.Cyberrisks
F3: Financial Strategy
A.Financialpolicydecisions
B.Sourcesoflong-termfunds
C.Financialrisks
D.Businessvaluation
E2: Managing Performance
A.Businessmodelsandvalue creation
B.Managingpeopleperformance
C.Managingprojects
P2: Advanced Management Accounting
A.Managingthecostsof creatingvalue
B.Capitalinvestment decision-making
C.Managingandcontrolling theperformanceof organisational units
D.Riskandcontrol
F2: Advanced Financial Reporting
A.Financingcapitalprojects
B.Financialreportingstandards
C.Groupaccounts
D.Integratedreporting
E.Analysingfinancial statements
E1: Managing Finance in a Digital World
A.Roleofthefinancefunction
B.Technologyinadigitalworld
C.Dataandinformationin a digital world
D.Shapeandstructureofthe financefunction
E.Financeinteractingwiththe organisation
P1: Management Accounting
A.Costaccountingfordecision andcontrol
B.Budgetingandbudgetary control
C.Short-termcommercial decision-making
D.Riskanduncertaintyin theshortterm
F1: Financial Reporting
A.Regulatoryenvironment offinancialreporting
B.Financialstatements
C.Principlesoftaxation
D.Managingcashand workingcapital
16 CIMA Professional Qualification Syllabus
The Operational Level
17
Operational Level summary Oncompletioncandidatesshouldbeableto:workwithothersintheorganisationanduseappropriatedataandtechnology:translatemedium-termdecisionsintoshort-termactionableplans;analysenewsituationsthatariseintheshorttermtosupportdecisionsthatcreatefurthervaluefortheorganisation;evaluateandmanagerisksassociatedwiththeshortterm;andreportontheperformance,positionandprospectsoforganisations.
Narrowscope
Financialbutsomequantitativenon-financialinformation
Pastandpresent
Shortterm
Implementationofdecisionsandanalysis ofshort-termdecisions
Internal orientation
Focusondetailsratherthanthebigpicture
Informationandsomeinsight
E1 Managing Finance in a Digital World
Howthefinancefunction is organised
F1 Financial Reporting
Whatthefinancefunction does and its implications
P1 Management Accounting
Whatthefinance functiondoes
18 CIMA Professional Qualification Syllabus 19
Summary of the Operational Level Syllabus
E1: Managing Finance in a Digital World
A.Roleofthefinancefunction
B.Technologyinadigitalworld
C.Dataandinformationin a digital world
D.Shapeandstructureofthe financefunction
E.Financeinteractingwith the organisation
P1: Management Accounting
A.Costaccountingfordecision andcontrol
B.Budgetingandbudgetary control
C.Short-termcommercial decision-making
D.Riskanduncertaintyin theshortterm
F1: Financial Reporting
A.Regulatoryenvironment offinancialreporting
B.Financialstatements
C.Principlesoftaxation
D.Managingcashand workingcapital
20 CIMA Professional Qualification Syllabus 2120
E1: Managing Finance in a Digital World A.Roleofthefinancefunction
B.Technologyinadigitalworld
C.Dataandinformationinadigitalworld
D.Shapeandstructureofthefinancefunction
E.Financeinteractingwiththeorganisation
The technologylandscapeand itsimpactonorganisations andthefinancefunction
Data usagebythefinancefunction
Structure and shape ofthefinance functionlinkedtotheroles
Howthefinancefunctioninteracts withtheorganisationtocreate
andpreservevalue
E1: Structure and outline
Role of finance in the organisation andtheactivitiesitperforms
tofulfilitsrole
22 CIMA Professional Qualification Syllabus 23
E1A: Role of the finance functionThissectionexaminestherolesthatfinanceplaysinorganisationsandwhy.Itdescribesindetailtheactivitiesthatfinanceprofessionalsperformtofulfiltheseroles.Consequently,itisthefoundationofthewholequalificationandanswersthequestion:whatdofinanceprofessionalsdoandwhy?Itprovideslinkswithothertopicswithinthesubject andwhatiscoveredinotherareasoftheOperationalLevel.
Lead outcome Component outcome
1.Explaintherolesofthefinancefunction inorganisations.
Explainhowthefinancefunction:
a.Enablesorganisationstocreateandpreservevalue
b.Shapeshoworganisationscreateandpreservevalue
c.Narrateshoworganisationscreateand preservevalue
2.Describetheactivitiesthatfinanceprofessionals performtofulfiltheroles.
Describehowthefinancefunction:
a.Collatesdatatoprepareinformationaboutorganisations
b.Providesinsighttousersbyanalysing information
c.Communicatesinsighttoinfluenceusers
d.Supportstheimplementationofdecisionstoachievethedesiredimpact
e.Connectsthedifferentactivitiesconnecttoeachother
Topics to be covered Explanatory notes
• Thefast-changingandunpredictablecontextsinwhichorganisationsoperate
• Enablingvaluecreationthroughplanning,forecastingandresourceallocation
• Shapingvaluecreationthroughperformancemanagementandcontrol
• Narratingthevaluecreationstorythroughcorporatereporting
• Theroleofethicsintheroleofthefinancefunction
Describetheincreasinglydisruptivecontextsinwhichorganisationsandtheirfinanceteamsoperateandhowthesecontextsshapetheroleoffinance.Takeeachroleandshowhowfinanceperformsitinatypicalorganisationalsetting.Thecoverageshouldbeintroductoryandbrief.ItismeanttosetthesceneforsubsequentsectionsanddrawalinkbetweentherolesandthetopicsthatwillbecoveredinotherareasoftheOperationalLevel.
• Howdataiscollected,cleanedandconnectedbyfinance
• Typesofanalysistoproduceinsights
• Howfinancecommunicatestoinfluence keystakeholders(audiences,frequency,format,etc.)
• Howfinanceusesresourceallocationandperformancemanagementtoenableorganisationstoachievetheirobjectives
• Potentialimpactoftechnology
Use“informationtoimpact”frameworktodescribetheprimaryactivitiesfinanceprofessionalsperform.Relateittohowdataisgenerated,transformedandused.Linkittohowtechnologycouldbeusedtoimprovetheproductivityoffinanceprofessionalsintheseareasandthethreat ofautomation.
E1: Managing Finance in a Digital World
24 CIMA Professional Qualification Syllabus 25
E1B: Technology in a digital worldThissectionfocusesonthetechnologiesthatdefineanddrivethedigitalworldinwhichfinanceoperates.Itprovidesawarenessofthetechnologiesusedinorganisationsanddeepensunderstandingoftheimpactofthetechnologiesonwhatfinancedoes.Itdrawsontheissuesraisedintheprevioussectionabouttheroleoffinanceandtheactivitiesfinanceperformstofulfiltheseroles.Giventhatthedigitalworldisunderpinnedbytechnologyandtheuseofdata,thissectionprovidesafoundationtothenextsectionondata.
Lead outcome Component outcome
1.Outlineandexplainthetechnologiesthataffect businessandfinance.
a.Outlinethekeyfeaturesofthefourthindustrial revolution.
b.Outlineandexplainthekeytechnologiesthatdefineanddrivethedigitalworld.
2.Examinehowthefinancefunctionusesdigital technologiestofulfilitsroles.
Examinehowfinanceusesthefollowingtoguidehowitperformsitsroles:
a.Digitaltechnology
b.Digitalmindsets
c.Automationandthefutureofwork
d.Ethicsoftechnologyusage
E1: Managing Finance in a Digital World
Topics to be covered Explanatory notes
• Characteristicsanddynamicsofthefourthindustrialrevolution
• Cloudcomputing
• Bigdataanalytics
• Processautomation
• Artificialintelligence
• Datavisualisation
• Blockchain
• Internet of things
• Mobile
• 3-Dprinting
Theaimistocreateawarenessofthetechnologiesthatdrivethedigitalworldandhowtheyinteractwitheachother.ThetechnologiesoutlinedbythemajoradvisoryfirmsandtheWorldEconomicForumdigitaltransformationinitiativeprovidethematerialonwhichlearningandrelatedactivitiescanbebased.
• Howfinanceusestechnologieslistedabove
• Areasoffinancesusceptibletoautomation andwhy
• Newareasforfinancetofocuson
• Digitalmindsetsforfinance
• Ethicsoftheuseoftechnology
Examinehowfinanceprofessionalsusetherelevanttechnologiestofulfiltheirroles.Explainhowthetechnologiesaffectvariousactivitiesfinanceprofessionalsperforminthe“informationtoimpact”framework.Theintentionistomovefromcreatingawareness to generating understanding of how financecanusethesetechnologiestoincreaseitsvalueandrelevancetoorganisations.
26 CIMA Professional Qualification Syllabus 27
E1C: Data and information in a digital worldThissectiondrawsoutoneofthemajorimplicationsofusingtechnologyinorganisationsandthefinancefunction—namelythecollectionandprocessingofinformationcanbedonemoreeffectivelybymachinesratherthanbypeople. Itassertsthattheroleoffinanceprofessionalsshouldbetousedatatocreateandpreservevaluefororganisations. Fivewaysofusingdataareexamined.Thekeycompetenciesrequiredtousedatainthesewaysarealsohighlighted.Theprimaryobjectiveistohelpfinanceprofessionalsunderstandwhattheycandowithdataandhowtobuildthe skillsneededtousedata.
Lead outcome Component outcome
1.Describethewaysinwhichdataisusedbythefinancefunction.
Identifythewaysinwhichthefinancefunction usesdata:
a.In a general sense
b.Specificallyineachoftheprimaryactivities offinance
2.Explainthecompetenciesrequiredto usedatatocreateandpreservevalue fororganisations.
Explainthecompetenciesthatfinanceprofessionalsneedin:
a.Datastrategyandplanning
b.Dataengineering,extractionandmining
c.Datamodelling,manipulationandanalysis
d.Dataandinsightcommunication
.
Topics to be covered Explanatory notes
Usingdatafor:
• Decision-making
• Understandingthecustomer
• Developingcustomervalueproposition
• Enhancingoperationalefficiency
• Monetising data
• Ethicsofdatausage
Buildontheprevioussectionontechnologytoexplainwhy,inthedigitalworld,financeprofessionalsmustplacemorefocusonusinginformationthanoncollectingand/orprocessinginformation.Outlineanddescribethevarioususesofinformation.LinkthemtotheprimaryactivitiesthatthefinancefunctionperformsandtothetopicstobecoveredinothermodulesoftheOperationalLevel.
• Assessmentofdataneeds
• Extraction,transformationandloading (ETL)systems
• BusinessIntelligence(BI)systems
• Bigdataanalytics
• Datavisualisation
Highlightandexplainthedatacompetenciesrequiredinthedigitalworld.Locatewherefinancehasacompetitiveadvantageandwherefinancewillneed toworkwithdatascientists.
.
E1: Managing Finance in a Digital World
28 CIMA Professional Qualification Syllabus 29
E1D: Shape and structure of the finance function
Thissectionbringstogethertheimplicationsoftheprevioussections.Itrevealshowthefinancefunctionisstructuredandshaped.Thisstructureandshapeenablesfinancetoperformitsroleintheorganisationandwithotherinternalandexternalstakeholders.Inthissense,itpreparescandidatesforthenextsection,whichlooksathowfinanceinteractswithkeyinternalstakeholdersinoperations,marketingandhumanresources.
Lead outcome Component outcome
1.Describethestructureandshapeofthefinancefunction.
Describethe:
a.Evolutionoftheshapeofthefinancefunction
b.Shapeofthefinancefunctioninthedigitalera
2.Explainwhateachlevelofthefinance functiondoes.
Explaintheactivitiesof:
a.Financeoperations
b.Specialistareasincludingfinancialreporting andfinancialplanningandanalysis(FP&A)
c.Strategicpartneringforvalue
d.Strategicleadershipofthefinanceteam
E1: Managing Finance in a Digital World
Topics to be covered Explanatory notes
• Structureofthefinancefunctionfromtherolesthatgenerateinformationtotherolesthatturninformationintoinsightandcommunicateinsighttodecision-makers
• Hierarchicalshapeoffinancefunction
• Sharedservicesandoutsourcingoffinanceoperations
• Retainedfinance
• Automationanddiamondshapeof financefunction
Introducecandidatestothestructureofthefinancefunctionandoutlinethebroadareasoffinancesuchasfinanceoperations,externalreporting,financialplanningandanalysis(FP&A),decisionsupportetc.Describetheevolvingshapeofthefinancefunctionfromthetriangletothediamondshape.Linkthedescriptiontotheimpactofdigitaltechnologyandautomationonthefinancefunction.
• Financeoperationstogenerateinformationandpreliminaryinsight
• FP&A,taxation,corporatereporting,decisionsupporttoproduceinsight
• Businesspartneringtoinfluenceorganisationtomakeappropriatedecisions
• Leadingthefinanceteamtocreatetherequiredimpactfortheorganisation
Thefocusisthediamondshapeandthefourlevelswithinthisshape.Explainwhateachleveldoes,therelationshipbetweenthelevels,andthelinkbetweenthelevelsandthebasicfinanceactivitiescoveredundertheroleoffinance.
30 CIMA Professional Qualification Syllabus 31
E1E: Finance interacting with the organisation
Thefinancefunctionisnottheonlyareaofactivityinorganisations.Financejoinswithotherstocreateandpreservevaluefortheirorganisations.Thissectionbringstogetherwhathasbeenlearnedintheprevioussectiontodescribehowfinancecaninteractwithotherpartsoftheorganisationtoachievetheobjectivesoffinance,thoseotherareasandcruciallytheobjectivesofthewholeorganisation.Theaimistoshowhowfinancecanworkcollaborativelyinaconnected(andjoined-up)organisationandnotinisolation.
Lead outcome Component outcome
1.Describehowthefinancefunctioninteracts withoperations.
Describe:
a.Mainroleofoperations
b.Areasofinterfacewithfinance
c.Keyperformanceindicators
2.Describehowthefinancefunctioninteracts withsalesandmarketing.
Describe:
a.Mainroleofsalesandmarketing
b.Areasofinterfacewithfinance
c.Keyperformanceindicators
3. Describehowthefinancefunctioninteracts withhumanresources.
Describe:
a.Mainroleofhumanresources
b.Areasofinterfacewithfinance
c.Keyperformanceindicators
4. Describehowthefinancefunctioninteracts withIT.
Describe:
a.Main role of IT
b.Areasofinterfacewithfinance
c.Keyperformanceindicators
E1: Managing Finance in a Digital World
Topics to be covered Explanatory notes
• Processmanagement
• Productandservicemanagement
• Supplychainmanagement
Describehowfinanceplaysitsrolebyinteractingwiththerestoftheorganisation.Bringtogethertheissuesraisedintheprevioussectionsandlinkthemtowhattheotherareasoftheorganisationsdo.Forexample,addresshowfinanceandmarketinginteractusingdataandcollaborativetechnologytoachieveorganisationalgoalsandtheindividualfunctionalgoalsofbothfinanceandmarketing.DescribehowtheuseofKPIsinfluencetheseinteractionsandhowtheKPIsoffinanceandtheseareascanbealignedtoensuretheyworktogethereffectively.
• Marketsegmentation
• Bigdataanalyticsinmarketing
• Channelmanagement
• Salesforecastingandmanagement
• Staffacquisition
• Staffdevelopment
• Performancemanagement
• Motivationandrewardsystems
• ITinfrastructure
• ITsystemssupport
• CostsandbenefitsofITsystems
33
P1: Management Accounting A.Costaccountingfordecisionandcontrol
B.Budgetingandbudgetarycontrol
C.Short-termcommercialdecision-making
D.Riskanduncertaintyintheshortterm
32
P1: Structure and outline
Primary topics
Costing requiredtosupportthe budgetsanddecision-making
Use understanding of risk and uncertainty in the short termtoimprovethequality ofbudgetsandshort-termdecisions.
Short-term decisions toexploit newopportunitiestocreate
orpreservevalue
Budgets to translate medium-termdecisionsinto actionableshort-termplans
34 CIMA Professional Qualification Syllabus 35
P1A: Cost accounting for decision and control
Thissectionisaboutunderstandingwhycostingisdoneandwhatitisusedfor.Itintroducescandidatestothe basicbuildingblocksofcostingandhowtoapplytheminthecostingmethodsandtechniquesorganisationsuse. Inafast-changingdigitalworldthisunderstandingiscriticalandcanenablecandidatestodeveloptheirownwaysofcalculatingcostswhenexistingmethodsarenolongerappropriate.Digitalcostingisintroducedinthissection.
Lead outcome Component outcome
1.Distinguishbetweenthedifferentrationales forcosting.
a.Definecosting
b.Distinguishbetweentherationalesforcosting
2.Applythemaincostingconceptstoorganisationsandcostobjects.
a.Explainthemaincostingconcepts
b.Applycostingconceptstodifferentorganisationsandcostobjects
3.Applycostingmethodstodeterminethecosts fordifferentpurposes.
Applythefollowing:
a.Costaccumulation,allocation,apportionmentandabsorption
b.Standardcosting
c.Varianceanalysis(withoutmixandyieldvariance)
d.Activitybasedcosting
e.Digitalcosting
Topics to be covered Explanatory notes
• Inventoryvaluation
• Profitreporting
• Costmanagementandtransformation
• Decision-making
Thisseekstoaddressthefollowingpertinentquestions:Whatarereasonsforcalculatingcosts? Whattypesofcostsareappropriateforaparticularpurposeandwhy?
• Costelements
• Costsstructure
• Costbehaviour
• Costdrivers
• Costingappliedtodifferenttypesoforganisations
• Costingappliedtodigitalcostobjects
Examinethebasicbuildingblocksofcostingandhowtheyapplytodifferenttypesoforganisationsandoperatingcontexts(e.g.,manufacturingandservicesectors).Howhasthedigitalworldaffectedthenatureofthesebuildingblocksofcosting?
• Trace,classifyandallocatecosts
• Marginalcosting
• Absorptioncosting
• Priceandratevariances
• Usageandefficiencyvariances
• Interpretationofvariances
• ProductandservicecostingusingABC
• AdvantagesofABCoverothercostingsystems
• Featuresofdigitalcosting
Investigatehowcostsaretraced,classified,accumulated,allocated,apportionedandabsorbedtoarriveatthecostsofaproduct,serviceorothercostobject.Calculatethecostsofproductsorservicesusingvariouscostingmethods.Determinewhichcostingmethodsareappropriateandwhy?
P1: Management Accounting
36 CIMA Professional Qualification Syllabus 37
P1B: Budgeting and budgetary controlTakentogether,budgetingandbudgetarycontrolisonewaythefinancefunctionenablesandshapeshoworganisationscreateandpreservevalue.Thissectionexaminesthevariousreasonsorganisationsprepareandusebudgets,how thebudgetsareprepared,thetypesandsourcesofdata,thetechnologiesusedtoimprovethequalityofbudgets, howbudgetsareimplementedandtheimpactonthepeoplewhoworkwiththeorganisation.
Lead outcome Component outcome
1.Distinguishbetweenthedifferentrationales forbudgeting.
a.Explaintheroleofbudgets.
b.Distinguishbetweenthedifferentrationales forbudgeting.
2.Preparebudgets. a.Explainforecastinganditsrelationship withbudgeting.
b.Preparemasterbudgets.
c.Conductwhat-ifanalysisinbudgeting.
d.Describethetechnologiesavailablefor improvingbudgeting.
3.Discussbudgetarycontrol. Discuss:
a.Theconceptofbudgetarycontrol
b.Humandimensionsofbudgeting
P1: Management Accounting
Topics to be covered Explanatory notes
• Planning
• Communication
• Coordination
• Motivation
• Control
Whydoorganisationspreparebudgets?Inwhatwaysarethedifferentrationalesforpreparingbudgetscompatiblewitheachother?Howdoorganisationsgetthemostoutthebudgetingprocess?
• Timeseriesandtrendanalysistoforecast salesvolumes
• Componentsofmasterbudgetsandtheirinteractionwitheachother
• Limitingfactors
• Stresstestingbudgets
• Bigdataanalyticsandbudgets
• Alternativeapproachestobudgeting
Whatistheprocessbywhichbudgetsareprepared?Whattypesofbudgetsarerequiredbyorganisations?Whatdatadotheyuseandwheredotheygetthedatafrom?Howarethosebudgetspreparedandpresented?Whattechnologiesareavailableforimprovingthequalityofthebudgets?
• Feedbackandfeedforwardcontrol
• Flexedbudgets
• Targetsettingandmotivation
• Controllableanduncontrollableoutcomes
• Dysfunctionalbehavioursinbudgeting
• Ethicalconsiderationsinbudgeting
Whatisbudgetarycontrol?Describeanddiscusshowandwhythebudgetarycontrolsystemprovidesfeedbackandfeedforwardtotheorganisation.Whatarethebehaviouralimpactsofbudgetarycontrolandhowaretheymanaged?
38 CIMA Professional Qualification Syllabus 39
P1C: Short-term commercial decision-makingOrganisationscannotforeseeeveryopportunitythatmightariseduringtheiroperations,sotheyneedmechanismsbywhichtoidentifyandtakeadvantageoftheseopportunitiesastheyarise.Theprimaryobjectiveofthissectionistoguidecandidatesinhowtodothisintheshorttermthrougheffectivedecision-making.Thefinancefunctionsupportssuchdecisions(e.g.,pricingandproductchoice)usingtechniquessuchasrelevantrevenueandcostanalysisandbreak-evenanalysis.Candidatesareintroducedtothesetechniquesandtheconceptsthatunderpinthetechniques.Theyareexpectedtobeabletoapplythetechniquestosupportshort-termdecision-making.
Lead outcome Component outcome
1.Describethemaintypesofshort-termdecisionsmadebyorganisations.
a.Describepricingandrevenuemaximising decisions.
b.Describeproductdecisions.
2.Explaintheunderlyingconceptsusedfor short-termdecision-making.
a.Explaintheobjectivesofdecision-making.
b.Explaintheunderlyingconceptsofshort-termdecision-making.
3.Applyappropriatetechniquestosupport short-termdecisions.
Applythefollowingtosupportshort-term decision-making:
a.Relevantcostanalysis
b.Break-evenanalysis
c.Productmixdecisionswithconstraints
d.Dataandtechnology
P1: Management Accounting
Topics to be covered Explanatory notes
• Marginalandfullcostrecoveryforpricingdecisions
• Differencesinpricingandrevenuemaximisationfortheshorttermandlongterm
• Productmix
Describethetypesofshort-termdecisionsorganisationsmakeandthecircumstancesthat giverisetothem.Whatdotheseshort-termdecisionsseektoachieve?Howimportantaretheytoperformanceoforganisations?Theemphasisisonbothrevenueandcosts.
• Implicationsofcommercialdecision-making intheshortterm
• Relevantrevenues
• Relevantcosts
• Differencewithprofitreporting
Whataretheobjectivesandunderlyingconceptsthatareusedtoguideshort-termdecision-makingandwhy?Distinguishbetweenthoseconceptsofrevenue,costsandinformationfromotherconcepts.
• Makeorbuydecisions
• Discontinuationdecisions
• Multi-productbreak-evenanalysis
• Useofdataandtechnologytoanalyse productmixdecisions
• Ethicalconsiderationsinshort-term decision-making
Usedata(financialandnon-financial)andtheappropriateconceptsandtechniquestosupportdecision-makingtoachieveorganisationalobjectivesofvaluecreationandpreservation.
40 CIMA Professional Qualification Syllabus 41
P1D: Risk and uncertainty in the short termBudgetsanddecisionsfocusonthefuture.Thisintroducesuncertaintiesandrisksthatneedtobeidentified,assessedandmanaged.Theaimofthissectionistohelpcandidatesidentify,assessandmanagetherisksanduncertaintiesassociatedwiththeshortterm.
Lead outcome Component outcome
1.Applybasicriskmanagementtoolsinthe shortterm.
a.Explainnatureofriskanduncertaintyin shortterm.
b.Applybasicsensitivityanalysistobudgeting andshort-termdecision-making.
P1: Management Accounting
Topics to be covered Explanatory notes
• Stresstesting
• Sensitivityandwhat-ifanalysis
• Probabilitydistributions
• Decisiontrees
Whattypesofrisksanduncertaintiesdoorganisationsfacewhenpreparingandimplementingbudgetsandwhenmakingshort-termdecisions?Howarethoserisksanduncertaintiesidentified,assessedandmanaged?
43
F1: Financial Reporting A. Regulatoryenvironmentoffinancialreporting
B. Financialstatements
C. Principlesoftaxation
D. Managingcashandworkingcapital
42
Implications
F1: Structure and outline
Regulatory issues thatprovidethebasis forpreparingfinancialstatements
Preparebasicfinancial statements forexternalstakeholders.
Usefinancialstatementstogain understanding of short-term
financing toimprovetheability oftheorganisationtocreate
andpreservevalue.
Calculatetaxation andexplainits affectsandhowitisaffectedbythe
organisation’sperformance.
44 CIMA Professional Qualification Syllabus 45
F1A: Regulatory environment of financial reporting
Thepreparationoffinancialstatementsisregulatedbylaws,standards,generallyacceptedaccountingprinciplesandbycodes.Theregulationsensurethatfinancialstatementsofdifferententitiesarecomparableandthattheypresentareasonablyaccuratepictureoftheperformance,positionandprospectsoftheorganisationtotheirusers.Thissectioncoverswhotheregulatorsare,whattheydoandwhyandhowtheregulationsareapplied.Theobjectiveistoprovidecandidateswithastrongfoundationforpreparingandinterpretingfinancialstatements.
Lead outcome Component outcome
1.Identifyregulatorsanddescribetheirrole. a.Identifythemajorregulators.
b.Describewhattheydo.
c.Explainwhytheyregulatefinancialreporting.
2.Applycorporategovernanceprinciples tofinancialreporting.
a.Describetheroleoftheboardincorporate governance.
b.Applycorporategovernanceandfinancial stewardshipprinciplestofinancialreporting.
Topics to be covered Explanatory notes
• National regulators
• IFRSfoundation
• IASB
• InternationalOrganisationforSecuritiesCommissions(IOSCO)
• Standardsettingprocess
• Differencesbetweenrules-basedand principles-basedregulations
• OtherssuchasInternationalIntegratedReportingCouncil(IIRC)
Whoaretheregulatorswhodeterminehowfinancialstatementsareprepared?Whatdotheydo?Whatvaluedotheycontributetotheproductionoffinancialstatements?Coveragewillincludenationalandinternationalregulators,stockexchangeregulatorsandvariousaccountingandfinancialreportingstandardsboardsandmajorinfluentialbodiesliketheIIRC.
• Needandscopeforcorporategovernanceregulations
• Differentapproachestocorporategovernanceregulations
Boardshaveoverallresponsibilityforensuringthatexecutivesoforganisationscreatevaluefortheirstakeholdersandsafeguardtheirassets.Theroleofboardsisincorporatedinvariouscorporategovernancecodes.Whatarethemainprinciplesastheyapplytofinancialreportingandtheoversightofboards?
F1: Financial Reporting
46 CIMA Professional Qualification Syllabus 47
F1B: Financial statementsOneoftherolesoffinanceistonarratehoworganisationscreateandpreservevalue.Thefinancialstatementsarethemeansbywhichnarrationisdonetoparticularaudiences.Thissectionenablescandidatestopreparebasicfinancialstatementsusingfinancialreportingstandards.Itcoversthemainelementsofthefinancialstatements,whatthey intendtoconvey,thekeyfinancialreportingstandardsandhowtheyareappliedtopreparefinancialstatements.
Lead outcome Component outcome
1.Identifythemainelementsoffinancial statements.
a.Identifythemainelementsoffinancial statementscontainedintheIFRSconceptualframework.
2.Explainspecificfinancialreportingstandards. Explainthespecificfinancialreportingstandardsrelatedto:
a.Non-currentassets
b.Leases
c.Impairment
d.Inventory
e.Eventsaftertheperiod
3.Applyfinancialreportingstandardstopreparebasicfinancialstatements.
Applyfinancialreportingstandardstoprepare:
a.Statementoffinancialposition
b.Statementofcomprehensiveincome
c.Statementofchangesinequity
d.Statementofcashflows
F1: Financial Reporting
Topics to be covered Explanatory notes
• Objectivesandoverallpurposeoffinancialreporting
• Qualitativecharacteristicsoffinancialinformation
• Reportingentityanditsboundaries
• Recognition(andderecognition)
• Measurementbases
• Presentationanddisclosure
• Conceptofcapitalmaintenance
Thissetsthemainprinciplesthatunderpinthepreparationoffinancialstatements.Thefocusisonthemainprinciples.Nodetailedtreatmentsareexpected.
• IAS16—Property,Plant&Equipment
• IFRS5—Non-currentAssetsHeldforSale orDiscontinuedOperations
• IFRS16—Leases
• IAS36—ImpairmentofAssets
• IAS2—Inventories
• IAS10—EventsAftertheReportingPeriod
Examinetherequirementsforhowmajoritemsofthefinancialstatementsaretoberecognised,measuredanddisclosed.Thiscoversthemainareasandnotspecialisttopics.
• IAS1—PresentationofFinancialStatements
• IAS7—StatementofCashFlows
Givehands-onexperienceofpreparingbasicfinancialstatementsbybringinginalltheelements.
48 CIMA Professional Qualification Syllabus 49
F1C: Principles of taxationOneoftheimplicationsofvaluecreationishowthatvalueisdistributedtodifferentstakeholders.Taxationispartofthisdistribution.Thissectionhelpscandidatesdistinguishbetweentypesoftaxesandtocalculatecorporatetaxes.Inadigitalworldwhererevenueisearnedthroughonlinetradingthatspansnationalboundaries,candidatesareintroducedtotheissuesrelatingtotaxationacrossinternationalbordersandtheethicsoftaxation.
Lead outcome Component outcome
1.Distinguishbetweendifferenttypesoftaxes. Distinguishbetween
a.Directversusindirect
b.Corporateversuspersonal
2.Calculatetaxforcorporates. a.Explainthebasisoftaxation
b.Explainthedifferencebetweenaccountingprofit andtaxableprofit
c.Calculatecorporatetax
3.Explainsomerelevantissuesthataffect taxation.
Explain:
a.Taxationacrossinternationalborders
b.Ethicsoftaxation
F1: Financial Reporting
Topics to be covered Explanatory notes
• Featuresofdirectandindirecttaxes
• Featuresofcorporateandpersonaltaxes
Givesabroadoverviewofthedifferenttypesoftaxes,whotheyaffectandwhytheyareused.
• Exemptincome
• Incometaxedunderdifferentrules
• Allowableexpenditure
• Capitalallowances
• Reliefs
• Taxonsaleofasset
Thefocusshiftsheretocorporatetaxation.Themainareacoveredisthedifferencebetweenaccountingprofitandprofitfortaxationpurposes.Nonationallawisappliedhere.Themainthinghereiscoverageandapplicationofprinciples.
• Corporateresidence
• Typesofoverseasoperations(e.g.,subsidiary orbranch)
• Doubletaxation
• Transferpricing
• Taxavoidance
• Taxevasion
Giventheincreaseofcross-bordertradingandrevenuegenerationinthedigitalworldwhatarethekeyissuesaffectinginternationaltaxation?Whataretheethicalissuesthatariseinthecomputationandpaymentoftaxes?
50 CIMA Professional Qualification Syllabus 51
F1D: Managing cash and working capitalCashisthelifebloodofanyorganisation.Theabilitytoprovidecash,attheappropriatecostwhenitisneededisoneofthekeycontributionsthatfinancemakestoorganisations.Itfulfilsfinance’sroleofenablingorganisationstocreateandpreservevalue.Thissectionprovidescandidateswiththetoolstoensurethattheorganisationhasenoughcashtoensureitscontinuingoperations.
Lead outcome Component outcome
1.Distinguishbetweenthetypesandsourcesofshort-termfinance.
Distinguishbetween
a.Typesofshort-termfinance
b.Financialinstitutions
2.Explainandcalculateoperatingandcashcycles. Explainandcalculate
a.Operatingcycle
b.Cashflowcycle
3.Applydifferenttechniquesusedtomanage workingcapital.
a.Applypoliciesrelatingtoelementsofoperatingand cashcycle
b.Prepareforecasts
c.Explainrisksrelatingtoworkingcapital
F1: Financial Reporting
Topics to be covered Explanatory notes
• Tradepayables
• Overdrafts
• Short-termloans
• Debtfactoring
• Tradeterms
• Tradepartners
• Banks
Whatarethemaintypesoffundsneededfortheshortterm?Wherecanthosefundsbeaccessed?Howdoesonedeterminewhichtypeorsourceoffinanceisappropriate?
• Inventorydays
• Tradereceivabledays
• Tradepayabledays
Theoperatingandcashcycleisoneofthemainmeansofputtingtogethervariouselementsofcashandnear-cashitemsinacoherentmannertoexplainthecashneedsoftheorganisation.Whataretheseelements?Howdotheyaffecttheavailabilityandadequacyofcashforshort-termoperations?
• Receivablesmanagement
• Payablesmanagement
• Inventorymanagement
• Riskofovertrading
• Short-termcashflowforecasting
• Investingshort-termcash
Whatarethepoliciesthatorganisationsshouldputinplacetomanageworkingcapital?Howistheappropriateleveldetermined,forecastedandaccessed?Whataretherisksassociatedwithaccessingsuchfunds?
53
The Management Level
52 CIMA Professional Qualification Syllabus
Management Level summary Oncompletion,candidatesshouldbeabletousedataandrelevanttechnologyto:manageorganisationalandindividualperformance; translatelong-termdecisionsintomedium-termplans;allocateresourcestoimplementdecisions;monitorandreportimplementationofdecisions;providefeedbackupanddowntheorganisation; andprepareandinterpretfinancialstatements toshowtheperformance,positionandprospects oftheirorganisations.
Widerscope
Integratedwithinlimits
Financialandquantitativenon-financial
Linkpresenttopastandfuture
Mediumterm
Monitorimplementationofdecisions
Internal (whole organisation)
Lesserdetailbutbroaderpicture
Insight
E2Managing
Performance
Mechanismsto implementdecisions andmanagepeople
performance
F2Advanced
Financial Reporting
Analysingand communicatinginsights abouttheperformance
of the organisation
P2 Advanced
Management Accounting
Makingmedium-term decisionsand
managingcostsand performance
54 CIMA Professional Qualification Syllabus
Summary of the Management Level Syllabus
E2: Managing performance
A.Businessmodelsand valuecreation
B.Managingpeopleperformance
C.Managingprojects
P2: Advanced management accounting
A.Managingthecosts ofcreatingvalue
B.Capitalinvestment decision-making
C.Managingandcontrolling theperformanceof organisational units
D.Riskandcontrol
F2: Advanced financial reporting
A.Financingcapitalprojects
B.Financialreportingstandards
C.Groupaccounts
D.Integratedreporting
E.Analysingfinancialstatements
57
E2: Managing PerformanceA. Businessmodelsandvaluecreation
B. Managingpeopleperformance
C. Managingprojects
56
E2: Structure and outline
The business model asaframework tounderstandandmanage
howtocreatevalue.
Implementingorganisationalgoals through project management
Managing people performance to implementorganisationalgoals
58 CIMA Professional Qualification Syllabus 59
E2A: Business models and value creationThedigitalworldischaracterisedbydisruptionstobusinessmodelsbynewentrantsandincumbentswhoseeksuperiorperformanceandcompetitiveadvantage.Thissectioncoversthefundamentalsofbusinessmodelsandhownewbusinessandoperatingmodelscanbedevelopedtoimprovetheperformanceoforganisations.
Lead outcome Component outcome
1.Explaintheecosystemsoforganisations. Explain:
a.Marketsandcompetition
b.Societyandregulation
2.Explaintheelementsofbusinessmodels. Explainthefollowing
a.Conceptofvalueandthebusinessmodel
b.Definingvalue
c.Creatingvalue
d.Deliveringvalue
e.Capturingandsharingvalue
3.Analysenewbusinessmodelsindigital ecosystems.
a.Analysedigitalbusinessmodelsandtheirrelated operatingmodels
E2: Managing Performance
Topics to be covered Explanatory notes
• Definitionofecosystems
• Participantsandroles
• Interactionsanddynamics
• Rulesandgovernance
• Technology
• Risksandopportunities
Whatisthenatureoftheecosystem?Whatareitscriticalelementsandhowdotheyinteractwitheachother?Howdotheyimpacttheorganisation?
• Stakeholdersandrelevantvalue
• Stakeholderanalysis
• Resources,process,activitiesandpeople increatingvalue
• Products,services,customersegments,channelsandplatformstodelivervalue
• Distributionofvaluetokeystakeholders
Thissectioncoverstheconceptofvaluefromdifferentstakeholderperspectives.Itexaminesthevariouselementsofthebusinessmodel,theirinteractionwitheachotherandtheirimplicationforcostsandrevenue.Thesectionalsocoverstheconnectivityandalignmentbetweentheecosystemandtheelementsofthebusinessmodel.
• Disruption
• Waystobuilddisruptiveandresilient businessmodels
• Creatingdigitaloperatingmodels
• Typesofdigitaloperatingmodels
Newbusinessmodelshaveevolvedtodisruptindustriesandtheirecosystems.Whatarethey? Howhavetheyredefinedtheirindustries?
60 CIMA Professional Qualification Syllabus 61
E2B: Managing people performanceHumancapitalisoneofthekeyintangibleassetsoforganisationsinanagewhereintangibleassetsarethedominantmeansbywhichorganisationscreateandpreservevalue.Leadershipisacrucialmeansformanagingindividualperformanceandtherelationshipsbetweenpeople.Thissectionexamineshowdifferentstylesofleadershipcanbeusedtoimprovetheperformanceofindividualssotheycanachieveorganisationalgoals.
Lead outcome Component outcome
1.Compareandcontrastdifferenttypesof leadershipandmanagementstyles.
Compareandcontrast:
a.Differentleadershipconcepts
b.Typesofleadership
c.Leadershipindifferentcontexts
2.Analyseindividualandteamperformance. Analysethefollowing:
a.Employeeperformanceobjectivesetting
b.Employeeappraisals
c.Coachingandmentoring
d.Managingworkplaceenvironment
3.Explainhowtomanagerelationships. Explainthefollowinginthecontextofmanagingrelationships:
a.Buildingandleadingteams
b.Communications
c.Negotiations
d.Managingconflicts
E2: Managing Performance
Topics to be covered Explanatory notes
• Power,authority,delegationandempowerment
• Contingentandsituationalleadership
• Transactionalandtransformationalleadership
• Leadershipofvirtualteams
• Leadershipandethics
Leadershipiskeytoperformancemanagement.Inadigitalworlditisanareathatisleastsusceptibletoautomation.Whatconstitutesleadership?Whatarethedifferenttypesofleadership?Howdoesonechooseastyleofleadershipthatisappropriatefortheparticularcontext?
• Targetsettingandemployeealignment
• Employeeempowermentandengagement
• Performancereportingandreview
• Rewardsandsanctionsinmanagingperformance
• Differentapproachestocoachingandmentoringtoimproveperformance
• Diversityandequitypractices
• Healthandsafety
• Organisationalculture
Individualperformanceisachievedthroughstructuredprocessesandapproaches.Theseincludeobjectivesettingandregularreviewofperformanceagainstobjectives.Howshouldtheseprocessesbedevelopedtoensureemployeeengagement,empowermentandalignment?Howshouldtheworkenvironmentbeconfiguredtoenhanceperformance?Whatistheroleoftheleaderincoachingandmentoringforhighperformance?
• Characteristicsofhigh-performingteams
• Motivatingteammembers
• Communicationprocess
• Digitaltoolsforcommunication
• Negotiationprocess
• Strategiesfornegotiation
• Sourcesandtypesofconflicts
• Strategiesformanagingconflicts
• Leadershipandethics
Individualsworkinteamsandtheirperformancecontributestotheteamperformance.Howshouldteamsbebuiltandledtoimproveperformance?Howiscollaborationenhancedusingtechnology?Howcanconflictsbemanaged?
62 CIMA Professional Qualification Syllabus 63
E2C: Managing projectsProjectshavebecomepervasivemeansbywhichorganisationsexecutetheirstrategies.Thissectionshowscandidateshowtouseprojectmanagementconceptsandtechniquestoimplementstrategieseffectivelyandefficiently.Itislinkedtocapitalinvestmentdecision-makingthatiscoveredinotherareasoftheManagementLevel.
Lead outcome Component outcome
1.Describetheconceptsandphasesofprojects. Describethefollowing:
a.Projectobjectives
b.Keystagesoftheprojectlifecycle
c.Projectcontrol
2.Applytoolsandtechniquestomanageprojects. Applythefollowingtomanageprojects:
a.Projectmanagementtoolsandtechniques
b.Projectriskmanagementtools
3.Explaintheconceptsofprojectleadership. Explain
a.Projectstructure
b.Rolesofkeyprojectpersonnel
c.Howtomanageprojectstakeholders
E2: Managing Performance
Topics to be covered Explanatory notes
• Overallprojectobjectives
• Objectivesrelatingtotime,costandquality
• Purposeandactivitiesassociatedwithkeystagesoftheprojectlifecycle
Projectsaretheprimarymeansbywhichmanyorganisationsimplementstrategicdecisions.Itisalsohoworganisationsensurecross-functionalcollaboration.Thissectioncoversthekeyelementsofprojectmanagement.Itseekstoprovidebothawarenessandunderstandingoftheprojectmanagementprocessandtheabilitytoapplytoolsandtechniquestoparticipateinprojectsandtoidentify,evaluateandmanageprojectrisks.Theobjectiveisnottotrainprojectmanagersbuttoequipfinancepeopletoworkwithinprojectsandtoleadsomepartsofprojects.
• Workstreams
• Workbreakdownschedule,Ganttcharts,networkanalysis
• PERTcharts
• Sourcesandtypesofprojectrisks
• Scenarioplanning
• Managingprojectrisks
• Projectmanagementsoftware
• Projectstructuresandtheirimpactonprojectperformance
• Roleofprojectmanager
• Roleofkeymembers ofprojectteam
• Lifecycleofprojectteams
• Managingkeystakeholdersofprojects
• Leadingandmotivatingprojectteam
64 CIMA Professional Qualification Syllabus 6564
P2: Advanced Management AccountingA. Managingthecostsofcreatingvalue
B. Capitalinvestmentdecision-making
C. Managingandcontrollingtheperformance of organisational units
D. Riskandcontrol
64
P2: Structure and outline
Managing costs usingcosting andcostdriveranalysis
Capital investment decisions toacquire thecapacitytocreatevalue
Managing and controlling the performance of organisational units
Risk and control in themediumterm
66 CIMA Professional Qualification Syllabus 67
P2A: Managing the costs of creating valueCostmanagementandtransformationareprioritiesfororganisationsfacingintensecompetition.Thissectionexamineshowtousecostmanagement,qualityandprocessmanagement,andvaluemanagementtotransformthecoststructuresanddriverstoprovideorganisationswithcostadvantage.
Lead outcome Component outcome
1.Applycostmanagementandcost transformationmethodologytomanage costsandimproveprofitability.
Applythefollowingtomanagecostsandimproveprofitability:
a.Activitybasedmanagement(ABM)methodology
b.Costtransformationtechniques
2.Compareandcontrastqualitymanagementmethodologies.
Compareandcontrast:
a.Just-in-time(JIT)
b.Qualitymanagement
c.Kaizen
d.Processre-engineering
3.Applyvaluemanagementtechniquestomanagecostsandimprovevaluecreation.
Applythefollowingtomanagecostsandvaluecreation:
a.Targetcosting
b.Valuechainanalysis
c.Lifecyclecosting
Topics to be covered Explanatory notes
• Engenderingacost-consciousculture
• LogicofABCasthefoundationormanagingcosts
• ABMtotransformefficiencyofrepetitiveoverheadactivities
• ABMtoanalyseandimprovecustomerprofitability
• ABMtoanalyseandimprovechannelperformance
Oneofthereasonsforcalculatingcostsistoenableorganisationstomanageandpossiblytransformtheircosts.ABMisakeytechniquethatisusedtoachievethisobjectivebecauseofitslinktoABC.ThisrevolvesaroundthelogicofABCthatlinkscoststoresourceconsumptionandlevelsofactivityandisrelatedtothebusinessmodelframework.Customerandchannelanalysishavebecomeveryimportantinthedigitalworld—particularlyascustomersshiftfromproductsandservicestoexperience.Howprofitablearethesegmentsandchannelstheyuse?
• ImpactofJITandqualitymanagementonefficiency,inventoryandcosts
• BenefitsofJITandTQM
• Kaizen,continuousimprovementandcost ofqualityreporting
• Eliminationofnon-valueaddingactivitiesandthereductionofcostsusingprocessre-engineering
Qualitymanagementisanimportantpartofmanagingandtransformingcosts.Whatarethekeymethodologies?Howdotheyaffectthecostsofproducts,servicesandthechannelsthatareusedtodeliverthem?
• Determinationoftargetcostsfromtargetprices
• Componentsofthevaluechain
• Profitabilityalongthevaluechain
• Lifecyclecostinganditsimplicationfor marketstrategies
Costtransformationmustalwaysbelinkedtothevaluethatorganisationscreate.Thispartprovidesthelinkbetweencostsandvalue.
P2: Advanced Management Accounting
68 CIMA Professional Qualification Syllabus 69
P2B: Capital investment decision-makingOrganisationshavetoallocateresourcesandkeystrategicinitiativestoensurethattheirstrategiesareproperlyimplemented.Capitalinvestmentdecision-makingistheprimarymeansbywhichsuchresourcesareallocated betweencompetingneeds.Thissectioncoversthecriteria,processandtechniquesthatareusedtodecidewhichprojectstoundertake.Ofparticularinterestisthefinancialappraisalofdigitaltransformationprojects.
Lead outcome Component outcome
1.Applythedatarequiredfordecision-making. Applythefollowingfordecision-making:
a.Relevantcashflows
b.Non-financialinformation
2.Explainthestepsandpertinentissues inthedecision-makingprocess.
Explain:
a.Investmentdecision-makingprocess
b.Discounting
c.Capitalinvestmentsasrealoptions
3.Applyinvestmentappraisaltechniques toevaluatedifferentprojects.
Applythefollowingtoevaluateprojects:
a.Payback
b.Accountingrateofreturn
c.IRR
d.NPV
4.Discusspricingstrategies. Discuss:
a.Pricingdecisions
b.Pricingstrategies
P2: Advanced Management Accounting
Topics to be covered Explanatory notes
• Incrementalcashflows
• Tax,inflationandotherfactors
• Perpetuities
• Qualitativeissues
• Sourcesandintegrityofdata
• Roleofbusinessintelligencesystems
Thequalityofdecisionsdependsonthequalityandtypeofdatathatisavailabletodecision-makers.Whattypeofdatadodecision-makersneedformedium-termdecisions?Wheredotheygetthisdata?Inadigitalworldthiswouldcomefromdatalakesthroughtodatawarehousesandbusinessintelligencesystems.
• Originationofproposals,creationofcapitalbudgets,go/nogodecisions
• Timevalueofmoney
• Comparingannuities
• Profitabilityindexforcapitalrationing
• Decisiontomakefollow-oninvestment, abandonorwait(capexasrealoptions)
Whatarethestepsintheinvestmentdecision-makingprocessforsimpleaswellascomplexdecisions?Whatkeyconceptsunderpinthetechniquesthatareused?Whatarethecriteriaforacceptingprojects?Howisuncertaintydealtwith?
• Processandcalculation
• Strengthsandweaknesses
• Appropriateusage
• Useinprioritisationofmutuallyexclusiveprojects
Thispartcoversastraightforwardapplicationofthetechniquesusedtoappraiseprojects.Theseshouldbeextendedtodealwiththeevaluationofdigitaltransformationprojectsthatdonothavethesameprofileasothercapitalprojects.
• Pricingdecisionsformaximisingprofitinimperfectmarkets
• Typesofpricingstrategies
• Financialconsequencesofpricingstrategies
Whatpricingstrategiesareopentoorganisationsoperatinginimperfectmarkets?Howdotheseaffectthecapitalinvestmentdecisionprocess?
70 CIMA Professional Qualification Syllabus 71
P2C: Managing and controlling the performance of organisational units
Thestructureandstrategiesoforganisationsshouldalignwitheachothertoensureeffectivestrategyimplementation.Responsibilitycentresaretheorganisationalunitsthatareallocatedresourcesandchargedwithimplementingorganisationalstrategy.Thissectionshowshowtomanagetheperformanceoftheseorganisationalunitstoensure thattheyachievethestrategicandotherorganisationalobjectives.Keyconcepts,techniquesandissuesareexploredandexamined.
Lead outcome Component outcome
1.Analysetheperformanceofresponsibilitycentresandpreparereports.
a.Analyseperformanceofcostcentres,revenuecentres,profitcentres,andinvestmentcentres.
b.Preparereportsfordecision-making.
2.Discussvariousapproachestotheperformance andcontroloforganisations.
a.Discussbudgetsandperformanceevaluation.
b.Discussotherapproachestoperformance evaluation.
3.Explainthebehaviouralandtransfer pricingissuesrelatedtothemanagement ofresponsibilitycentres.
Explain:
a.Behaviouralissues
b.Useandethicsoftransferpricing
P2: Advanced Management Accounting
Topics to be covered Explanatory notes
• Objectivesofeachresponsibilitycentre
• Controllableanduncontrollablecostsandrevenue
• Costsvariability,attributablecostsandrevenueandidentificationofappropriatemeasures ofperformance
• Useofdataanalyticsinperformancemanagementofresponsibilitycentres
Whatareresponsibilitycentresandhowshouldtheybematchedtothestrategyoforganisations?WhataretheKPIsofeachtypeofresponsibilitycentre?Howistheirperformanceevaluatedandwhy?Whattypesofreportsarepreparedforresponsibilitycentremanagers?Howdotheyuseanalytics,visualisationandself-servicetechnologiestoenhancetheperformancemanagementofresponsibilitycentres?
• Keyperformanceindicators(e.g.,profitability,liquidity,assetturnover,returnoninvestment andeconomicvalue)
• Benchmarking(internalandexternal)
• Non-financialperformanceindicators
• Balancedscorecard
Howarebudgetsusedtoevaluatetheperformanceofresponsibilitycentres?Whatisbestpracticeinthisarea?Howareothermethodologieslikethebalancedscorecardusefulinmanagingperformance?
• Internalcompetition
• Internal trading
• Transferpricingforintermediategoodswheremarketsexistandwherenomarketsexist
• Typesoftransferpricesandwhentousethem
• Effectoftransferpricingonautonomy,andmotivationofmanagersofresponsibilitycentre
• Effectoftransferpricingonresponsibilitycentreandgroupprofitability
Whatarethebehaviouralissuesinresponsibilitycentreperformancemanagement—inparticularastheyaffectcontrollableandnon-controllablecostsandrevenue?Howshouldtheybemanagedsothatresponsibilitycentresworkeffectivelywitheachothertomaximiseperformanceofthewholeorganisationratherthaneachresponsibilitycentre?Whatrolecantransferpricingplayinthisarea?
72 CIMA Professional Qualification Syllabus 73
P2D: Risk and controlRiskisinherentintheoperationsofallorganisations.Thissectionanalysesrisksanduncertaintiesthatorganisationsfaceinthemediumterm.Therisksaremainlyoperationalinnature.
Lead outcome Component outcome
1.Analyseriskanduncertaintyassociatedwith medium-termdecision-making.
Conduct
a.Sensitivityanalysis
b.Analysisofrisk
2.Analysetypesofriskinthemediumterm. a.Analysetypesofrisk
b.Managerisk
P2: Advanced Management Accounting
Topics to be covered Explanatory notes
• Quantificationofrisk
• Useofprobabilisticmodelstointerpret distributionofprojectoutcomes
• Stress-testingofprojects
• Decisiontrees
• Decision-makingunderuncertainty
Whatrisksdoorganisationsfaceinrelationtocapitalinvestmentdecision-makingandtheimplementationofthosedecisions?Howarethoserisksincorporatedinthedecision-makingprocessandmanagedintheimplementationof thedecisions?
• Upsideanddownsiderisks
• TARAframework—transfer,avoid,reduce,accept
• Businessrisks
• Useofinformationsystemsanddatain managingrisks
7574
F2: Structure and outline
Financial reporting standards forpreparinggroupaccounts
Preparegroup accounts forstakeholders.
Integrated reporting in a multi-stakeholderworld
Financing capital projects
Analyse financial statements toprovideinsights.
F2: Advanced Financial ReportingA. Financingcapitalprojects
B. Financialreportingstandards
C. Groupaccounts
D. Integratedreporting
E. Analysingfinancialstatements
76 CIMA Professional Qualification Syllabus 77
F2A: Financing capital projectsForselectedstrategic(capitalinvestment)projectstobeimplemented,fundsmustbesourcedattherightcostandattherighttime.Thisisakeyroleofthefinancefunctionandshowshowitenablestheorganisationtocreatevalue.Thissectionlooksatthesourcesandtypesoffundsandhowmuchtheycost.
Lead outcome Component outcome
1.Compareandcontrasttypesandsourcesof long-termfunds.
Compareandcontrast:
a.Long-termdebt
b.Equityfinance
c.Marketsforlong-termfunds
2.Calculatecostoflong-termfunds. Calculate:
a.Costofequity
b.Costofdebt
c.Weightedaveragecostofcapital
F2: Advanced Financial Reporting
Topics to be covered Explanatory notes
• Characteristicsofdifferenttypesofsharesandlong-termdebts
• Ordinaryandpreferenceshares
• Bondsandothertypesoflong-termdebt
• Operationsofstockandbondmarkets
• Issuanceofsharesandbonds
• Roleofadvisors
Whatarethetypesoffundsthatcanbeusedtofinancemediumtolong-termprojects?Whataretheiruniqueandsharedprofilesandunderwhatconditionsaretheysuitablefororganisationsseekinglong-termfunds?Whatistheimpactofthesefundsontheriskprofileoforganisations?Wherecanthesefundsbesourced?Whatarethecriteriathatorganisationsmustfulfiltoaccessfundsfromthesesources?
• Costofequityusingdividendvaluationmodel (withorwithoutgrowthindividends)
• Post-taxcostofbankborrowing
• Yieldtomaturityofbondsandpost-taxcost ofbonds
• Post-taxcostsofconvertiblebondsuptoandincludingconversion
Whatisthecostofeachtypeoffunds?Whatisthecostofthetotalfundsusedbytheorganisationtofunditsprojects?Howcantheorganisationminimisethecostoffundswhilstensuringtheavailabilityofadequatefundsattherighttimeandatthesametimemaintaininganappropriateriskprofile?
78 CIMA Professional Qualification Syllabus 79
F2B: Financial reporting standardsThefinancefunctionisresponsiblefornarratinghoworganisationscreateandpreservevalue.Differenttypesofnarrativesareusedfordifferentaudiences.Financialreportingisusedforexternalstakeholders.Thissectionexaminesthebuildingblocksforconstructingthenarrativesinthefinancialstatements.Itcoversthekeyfinancialreportingstandardsonwhichthefinancialstatementswillbebased.
Lead outcome Component outcome
1.Explainrelevantfinancialreportingstandardsforrevenue,leases,financialinstruments,intangibleassetsandprovisions.
Explainthefinancialreportingstandardsfor:
a.Revenue
b.Leases
c.Provisions
d.Financialinstruments
e.Intangibleassets
f.Incometaxes
g.Effectofchangesinforeigncurrencyrates
2.Explainrelevantfinancialreportingstandardsforgroupaccounts.
a.Explainthefinancialreportingstandardsforthekeyareasofgroupaccounts
F2: Advanced Financial Reporting
Topics to be covered Explanatory notes
• IFRS15—RevenuefromContractswithCustomers
• IFRS16—Leases
• IAS37—Provisions,ContingentLiabilities and Contingent Assets
• IFRS9—FinancialInstruments
• IAS32—FinancialInstruments:Presentation
• IAS38—IntangibleAssets
• IAS12—IncomeTaxes
• IAS21—EffectofChangesinonForeign ExchangeRates
Howshouldimportantelementsofthefinancialstatementbetreatedinthebooks?Whatprinciplesshouldunderpinthese?Howdofinancialreportingstandardshelptoensurethis?Usingfinancialreportingstandardsterminologythispartwillbelookingatissuesinrecognitionandmeasurement.Themostimportantissueswillbeconsideredhere.
• IAS1—PresentationofFinancialStatements
• IAS27—SeparateFinancialStatements
• IAS28—InvestmentinAssociatesandJointVentures
• IFRS3—BusinessCombinations
• IFRS5—Non-currentAssetsHeldforSaleorDiscontinuedOperations
• IFRS10—ConsolidatedFinancialStatements
• IFRS11—JointArrangements
Whatarethekeyprinciplesthatshouldgovernthepreparationofgroupaccounts?Howaretheyreflectedinfinancialreportingstandards?Theapproachshouldfocusontheaspectsofgroupaccountsthatareessentialfordiscussionswiththerestofthebusiness.Therefore,theemphasisshouldbeonawarenesscreationandbasicunderstandingofthetechnicalelements.
80 CIMA Professional Qualification Syllabus 81
F2C: Group accountsOrganisationssometimesacquireormergewithotherorganisationstoimprovetheirstrategicperformance,positionandprospects.Theperformanceandpositionofcombinedoperationsarereportedthroughgroupaccounts.Thissectioncoverstheapplicationoftherelevantfinancialreportingstandardstopreparegroupaccounts.Thetopicscoveredarethosethatareessentialtoconductingconversationswithdifferentpartsofthebusinessabouttheperformanceofthegroupanditscomponentparts.
Lead outcome Component outcome
1.PreparegroupaccountsbasedonIFRS. Preparethefollowingbasedonfinancialreportingstandards:
a.Consolidatedstatementoffinancialposition
b.Consolidatedstatementofcomprehensiveincome
c.Consolidatedstatementofchangesinequity
d.Consolidatedstatementofcashflows
2.Discussadditionaldisclosureissuesrelatedtothegroupaccounts.
Discussdisclosurerequirementsrelatedto:
a.Transactionbetweenrelatedparties
b.Earningspershare
F2: Advanced Financial Reporting
Topics to be covered Explanatory notes
• IAS1—PresentationofFinancialStatements
• IAS27—SeparateFinancialStatements
• IAS28—InvestmentinAssociatesandJointVentures
• IFRS3—BusinessCombinations
• IFRS5—Non-currentAssetsHeldforSaleorDiscontinuedOperations
• IFRS10—ConsolidatedFinancialStatements
• IFRS11—JointArrangements
Thisisaboutthepreparationofbasicgroupaccountsapplyingthefinancialreportingstandardslearnedintheprevioussection.Basicunderstandingofthetechnicalissuesisrequired.Thus,itshouldcovertherulesofconsolidation,goodwill,foreignsubsidiaries,minorityinterestsandassociatedcompanies.Theseshouldbeplacedinthecontextoftheorganisation’sstrategyasexecutedthroughmergersandacquisitionsandthesettingupofsubsidiaries.Inaddition,itcanbelinkedtotheperformancemanagementofresponsibilitycentres.
• IAS24—RelatedPartyDisclosures
• IAS33—EarningsPerShare
Whatotherissuesshouldbedisclosedoutsidethefinancialstatements?Why?Again,thefocusisonbuildingawarenessandbasicunderstandingofthetechnicalissuesinordertoequipfinanceprofessionalstoconductmeaningfuldiscussionswiththerestoftheorganisationabouttheperformance,positionandpotentialoftheorganisation.
82 CIMA Professional Qualification Syllabus 83
F2D: Integrated reportingInamulti-stakeholderworld,therehasbeenacallforbroaderformsofreportingtocoverwideraudiencesandissuesofconcerntothem.TheInternationalIntegratedReportingFrameworkdevelopedbytheInternationalIntegratedReportingCouncil(IIRC)isoneofthemostinfluentialframeworksthatseekstofulfilthisrole.ThissectionintroducescandidatestotheFrameworkanditscomponents.
Lead outcome Component outcome
1.DiscusstheInternational<IR>Framework activities.
a.DescribetheroleoftheInternationalIntegratedReportingCouncil.
b.Explainintegratedthinking.
c.DiscusstheInternational<IR>Framework.
2.ExplaintheSixCapitalsofIntegratedReporting. Explainthemeasurementanddisclosureissuesof:
a.Financialcapital
b.Manufacturedcapital
c.Intellectualcapital
d.Humancapital
e.Socialandrelationalcapital
f.Naturalcapital
F2: Advanced Financial Reporting
Topics to be covered Explanatory notes
• Contextofintegratedreporting
• InternationalIntegratedReportingCouncil
• Integratedthinking
• International<IR>Framework
• BenefitsandlimitationsoftheFramework
ThissectionlooksattheInternational<IR>Frameworkasameansofaddressingtheneedforwiderformsofreportinginamulti-stakeholderworld.ItintroducestheroleoftheIIRCandusestheconceptofintegratedthinkingasthefoundationalconceptoftheInternational<IR>Framework.ItalsodiscussestheFramework,itsbenefitsandlimitations.
• Definitionofthesixcapitals
• Measurementanddisclosureissuesrelating tothesixcapitals
ThesixcapitalsareakeypartoftheInternational<IR>Framework.Thissectiondefinesthesixcapitalsandexplainsthemeasurementanddisclosureissuesrelatingtothem.
84 CIMA Professional Qualification Syllabus 85
F2E: Analysing financial statementsTheanalysesoffinancialstatementsenableorganisationstoexplaintheirperformanceandtocomparetheirperformanceandprospectsovertimeandagainstothers.Itcanshowhowvulnerabletheyandtheirbusinessmodelsaretodisruption.Thissectionshowshowtheseanalysesareconductedandtheirlimitations.
Lead outcome Component outcome
1.Analysefinancialstatementsoforganisations. Analysefinancialstatementstoprovideinsighton:
a.Performance
b.Position
c.Adaptability
d.Prospects
2.Recommendactionsbasedoninsightsfrom theinterpretationoffinancialstatements.
a.Recommendactions
3.Discussthelimitationsofthetoolsusedfor interpretingfinancialstatements.
Discuss:
a.Datalimitations
b.Limitationsofratioanalysis
Topics to be covered Explanatory notes
• Ratioanalysis
• Interpretationofratios
• ReportingofratiosalongthedimensionsoftheGartnerDataAnalyticsmaturitymodel—descriptive,diagnostic,predictiveandprescriptive
• Linktoorganisation’sbusinessmodel
Thefinancialstatementsnarratehoworganisationscreateandpreservevalueusingfinancialnumbers.Analysesoffinancialstatementsallowsfinanceprofessionalstogobeyondthenumbersandputthenarrativeintoeverydaybusinesslanguagetofacilitatediscussionsandcollaborationwiththerestoftheorganisation.TheanalysiscouldbebasedontheGartnerDataAnalyticsmodelwhichpresentsinformationasdescriptive,diagnostic,predictiveandprescriptive.Thus,itwillcoverhindsight,insightandforesightintotheorganisation’sperformance,position,resilience(oradaptability)andprospects.Theanalysescanbelinkedtotheorganisation’sbusinessmodel.
• Linkagesbetweendifferentareasofperformance
• Predictiveandprescriptiveratios
• Impactofrecommendationsonwiderorganisationalecosystem
Drawlogicalconclusionsfromtheanalysis.Thefocusismainlypredictiveandprescriptiveareasofdataanalytics.Therecommendationsshouldalsobeorganisationwideandmustencompasstheecosystem.AlinkwiththebusinessmodelframeworkinE2isessential.
• Qualityandtypeofdataused
• Comparability—bothinsegmentandinternationally
Whatarethelimitationsofthedataandtechniques usedintheanalysesoffinancialstatements?Howdotheyaffecttherecommendations?Howcouldthey beovercome?
F2: Advanced Financial Reporting
8786 CIMA Professional Qualification Syllabus
The Strategic Level
Strategic Level summary Oncompletioncandidatesshouldbeableto:supportorganisationalleaderstocraftstrategy;evaluateandmanagerisksthatmightpreventorganisationsfromsuccessfullyimplementingstrategy;valueorganisations;andsourcefinancialresourcesrequiredtoimplementofstrategy.
Widescope
Fullyintegrated
Financialandbothquantitative andqualitativenon-financial
Futureandsomepresent
Long-termdecision-making
Externalcombinedwithinternal (whole organisation)
Aggregate (fewer details)
Influence
E3 Strategic
Management
Formulatestrategy andcreateconditions
forsuccessful implementation.
F3 Financial Strategy
Createfinancialstrategy, evaluateandmanage
financialriskandassess organisationalvalue.
P3 Risk Management
Analyse,evaluateand managestrategic, operationaland cyberrisks.
88 CIMA Professional Qualification Syllabus
Summary of the Strategic Level Syllabus
E3: Strategic Management
A.TheStrategyprocess
B.Analysingtheorganisational ecosystem
C.Generatingstrategicoptions
D.Makingstrategicchoices
E.Strategiccontrol
F.Digitalstrategy
P3: Risk Management
A.Enterpriserisk
B.Strategicrisk
C.Internalcontrols
D.Cyberrisks
F3: Financial Strategy
A.Financialpolicydecisions
B.Sourcesoflong-termfunds
C.Financialrisks
D.Businessvaluation
91
E3: Strategic Management A. Thestrategyprocess
B. Analysingtheorganisationalecosystem
C. Generatingstrategicoptions
D. Makingstrategicchoices
E. Strategiccontrol
F. Digitalstrategy
90
E3: Structure and Outline
Thestrategyprocess
Create a digital strategy thatenablesthedigitaltransformationofthe
organisation.
Analyseorganisational ecosystem to diagnose
theopportunities andchallengesto
createvalue.
Makestrategic choices andintegratetheminto acoherentstrategy.
Deploystrategic control systemstocreateandcommunicateaction plansandallocate
resourcesto implementstrategy.
Searchfor,develop andevaluatestrategic
options.
92CIMA Professional Qualification Syllabus 93
E3A: The strategy processStrategyisattheheartofwhatorganisationsdo.Thissectionprovidesthefoundationofstrategicmanagementfortheorganisation.Itintroducesthestrategyprocessthatiselaboratedonintherestofthesubject.
Lead outcome Component outcome
1.Explainthepurposeofstrategy. a.Definestrategy.
b.Explainthepurposeofstrategy.
2.Discussthetypesandlevelsstrategy. Discuss
a.Typesofstrategy
b.Levelsofstrategy
3.Outlinethestrategyprocess. a.Outlinetherationalandemergentprocessesof arrivingatstrategy.
Topics to be covered Explanatory notes
• Differentdefinitionsofstrategy
• Essentialfeaturesandcharacteristicsofstrategy
ThissectionintroducestherestofE3.Itprovidesthevariousdefinitionsofstrategyandoutlinesitsessentialfeaturesandcharacteristics.Itdiscussesthedifferenttypesandlevelsofstrategyandtheleaderswhohaveresponsibilityforthem.Finally,itlooksatthestrategyprocessfromboththerationalandemergentperspectives.
• Intendedandemergentstrategy
• Corporate,businessandfunctionalstrategies
• Analysisoforganisationalecosystem
• Generatingoptions
• Strategicchoice
• Strategiccontrol
E3: Strategic Management
94CIMA Professional Qualification Syllabus 95
E3B: Analysing the organisational ecosystemEveryorganisationinhabitsanecosystemwithinwhichitadaptsandevolves.Thisecosystemcomprisesmarketsandsociety,hasitsplayersanditsownsystemofgovernance.Organisationscanalsojoinwithotherstoformasmallerecosystemwithinthebroaderonetoreflecttheirstrategicpreferences.Thissectionprovidescandidateswithanunderstandingofthedynamicsoftheecosystem(boththewiderandthesmallermoredeliberateonesformedbyorganisations)andhowitaffectsthestrategyoftheorganisation.
Lead outcome Component outcome
1.Analysetheelementsoftheecosystem. Analyse
a.Marketsandcompetition
b.Societyandregulation
2.Discussdriversofchangeintheecosystem. Discussthefollowingdriversofchange:
a.Institutionalandsystemic
b.Social
c.Market
d.Technology
e.Sustainability
3.Discusstheimpactoftheecosystemon organisationalstrategy.
a.Discusstheimpactofstrategicnetworksand platformsonorganisationalstrategy
b.Conductstakeholderanalysisinnetworks
E3: Strategic Management
Topics to be covered Explanatory notes
• SWOTanalysis
• PESTELanalysis
• Competitoranalysis
• Customeranalysis
• Widerecosystems
• Industryecosystems
Whattypesofmarketsdoorganisationsoperatein?Whatarethe“rulesofthegame”inthesemarkets?Whatarethesourcesandopportunitiesfordisruptioninthemarket?Howdoessocietyregulatethemarketsandprovide“permissiontoplay”fororganisations?
• Globalisation
• Geopolitics
• Demography
• Customerempowerment
• Digitaltechnology
• Automation
Whatarethedriversofchangeintheecosystem?Howaretheindividualdriverslinked?Whattypeofoutcomesdotheybringindividuallyandcollectively?Whatrisksandopportunitiesdotheybringorganisations?
• Valuecreationinecosystems
• Participantsandinteractionsinnetworks andplatforms
• Technologyenablersinnetworks
• Processofcreatingnetworksandplatforms
• Stakeholderanalysisinnetworks
• Corporatesocialresponsibility
Inadigitalworldwhatistheimportanceofnetworksandplatforms?Whataretheroles,interactions,andgovernancesystemsintheecosystems?Whoarethekeyplayers?Howdoesthisaffectthebusinessmodeloforganisations?
96CIMA Professional Qualification Syllabus 97
E3C: Generating strategic optionsStrategyisaboutchoiceofoptions.Theseoptionsmustbegeneratedanddevelopedbasedonthedynamicsoftheecosysteminwhichtheorganisationoperatesandthefoundationalcontextsoftheorganisation(e.g.itspurpose,valuesetc).Thissectioncovershowoptionsaregeneratedandlinksthemtothepurpose,valuesandvisionoftheorganisation.Inaddition,itlooksattheroleofvariouspartsandlevelsoftheorganisationinthestrategyprocess.
Lead outcome Component outcome
1.Discussthecontextofgeneratingoptions. Discuss:
a.Theroleofgovernanceandethicsinthestrategyprocess
b.Thepurpose,visionandvaluesoftheorganisationandtheirimpactonstrategy
2.Discusshowtogenerateanddevelopoptions. Discusshowto:
a.Framekeystrategicquestions
b.Diagnoseorganisation’sstartingposition
c.Forecastpotentialorganisationaloperating ecosystem
d.Usevariousframeworkstogenerateoptions
.
E3: Strategic Management
Topics to be covered Explanatory notes
• Rolesandresponsibilityofleadersoforganisationsforstrategy
• Definitionofpurpose,visionandvaluesoforganisations
• Linkagebetweenpurpose,visionandvalues toeachotherandtostrategy
Whoisresponsibleforvariousaspectsofthestrategyformulationprocess?Howarethoserolesdeterminedandgoverned?Howdoestheorganisationderiveitspurpose,visionandvalues?Whatprocessesexisttoensurethatstrategyisbasedonand/orarealigned tothese?
• Product/marketmatrix
• Genericstrategies
• Trendanalysis
• Systemmodeling
• Scenarioplanning
• Tangibleandintangiblevaluedriversand datatomeasurethem
• Gametheoryperspectives
• Realoptionperspectives
Whatarethecorestrategicquestionstoaskandwhatarethecriteriaandconstraintsforaskingthem?Whatistheorganisation’sstartingpoint?Whereandhowdoesitmakemoney?Whatpotentialfuturesmightitinhabitandwhataretheforcespotentiallydrivingthesefutures?Whatarethepotentialpathwaystothisfuture?Whatnewbusinessmodelsareinplay?
.
98CIMA Professional Qualification Syllabus 99
E3D: Making strategic choicesOnceoptionshavebeengeneratedinvariousareasoftheorganisation’soperationstheorganisationhastochoosebetweenthealternatives.Thechoiceisbasedonpredefinedcriteriaandanevaluationoftheoptionsagainstthesecriteria.Thevariousoptionschosenmustthenbeintegratedintoacoherentwholetoformtheorganisation’sstrategy.Thissectioncovershowtheoptionsareevaluated,chosenandintegratedcoherentlytoformthestrategyoftheorganisation.
Lead outcome Component outcome
1.Evaluateoptions. a.Developcriteriaforevaluation.
b.Evaluateoptionsagainstcriteria.
c.Recommendappropriateoptions.
2.Producestrategybytheintegrationofchoicesinto coherentstrategy.
Conduct:
a.Valueanalysis
b.Portfolioanalysis
E3: Strategic Management
Topics to be covered Explanatory notes
• Suitability,acceptabilityandfeasibilityframework Whatarethedifferentcriteriatoguidethechoiceofoptions,onehowaretheyprioritisedandwhy?
• Valuechainanalysis
• Managingproductportfolio
Whatarethecriteriatoensureeffectiveintegrationandwhy?Whatarethetrade-offstobemadewhenputtingtheindividualchoicestogether?Howdoesoneensureintegratedthinking?
100 CIMA Professional Qualification Syllabus 101
E3E: Strategic controlOncestrategyhasbeenformulated,ithastobeimplemented.Thisinvolvesdevelopingandcommunicatingactionplans,allocatingresourcesandmonitoringtheimplementationoftheplans.Inaddition,implementingstrategyinvolvessignificantchange.Thenatureofthesechangesshouldbeevaluatedandappropriatewaysofmanagingchangehavetobedevelopedandimplemented.Thissectionexamineshowtheseimplementationobjectivesareachievedandhowchangeismanaged.
Lead outcome Component outcome
1.Developstrategicperformancemanagement system.
a.Developdetailedactionplans
b.Communicateactionplans
c.Monitorimplementation
d.Alignincentivestoperformance
2.Adviseonresourceallocationtosupportstrategy implementation.
a.Adviseonresourceavailability
b.Alignresourceallocationtostrategicchoices
3.Recommendchangemanagementtechniques andmethodologies.
a.Assessimpactofstrategyonorganisation
b.Recommendchangemanagementstrategies
c.Discusstheroleoftheleaderinmanagingchange
.
Topics to be covered Explanatory notes
• Actionplans
• Target setting
• Criticalsuccessfactors(CSFs)
• Keyperformanceindicators(KPIs)
Howdoestheorganisationpreparethegroundsforexecutingstrategy?Howdoesitcreateandcommunicateactionplansforimplementation?Howisthewholeorganisationmobilised,motivatedandincentivisedtoimplementtheplans?Whatrolecanintegratedreportingplay?
• Auditofkeyresourcesandcapabilitiesrequired toimplementstrategy
• Matchingresourcestostrategy
Whataretheresourcesneededtoimplementstrategy?Wherearetheresourcesneeded?Howdoestheorganisationre-alignresourceallocationfromexistingunitsorprojectstonewonesthatmatchthestrategicchoicesmade?
• Typesofchange
• Impactofchangeonorganisationalculture
• Resistancetochange
• Approachesandstylesofchangemanagement
• Roleofchangeleaderincommunication
Whatistheimpactofthenewstrategyonthewholeorganisation,partsoftheorganisationandpartnersoftheorganisation?Whattransformationisrequired andhowdoestheorganisationdrivethesechanges?
.
E3: Strategic Management
102 CIMA Professional Qualification Syllabus 103
E3F: Digital strategyStrategytakesplacewithinspecificorganisationalcontextsandecosystems.Theprimarycharacteristicsofthecurrentcontextisdigitaltransformation.Organisationsneedtothinkthroughtheirapproachtostrategywithinthisperspective.Thissectioncovershowtointroducethinkingaboutdigitaltransformationinthestrategyoforganisations.
Lead outcome Component outcome
1.Describethegovernanceofdigitaltransformation. a.Describetherolesandresponsibilitiesoftheboardandexecutiveleadershipindigitalstrategy.
2.Analysedigitaltransformation. Analyse
a.Digitaltechnologies
b.Digitalenterprise
3.Discussthevariouselementsofdigital strategies.
Discuss:
a.Economicsofdigitisation
b.Digitalecosystems
c.Digitalconsumption
d.Dataandmetrics
e.Leadershipandculture
E3: Strategic Management
Topics to be covered Explanatory notes
• Roleofboardandseniorleadershipindigitalstrategy
Whoisresponsibleforleadingtheprocessof digitaltransformation?Whatistheirroleinthe processandwhy?
• Cloudcomputing
• Bigdataanalytics
• Processautomation
• Artificialintelligence
• Datavisualisation
• Blockchain
• Internet of things
• Mobile
• 3-Dprinting
Whatarethetechnologiesthatunderpindigitaltransformation?Howaretheyevolvingandwhatimpactdotheyhaveontheorganisationanditsimmediateandwideroperatingenvironment?Whattypeoforganisationdosuchtechnologiescreate?Whataretheelementsofthebusinessandoperatingmodelsofsuchdigitalenterprises.
• Businesscasefordigitaltransformation
• Participants,interactionsanddynamicsof ecosystemandimpactonstrategy
• Trendsinconsumption(e.g.,hyperpersonalisation, movefromproductsandservicestoexperience)
• Newmetrics(scale,activeusageandengagementmetrics)
• Leadershipindigitaltransformation
Whatistheeconomicandbusinesscasefordigitisation?Howdoestheorganisationcreatepartnershipsintheecosystemtoensurestrategicsuccess?Whatarekeytrendsunderlyingtheconsumptionoftheorganisation’sproductsandservicesbycustomersandconsumers?Whatdataandmetricsshouldorganisationsusetoevaluatesuccessofdigitalenterprises?Howshouldleadersandtheirorganisationsthink,actandreactdifferentlybecauseofdigitaltransformation?
105
P3: Risk ManagementA. Enterpriserisk
B. Strategicrisk
C. Internalcontrols
D. Cyberrisks
104
P3: Structure and outline
Identifyandevaluate enterprise risks and their
sourcesthatcanimpedethe implementationofstrategy.
Developprocessestoidentify, evaluateandmanage
cyber risks.
Developappropriateresponses to strategic risks.
Evaluatetheuseofinternal controlstomanage enterpriserisks.
106 CIMA Professional Qualification Syllabus 107
P3A: Enterprise riskNotallintendedstrategiesareimplementedduetovariousfactors.Thesefactorsconstitutetheoperating enterprise-widerisksoftheorganisation.Thissectioncovershowtoidentify,evaluateandmanagetheserisks.
Lead outcome Component outcome
1.Analysesourcesandtypesofrisk. Analyse:
a.Sourcesofrisks
b.Typesofrisks
2.Evaluaterisk. a.Evaluatetheimpactofrisk
b.Assessthelikelihoodofrisks
c.Analysetheinteractionofdifferentrisks
3.Discusswaysofmanagingrisks. Discuss:
a.Rolesandresponsibilities
b.Risktolerance,appetiteandcapacity
c.Riskmanagementframeworks
d.Riskanalytics
P3: Risk Management
Topics to be covered Explanatory notes
• Upsideanddownsiderisks
• Risksarisingfrominternalandexternalsources
• Risksarisingfrominternationaloperations
• Strategicandoperationalrisks
Whatarethetypesandsourcesofrisksthatwouldpreventorganisationsfromimplementingtheirintendedstrategy?
• Quantificationofriskexposure
• Riskmaps
Whatistheimpactoftherisksontheorganisation?Whattechniquesareavailabletoevaluatetheimpactofsuchrisks?
• Roleofboardandothersintheorganisationforidentifyingandmanagingrisks
• RiskmitigationincludingTARA–transfer,avoid, reduce,accept
• Assurancemapping
• Riskregister
• Riskreportsandresponses
• Ethicaldilemmasassociatedwithriskmanagement
Howisriskmanagedintheorganisation?Howisresponsibilityforvariousaspectsofriskmanagementdistributedintheorganisation?Howdoestheorganisationalignitsrisktolerance,appetiteandcapacitytoitsdecisionsandactions?Whatriskmanagementframeworksarethere?Howisriskinformationcommunicatedtotheorganisation?
108 CIMA Professional Qualification Syllabus 109
P3B: Strategic riskAfundamentalriskoftheorganisationisthatitsstrategyisthewrongoneandthatevenifimplementedperfectly,itwillachievethewrongoutcomefortheorganisation.Inaddition,somerisksareofsuchhighsignificancethattheycanaffecttheveryexistenceoftheorganisation.Thissectioncoverswheretheserisksemanatefrom,evaluatesthem andexplainshowoversightofsuchrisksiscriticaltothegovernanceoftheorganisation.
Lead outcome Component outcome
1.Analyserisksassociatedwithformulatingstrategy. a.Analyserelevanceoftheassumptionsonwhichstrategyisbased.
b.Discusspotentialsourcesandtypesofdisruptionstostrategy.
2.Evaluatethesourcesandimpactof reputationalrisks.
Evaluate:
a.Sourcesofreputationalrisk
b.Impactofreputationalriskonstrategy
3.Explaingovernancerisks. Explain:
a.Theroleofboardanditscommitteesinmanaging strategicrisk
b.Failureofgovernanceanditsimpactonstrategy
P3: Risk Management
Topics to be covered Explanatory notes
• Analysisofstrategicchoice
• Scenarioplanning
• Stress-testingstrategy
Whataretherisksthatthestrategyoftheorganisationiswrong?Whatarethesourcesofsuchrisks?Howdoestheorganisationevolveitsstrategyinadynamicenvironmenttokeepitrelevant?
• Risksofunethicalbehaviour
• Impactonbrandandreputationoforganisation
Whatisreputationalriskandwhyisitanimportantstrategicrisk?Whatarethetypesandsourcesofreputationalrisksandwhatistheirimpactontheorganisation?Howcantheybemanaged?
• SeparationoftherolesofCEOandchairman
• Roleofnon-executivedirectors
• Rolesofauditcommittee,remunerationcommittee,riskcommitteeandnominationcommittee
• Directors’remuneration
Whatistheroleoftheboardinriskmanagement?Howdoesgovernanceriskoccur?Howisthisrolegovernedbythevariouscorporategovernance codesandprinciples?
110 CIMA Professional Qualification Syllabus 111
P3C: Internal controlsControlsystemsareanintegralpartofmanagingrisks.Variouscontrolframeworkshavebeendevelopedtoassistinthisprocess.Inaddition,theinternalauditfunctionperformsavitalroleinhelpingtoimplementandmonitorimplementationandadherencetothecontrolframeworks.Thissectioncovershowinternalcontrolsystemscanbeusedeffectivelyintheriskmanagementprocess.
Lead outcome Component outcome
1.Analyseinternalcontrolsystems. a.Discussrolesandresponsibilitiesforinternal controls.
b.Discussthepurposeofinternalcontrol.
c.Analysethefeaturesofinternalcontrolsystems.
2.Recommendinternalcontrolsforrisk management.
a.DiscusstheCommitteeofSponsoringOrganisationsoftheTreadwayCommission(COSO)internalcontrolandriskmanagementframework.
b.Assesscontrolweakness.
c.Assesscompliancefailures.
d.Recommendinternalcontrolsforrisk management.
3.Discussvariousissuesrelatingto internalauditinorganisations.
Discuss:
a.Formsofinternalaudit
b.Internalauditprocess
c.Effectiveinternalaudit
d.Theinternalauditreport
P3: Risk Management
Topics to be covered Explanatory notes
• Roleofriskmanagerasdistinctfrominternalauditor
• Controlsystemsinfunctionalareas
• Operationalfeaturesofinternalcontrol
Whataretherolesofinternalcontrolsystemsinmanagingrisks?Whatareitskeyfeaturesandwhy?
• Governanceandculture
• Strategyandobjectivesetting
• Performance
• Reviewandrevision
• Information,communicationandreporting
• Identifyingandevaluatingcontrolweaknessandcompliancefailures
ThisintroducestheCOSOframeworkasacomprehensivewayoflookingatinternalcontrolsinriskmanagement.Theobjectiveistogetcandidatestounderstandthekeyelementsandknowhowtoapplytheminevaluatinginternalcontrols.
• Complianceaudit,fraudinvestigation,value formoneyauditandmanagementaudit
• Operationofinternalaudit
• Assessmentofauditrisk
• Processofanalyticalreview
• Independence,staffingandresourcing of internal audit
• Preparationandinterpretationofinternal auditreports
Thispartlooksatthecriticalrolethattheinternalauditfunctioncanplayinriskmanagement.Theobjectiveistocreateawarenessandunderstandingofthevariousissuesininternalauditandhowtheylinktoeachother.
112 CIMA Professional Qualification Syllabus 113
P3D: Cyber risksInadigitalworldoneofthemajorthreatsiscyberrisk.Howaredataandoperatingsystemsprotectedfromunauthorisedaccessandmanipulation?Howarebreachesidentified,analysed,remediedandreported? Thesearesomeofthequestionscoveredinthissection.
Lead outcome Component outcome
1.Analysecyberthreats. Analyse:
a.Natureandimpactofcyberrisks
b.Typesofcyberrisks
c.Riskofsecurityvulnerabilities.
2.Reviewcybersecurityprocesses. Review:
a.Cybersecurityobjectives
b.Securitycontrols
c.Centralisationincybersecurity
3.Discusscybersecuritytoolsandtechniques. Discuss:
a.Forensicanalysis
b.Malwareanalysis
c.Penetration testing
d.Softwaresecurity
4.Evaluatecyberriskreporting. a.Evaluatecyberriskreportingframeworks
P3: Risk Management
Topics to be covered Explanatory notes
• Malware
• Applicationattacks
• Hackers
• Resultofvulnerabilitiesincludingdowntime,reputationalloss,customerflight,legalandindustryconsequences
Thispartlooksatwhereandhoworganisationscanbevulnerabletocyberthreatsandthetypeandsourcesofsuchthreats.Inaddition,itlooksattheimpactsuchthreatscanhaveonorganisations.
• Protection,detectionandresponse
• Centralisedmanagement
• Centralisedmonitoring
Theprincipalaimhereistoenablecandidatestounderstandhowtomanagecyberthreatsthroughcybersecurityprocesses.Whatobjectivesshouldorganisationssetinthisarea?Whatcontrolsareavailabletoorganisations?
• Systemlevelanalysis,storageanalysisandnetworkanalysis
• Reverseengineering,decompilationanddisassembly
• Networkdiscovery,vulnerabilityprobing,exploitingvulnerabilities
• Tiersofsoftwaresecurity
Thispartlooksatthetoolsandtechniquesavailabletomanagecyberrisks.Candidatesareexpectedtohaveabasicunderstandingofthetechniquesandhowtheycanbedeployedtogether.
• Descriptioncriteriaincludingnatureofbusinessandoperations,natureofinformationatrisk,riskmanagementprogrammeobjectives,cybersecurityriskgovernancestructureetc.
Howshouldcyberrisksbereported?Whatreportingframeworksareavailable?
115
F3: Financial StrategyA. Financialpolicydecisions
B. Sourcesoflong-termfunds
C. Financialrisks
D. Businessvaluation
114
F3: Structure and outline
Analyseandevaluatethe sources of long-term financestomeet theorganisation’sfinancing
requirements.
Identify,assessandmanage financial risksassociatedwith cashflowsandcapitalprojects.
Makefinancial policy decisions thataligntotheorganisation’s
strategicobjectives.
Developandapply business valuation techniquestomeasure thetangibleandintangiblevalue
oforganisations.
116 CIMA Professional Qualification Syllabus 117
F3A: Financial policy decisionsTheoverallstrategyoftheorganisationmustbesupportedbyhowitsfinancesareorganised.Thisrequiresanunderstandingofthedifferentstrategicfinancialobjectivesandpolicyoptionsthatareopentoorganisations.Thechoiceoftheseobjectivesandpolicyoptionswillbeheavilyinfluencedbythefinancialmarketrequirementsandtheregulatoryenvironmentinwhichtheorganisationoperates.Thissectionexaminestheseissues.
Lead outcome Component outcome
1.Adviseonstrategicfinancialobjectives. a.Analysedifferenttypesoforganisationsandtheirobjectives.
b.Adviseonfinancialobjectives.
c.Adviseonnon-financialobjectives.
2.Analysestrategicfinancialpolicydecisions. Analysethefollowingpolicydecisionareas:
a.Investment
b.Financing
c.Dividends
d.Interrelationshipsbetweenpolicydecisionareas
3.Discusstheexternalinfluencesonfinancial strategicdecisions.
Discusstheinfluenceofthefollowingonfinancialstrategicdecisions
a.Marketrequirements
b.Taxation
c.Regulatoryrequirements
F3: Financial Strategy
Topics to be covered Explanatory notes
• Profitandnot-for-profitorganisations
• Quotedandunquotedcompanies
• Privateandpublicsectororganisations
• Valueformoney,maximisingshareholderwealth
• Earningsgrowth,dividendgrowth
• Impactofunderlyingeconomicconditionsandbusinessvariablesonfinancialobjectives
• Enhancingthevalueofothernon-financialcapitals(humancapital,intellectualcapitalandsocialandrelationalcapital)
• UnitedNationsSustainabilityDevelopmentGoals
Thissectionisaboutaligningfinancialobjectivesandpoliciestothestrategiesoftheorganisation.Thekey aimistomakesurethattheorganisationhasaproperbasistodeterminewhattypesoffundstoaccessandhowtousethosefunds.Todothiseffectivelyfinanceprofessionalsmustbeabletoevaluatetheopportunitiesandconstraintsplacedonthemintheoperatingenvironment—particularlyfinancialmarketrequirements,theimpactoftaxationandtherequirementsofindustryandfinancialmarketregulators.
• Useofpolicydecisionstomeetcashneedsofentity
• Sensitivityofforecastfinancialstatementsandfuturecashpositiontothesepolicydecisions
• Considerationoftheinterestsofstakeholders
• Lenders’assessmentofcreditworthiness
• Considerationofdomesticandinternational taxregulations
• Considerationofindustryregulationssuchas priceandservicecontrols
118 CIMA Professional Qualification Syllabus 119
F3B: Sources of long-term fundsWhattypesoffundsareavailabletoorganisationstofinancetheimplementationoftheirstrategies?Howmuchofeachtypeshouldtheygofor?Andwhatistheimpactontheorganisation?Whereandhowdotheygetthesefunds?Andhowdotheyprovideincentivestoprovidersofsuchfundssothatthefundsareavailableattherighttime,intherightquantitiesandattherightcost?Thesearesomeofthequestionscoveredbythissection.
Lead outcome Component outcome
1.Evaluatethecapitalstructureofafirm. Evaluate:
a.Choiceofcapitalstructure
b.Changesincapitalstructure
2.Analyselong-termdebtfinance. Analyse:
a.Selectingdebtinstruments
b.Targetdebtprofile
c.Issuingdebtsecurities
d.Debtcovenants
e.Taxconsiderations
3.Evaluateequityfinance. a.Evaluatemethodsofflotation
b.Discussrightsissues
4.Evaluatedividendpolicy. Evaluatepolicyinthefollowingareas:
a.Cashdividends
b.Scripdividends
c.Sharerepurchaseprogrammes
F3: Financial Strategy
Topics to be covered Explanatory notes
• Capitalstructuretheories(traditionaltheoryandMiller and Modigliani (MM) theories)
• Calculationofcostofequityandweightedcostofcapitaltoreflectchangesincapitalstructure
• Impactofchoiceofcapitalstructureonfinancialstatements
• Structuringdebt/equityprofilesofcompanies inagroup
Howshouldimportantelementsofthefinancialstatementbetreatedinthebooks?Whatprinciplesshouldunderpinthese?Howdofinancialreportingstandardshelptoensurethis?Usingfinancialreportingstandardsterminologythispartwillbelookingatissuesofrecognitionandmeasurement.Themostimportantissueswillbeconsideredhere.
• Typesofdebtinstrumentsandcriteriaforselectingthem
• Managinginterest,currencyandrefinancingriskswithtargetdebtprofile
• Privateplacementsandcapitalmarketissuance ofdebt
• Featuresofdebtcovenants
• Methodsofflotationandimplicationsformanagementandshareholders
• Rightsissues,choiceofdiscountratesandimpactonshareholders
• Calculationoftheoreticalex-rightsprice(TERP)andyieldadjustedTERP
• Featuresandcriteria
• Impactonshareholdervalueandentityvalue,financialstatementsandperformance
120 CIMA Professional Qualification Syllabus 121
F3C: Financial risksThereisalwaysariskthattheorganisationwillnotbeabletoattractenoughfundstofinanceitsoperationsandinextremeconditionswillfailtosurviveasaresult.Thissectioncoversthesourcesofsuchrisksandhowtoevaluateandmanagesuchfinancialrisksappropriately.
Lead outcome Component outcome
1.Discussthesourcesandtypesoffinancialrisks. Discuss:
a.Sourcesoffinancialrisk
b.Typesoffinancialrisk
2.Evaluatefinancialrisks. a.Evaluatehowfinancialrisksarequantified
3.Recommendwaysofmanagingfinancialrisks. a.Recommendwaystomanageeconomic andpoliticalrisks
b.Discusscurrencyriskinstruments
c.Discussinterestrateriskinstruments
F3: Financial Strategy
Topics to be covered Explanatory notes
• Economicrisk
• Politicalrisk
• Currencyrisk
• Interestraterisk
Managingrisksrelatedtofinancesissimilartomanagingothertypesofrisksingeneralapproachandmethodology.However,therearespecificdifferencessuchasthesourcesandtypesoffinancialrisks,howtheycanbequantifiedandwaysinwhichtheyaremanaged.Thissectionlooksattheveryspecificissuesrelatedtomanagingfinancialriskswithinageneralriskmanagementframework• Theoryandforecastingofexchangerates
(e.g.interestrateparity,purchasingpower parityandtheFisherEffect)
• Valueatrisk
• Responsestoeconomictransactionandtranslationrisks
• Operationsandfeaturesofswaps,forwardcontracts,moneymarkethedges,futuresandoptions
• Techniquesforcombiningoptionsinordertoachievespecificriskprofilesuchascaps, collarsandfloors
• Internalhedgingtechniques
122 CIMA Professional Qualification Syllabus 123
F3D: Business valuationTheprimaryobjectiveofallstrategicactivityistocreateandpreservevaluefororganisations.Howdoestheorganisationknowwhetherithassucceededinthisobjective?Sometimes,inordertoimplementstrategies,organisationshavetoacquireotherorganisations.Howdoestheacquirerdeterminethevalueofitsacquisition?Thissectioncovershowtousetechniquesinbusinessvaluationtoanswersuchquestions.
Lead outcome Component outcome
1.Discussthecontextofvaluation. Discuss:
a.Listingoffirms
b.Mergersandacquisitions(M&A)
c.Demergersanddivestments
2.Evaluatethevariousvaluationmethods. a.Evaluatedifferentvaluationmethods
b.Discussthestrengthsandweaknessesofeachvaluationmethod
3.Analysepricingandbidissues. Analyse:
a.Pricingissues
b.Bidissues
4.Discusspost-transactionissues. Discuss:
a.Post-transactionvalue
b.Benefitrealisation
Topics to be covered Explanatory notes
• ReasonsforM&Aanddivestments
• Taxationimplications
• Processandimplicationsofmanagement buy-outs
• Acquisitionbyprivateequityandventurecapitalist
Thissectionlooksattheconditionsunderwhichorganisationsneedtocalculatetheirownvalueorthevalueofotherorganisationsorsub-unitsthereof.Itintroducescandidatestovaluationtechniques.Ofparticularimportanceinthedigitalworldisthevaluationofintangibles.Thislinksalsotohowtoreportintangiblevalueandtheirdriversinintegratedreporting.Inaddition,howshoulddigitalassetsbevalued?Oneofthereasonsforvaluationiswhenmergingoracquiringfirms.Howshouldsuchdealsbestructured,implementedandclosed?Forexamplewhatshouldtheformsoftheconsiderationbe?Whatarethetermsoftheacquisition?Howdoesoneenablebenefitrealisation,particularlyforsynergiesoncetheacquiredorganisationhasbeenintegratedintotheacquiringorganisation?
• Assetvaluation
• Valuationofintangibles
• Differentmethodsofequityvaluation(shareprices,earningsvaluation,dividendvaluation,discountedcashflowvaluation)
• CapitalAssetPricingModel(CAPM)
• Efficientmarkethypothesis
• Formsofconsideration
• Termsofacquisition
• Targetentitydebt
• Methodsoffinancingcashofferandrefinancingtargetentitydebt
• Bidnegotiation
• Post-transactionvalueincorporatingeffectofintendedsynergies
• M&Aintegrationandsynergybenefitrealisation
• Exitstrategies
F3: Financial Strategy
124 CIMA Professional Qualification Syllabus 125
Exam information and timetableExams Availability Type of
assessment Length of assessment
Location
Objective tests CanbesatgloballyatPearsonVUE testcentres
LocationsofPearsonVUEcentrescanbefoundviathe CIMAwebsite
E3P3F3
E2P2F2
E1P1F1
On-demandand yearround
Computerised objectivetests
90minutes
Case study exams
StrategicLevel
ManagementLevel
OperationalLevel
Four sittings peryear
Casestudy exam
3 hours
ActualdatesforthecasestudyexamsittingsareavailableontheCIMAwebsite.
International Accounting Standards and Exposure DraftsTheexaminationswillbesetinaccordancewithrelevantInternationalAccountingStandardsandInternationalFinancialReportingStandards.ThisalsoappliestomaterialcontainedinFinancialReportingExposureDrafts.Detailsofexaminablestandardsforagivenperiodwillbecommunicatedintherelevantexaminationblueprint.
Mathematical tables and formulaeRelevantmathematicaltablesandformulaewillbeincludedwithintheappropriateexaminationandwillbeprovidedintherelevantexaminationblueprint.
Formoreinformation,gotocimaglobal.com/examblueprints.
Programme design and the international education standards International education standardsCIMAisamemberoftheInternationalFederationofAccountants(IFAC)andsupportstheprinciples,standardsandguidelinessetoutwithintheIFACInternationalEducationStandardsforProfessionalAccountants.
CIMA pre-qualification education programmesDesignersanddeliverersofCIMAtuitionprogrammesarerequestedtorefertotheIFACInternationalEducationStandardsandreflectthecontentswhendevelopinglearningprogrammesforCIMAstudents.
CIMA initial professional development – practical experienceThoseresponsibleformanaging,supervisingandmentoringCIMAstudentsastheyacquirerelevantpracticalexperiencearerequestedtorefertotheIFACInternationalEducationStandardsandreflectthecontentswhendevelopingwork-basedexperienceprogrammes.
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