A career as a CMA is the choice of many. But there are only a selected few who are capable of earning the credential and establishing their place in the industry. The difference between those who have earned the CMA certificate and those who have is not very big. The former had received the right guidance to clear the CMA exams, while the latter was devoid of one.
Registering for a good and structured CMA course is definitely the right path toward becoming a CMA. These courses act as the ultimate guide that takes the students closer to the advanced accounting certification issued by the Institute of Management Accountants (IMA). The significance of this certificate is immense, as it validates the financial management, leadership, and strategic decision-making skills of existing and aspiring management accountants and financial professionals.
Clearing the CMA exam is not hard if you have mastered all the concepts and topics that are asked in the exam. This article will talk about the important topics and areas on which the CMA Part 1 exam is designed upon.
Topics Covered in CMA Part 1 Exam
The CMA Part 1 syllabus consists of:
- External Financial Reporting Decisions
- Planning, Budgeting, and Forecasting
- Performance Management
- Cost Management
- Internal Controls
- Technology and Analytics
All these topics test the candidate’s skills and expertise in Knowledge, Comprehension, Application, Analysis, Synthesis, and Evaluation.
Let us dive in and take a look at each of these topics individually:
1) External Financial Reporting Decisions
This section of the CMA Part 1 exam deals primarily with financial statements for accounting information. Candidates will learn how to provide information that is useful in making decisions. Apart from just collecting data, CMA professionals should also know how to use financial statements and their components to make the right decision.
The important parts of this topic are:
Financial Statements
Candidates should have a strong knowledge of:
- Balance Sheets
- Income Statements
- Statement of Changes in Equity
- Statement of Cash Flows
- Integrated Reporting
Recognition, Measurement, Valuation, and Disclosure
- Candidates should have a strong knowledge of
- Asset Valuation
- Valuation of Liabilities
- Equity Transactions
- Revenue Recognition
- Income Measurement
- Significant differences between U.S. GAAP and IFRS
2) Planning, Budgeting, and Forecasting
This area tests the ability of the candidate to blend accounting concepts with practical skills in finance. CMA professionals are known for their expertise in using financial information to set long-term goals.
The main areas in this topic are segregated as:
Strategic Planning
- Analysis of internal and external factors affecting strategy
- Long-term mission and goals
- Alignment of tactics with long-term strategic goals
- Analytical techniques and Strategic planning models
- Characteristics of a successful strategic planning process
Budgeting Concepts
- Operations and performance goals
- Characteristics of a good budget process
- Resource allocation
- Other budgeting concepts
Forecasting Techniques
- Regression Analysis
- Learning Curve analysis
- Expected value
Budgeting Methodologies
- Annual business plans (master budgets)
- Project budgeting
- Activity-based budgeting
- Zero-based budgeting
- Continuous (rolling) budgets
- Flexible budgeting
Annual Profit Plan and Supporting Schedules
- Operational
- Financial
- Capital
Top-level Planning and Analysis
- Pro forma income
- Financial statement projects
- Cash flow projections
3) Performance Management
This section of the CMA Part 1 exam deals with flexible budgets, transfer pricing methods, a balanced scorecard, standard costing, variance analysis, and more. Mastering these will make the professional capable of determining and ensuring that the performance standard is met.
The major areas under this topic are:
Cost and Variance Measures
- Comparison of actual to planned results
- Use of flexible budgets to analyze the performance
- Management by exception
- Use of standard cost systems
- Analysis of variation from standard cost expectations
Responsibility Centers and Reporting Segments
- Types of responsibility centres
- Transfer pricing
- Reporting of organizational segments
Performance Measures
- Product profitability analysis
- Business unit profitability analysis
- Customer profitability analysis
- Return on investment
- Residual income
- Investment base issues
- Key performance indicators (KPIs)
- Balanced scorecard
4) Cost Management
This area will test the candidate’s ability to monitor and manage costs. The questions from this area will deal with accounting and operational aspects of business, like costing, overhead, and supply chain.
Cost management can be further subdivided into:
Measurement Concepts
- Cost behaviour and cost objects
- Actual and normal costs
- Standard costs
- Absorption (full) costing
- Variable (direct) costing
- Joint and by-product costing
Costing Systems
- Job order
- Process
- Activity-based
- Life-cycle
- Basic Financial Statement Analysis
Overhead Costs
- Fixed and variable overhead expenses
- Plant-wide vs. departmental overhead
- Determination of allocation base
- Allocation of service department costs
Supply Chain Management
- Lean resource management techniques
- ERP – Enterprise Resource Planning
- Theory of constraints
- Capacity management and analysis
Business Process Improvement
- Value chain analysis
- Value-added concepts
- Process analysis, redesign, and standardization
- Activity-based management
- Continuous improvement concepts
- Best practice analysis
- Cost of quality analysis
- Efficient accounting processes
5) Internal Controls
This area teaches candidates how to design internal controls while also ensuring that they are maintained. This topic will test your knowledge of governance, structures, policies, risk, and audits.
Internal Controls can be sub-divided into:
Governance, Risk, and Compliance
- Internal control structure and management philosophy
- Internal control policies for safeguarding and assurance
- Internal control risk
- Corporate governance
- External audit requirements
Systems Controls and Security Measures
- General accounting system controls
- Application and transaction controls
- Network controls
- Backup controls
- Business continuity planning
6) Technology and Analytics
This section has been recently added to the CMA Part 1 exam. This area deals with concepts like how to use information systems, how to manage data, and how to automate financial tasks.
The important areas covered under this topic are:
Information Systems
- Accounting information systems
- Enterprise resource planning systems
- Enterprise performance management systems
Data Governance
- Data policies and procedures
- The life cycle of data
- Controls against security breaches
Technology-Enabled Finance Transformation
- System Development Life Cycle
- Process automation
- Innovative applications
- Business intelligence
- Data mining
- Analytic tools
- Data visualization
- Data Analytics
While clearing the CMA exam sure is not a piece of cake, the right guidance and resources can prove to be of great help. Researching and finding a good CMA course can even help you earn your CMA credential on the very first attempt.
