Tuesday 25 June 2013

CIMA managerial level

In for a shameful (and soured) love affair

In the last post after taking the second level exams, I declared that:

"In case F2 doesn't come through, I have a number of months to revisit each part of the syllabus and have a full-fledged love affair with this one baby, (which is not that bad a proposition, as the financial pillar is still a slightly intimidating one to climb). Also, having a strong(er) command of IFRS principles should pay-off in countries like Australia that are keenly interested in adoption. Having to retake P2 would be a shame, but E2 should come through for me."

Well, I missed the P2 by 5 marks and the F2 by 10 marks, and hit E2 right in the middle for a pass.

Having said that, I would have been in for a shameful love affair this time around then, until I took a fresh look at my predicament.

You see, SEEK results for the last 30 days for all jobs in Australia with keyword "CIMA" returns 73 jobs. That includes only 47 from a total of 2,457 management accountant jobs.

On the other hand, management accountant jobs for CA or CPA s are 91% of the total accounting jobs as more than 9 out 10 jobs for management accountants require the qualification, while there are another 1,500 other jobs waiting to be filled under other classifications.

If the CIMA diploma in management accounting helped me to receive a "suitable for immigration" for my occupation assessment, then I have already reaped the benefits from all the studies to date. The CA/ CPA qualification involves the outlay of thousands of Australian dollars (approx. five thousand), which is something I may be able to afford once I get settled, but is out of the question presently.

However, as things turn out, CPA Australia has a mutual recognition agreement (MRA) with CIMA for gaining reciprocal membership. If I understand correctly, this means that I can simply apply for and get a CPA title once I am a ACMA, though public practice will require additional certification. (Note: the ICAA is not as friendly to CIMA as it only provides exemption for one module).

Completion of CPA Australia's CPD requirements will also satisfy CIMA's CPD requirements and I will be required to report annually to both CIMA and CPA Australia. The MRA is valid for another three years, up to somewhere in 2013.

This means that a shameful love affair will take place after all, as I continue to spade in cheap Pakistani rupees into gaining pounds for CIMA with the hope that I will be able to convert it to a CPA once I get to Australia, making me eligible for thousands of more jobs at a much more senior level than I would have without it - or at least a qualification that is valued in Australia and around the world.

However, management accounting is not an occupation that exactly matches my current work profile.

While years of modeling, reporting, consolidations, MIS and Excel will certainly help my prospects, most management accounting jobs require some core accounting or managerial accounting experience along with a CA/ CPA. This means that I probably need to get some more hands-on experience in such things as budgeting, forecasting, financial reporting and analysis and other things that these guys do like variance analysis, or at least some ERP exposure to financial accounting and reporting systems such as Oracle and SAP, or BI tools like Hyperion and Cognos.


There is also another emerging line of thought - rather than take my current occupation towards finance, or remaining in the shallow parts of the stream between IS and Finance, I could consider amplifying my database skills with a formal role in data warehousing, or ERP/ BI project developments to finally achieve my vision of marrying IT to Finance, particularly with an ACMA/ CPA.

If I do remain in my current role, producing MIS in Excel and working with data maintaining Excel, Access and VB systems, I will at least need stronger SQL skills and VBA to apply for similar jobs. The CA/ CPA qualification would be an added advantage at best, but strong technical skills and relevant experience would be far more important.

While there are a few jobs that require this kind of technical work experience and also ask for a CPA, they usually have many more demands and are senior-level well paid jobs.

Further research will determine whether the investment - keeping in mind that my relevant work experience is limited - will pay off realistically, or whether the money, time and effort that will be spent on getting membership to CIMA is ridiculous and uncalled for right now.

But at least for now, another half-month's salary is going to be spent.

Anticipate this...

Walking down the lane towards the masjid for maghrib prayers, I was finally able to breathe in the cool crisp air of the heavily planted upscale Clifton suburban lane, deliberately measuring my steps without any mental processes frantically trying to grasp those consolidation adjustments or other muddling thoughts.

With the last few minutes of my attempts at earning more marks in the managerial exams having drawn to a close, I had given in my final paper with many-a-hope, fear and regret.

For the main part, I vowed to start as early as possible in my preparation for the next exams so that I would be able to absorb the syllabus into my bloodstream, and simply let it flower during the exams, very much like the hard-working bee produces honey, instead of the usual last-minute desperate dash, complete with hair fall, worrying-sickness and weeks of jail-sentence-like studying routines.

So now I have a 50% chance at passing at least one, and maybe two or even all three managerial level exams. F2 is the most unlikely, having attempted only around 80% of the paper with some earnest, though I managed to pass P1 with a similar completion statistic. P2 was a little better, though suspiciously easier (and probably deceptively so). E2 was best, but could have been better, having been unable to recall a couple of important points to elaborate on, such as Porter's model for a long (25 mark) question.

In case F2 doesn't come through, I have a number of months to revisit each part of the syllabus and have a full-fledged love affair with this one baby, (which is not that bad a proposition, as the financial pillar is still a slightly intimidating one to climb). Also, having a strong(er) command of IFRS principles should pay-off in countries like Australia that are keenly interested in adoption. Having to retake P2 would be a shame, but E2 should come through for me.

The scenarios in the examination questions were strangely familiar, with almost the exact same language being used as in previous papers and revision questions I had read through or solved. I suspect that the questions only examined a different aspect from previous appearances, or were simply recycled.


Also, the syllabus structure did coincide quite exactly (in my opinion) with the exam paper.This means that the paper examines the entire syllabus and allocation of marks is in line with the study weightings given to each part of the syllabus, which is why I was unable to attempt at least 20% of F2 owing mostly to my decision to not study financial instruments (20% of the syllabus).


Which brings me to the hypothesis that a sharply exam-oriented approach to studying, revision and practice with yield flying colors - once I understand core learning outcomes expected and can adapt to the limited variations in the basic application.

For example, 35% of the F2 paper required no more than consolidation of the financial statements with a total of maybe five or six adjusting entries for added complexity. Other parts of the syllabus could be interwoven into a consolidation question, such as a financial instrument that needed to be included in equity.

To reiterate, once the basic pattern of the paper is clear, you should be able to understand what typical questions look like and be able to list the various complexities that expand its scope.


Concerning immigration prospects, the ICAA assessment results are due pretty much around the same time as the exam results, but everything is different now. In short, I no longer need to worry about crossing 30 - the points test has once again been completely changed, and now awards the maximum points for applicants aged 25-32.

However, as much as Aussie land is facing a shortage of accountants, from a quick analysis there seems to be no preference for accountants, only for applicants with "superior English", i.e. 8.0 (will my 7.5 in the writing module mean that I have to..? No, I can't say it, it's too painful...). In case my assessment is negative, I still have another 24 months or so to make sure I qualify.

However, the majority of changes seem to be in my favor since it places a good resource like me ahead of exceptionally qualified individuals. A separate blog post will examine the new points test and its implications on accounting professing as soon as I get this one out of the way. 


Getting my PER awarded was certainly next on the agenda as soon as I completed my managerial exams, as advised by Osama earlier.

However, this too seems to be carried forward as all the latest literature on the PER states that passing the strategic level exams is a pre-requisite to applying, as the PER is really one half of the final T4 exam that awards credit to the TOPCIMA, if I am not mistaken.

Never-the-less, the PER should be compiled while I can still recall the work done here, though students who pass the TOPCIMA exam have four years to apply for membership. So while this is not a critical task anymore, I need to keep track of my experience. Expect a blog post on this too, coming soon.


So really the only things on the critical path now are to get all my facts together to reassess my position and to start preparing for the next examinations. That will involve redoing my study area to make it less of a store-room and more of a study as well as another blog on my study strategy for the strategic level exams. It can never be too early to take a look at the syllabus and start planning, even if I have to take the exam next November (2011).


So a lot of blogging ahead of me this week top get the following things clear:


> Study strategy for Strategic Level Exams
> Implications of new developments for skilled migration and updated immigration plan
> Practical Experience Requirements: What it is, how it is prepared and when it can be assessed.

E2 Brutus?

Yes, I'm shaky. And hoping I'll blossom like a wildflower during the exam, blazing guns and hitting the target without any shooting practice, not even the specimen paper, and a good part of revision process still underway with only four hours till I have to make the march to the exam hall.

But from all I've read so far, I need to remember:

- to take it as it comes:

It's not all about the black and white I've had to drink in the last few (I mean xerox powder). As long as I'm making commercial sense and can draw on some of the material I've read, I can probably score, so I shouldn't be intimidated by a what's-that how's-that. Just give the man some good advice that someone like a boss or a client or such would be able to really use in practical life. That is the essence of CIMA exams and that should work out just fine.

In fact, like formalized strategy formulation, I don't want to let the syllabus put me in a box. I'm sure I got a decent percentage in E1 because I wasn't afraid to bring in some good business sense to my answers, regardless of whether it was in the syllabus.

For E3 (or E2 revisit in case I don't make it this time), I need to keep a secondary-grade science-book scrap book for each part of the syllabus (with one side of the book blank for diagrams and such), in which I can write in neat handwriting and sketch pretty charts and make it fun and structured too, with cutouts and foldouts and pullouts and all that, with a page dedicated to each component and plenty of interactive stuff for revision, finishing off with an outline summary for final revision. A separate workbook with fill-in-the's and draw-the's and q&as with some serious work and rework done on them would truly compact this information.

This kind of preparation would have made E2 a breeze and a no-stress paper.

But coming back to the present, I need to finish revision, read through the specimen paper, check some business articles and E2 articles on the website including exam tips. And going by my current rate of learning, I need to move fast.

Two tablespoons of P2 before bedtime each night...

Scoring possibly 30% on the specimen paper is not good. But it could have been worse, since I didn't really think it would be so tough.

Those guys weren't kidding when they said everything will be tested, and anything too, all the way from C01 to P1 and P2 as well. Now you don't just get by making calculations, you need to know the deeper logic, rationale and mathematical, logarithmic inner workings of all the concepts you've ever come across by now.

You need stamina to go through the whole wringing process but the good part is that if you're some kind of management accounting guru by now you can simply:

1) quickly and comprehensively grasp the specific requirements of each question

2) analyze the scenario sharply and observantly, with a reasonable depth of understanding

3) use your vast management accounting and commercial sense to recognize what the problem is and what the appropriate solution is

4) rattle off relevant principles, theory and argumentation to supplement your answers

5) work mechanically at doing all those workings you can do in your sleep by now


The best way to have prepared for P2 would probably have been to eat, sleep and drink P2 at least four months previously and have had enough batting practice, and diligently + regularly too, to score a century, to be sure to at least get half way.

Since that is not the case, I can depend on hope and some hard work.


Exam Paper strategy for P2:

1. Move fast, be highly conscious of time-ups

2. Make sure you read everything in 20 minutes, then go on to the closer examination, starting with the most technical questions worth the most marks

3. Understand your role in each question and what you need to do

4. Don't be worried if you can't remember the jargon, use sound commercial reasoning at every step and keep moving

5. Know the following topics inside out with plenty practice:

- fundamental principles such as relevant costs and sharp analytical skills in ratio analysis, getting down to business immediately recognizing problems and likely explanations

- standard costing, ABC and marginal costing/ absorption costing like the back of your hand

- optimization, learning curves, major pricing strategies with their applicability in the product life cycle and everything to know about variances as easily calculated as taking a deep breath

- transfer pricing methods, calculation, together with divisional performance measures, budgeting behavior and common problems and likely solutions any time of the day

- knowledge of all concepts and linkages with enough argumentation to support a discussion within 2 seconds of being asked


One area of consolation is that once you have somehow entered the 'zone', P2 is not much different from that English language test you took earlier: it's basically a test of your comprehension of detailed complicated information you need to provide an analytical answer for - reading sharply and being poignant in your answers.

Questions are very rarely straight forward so care should be taken to read carefully, absorb the material and apply yourself brilliantly.

F2 Last Chance Preparation

As dusk approaches and the last day of (Bohra) Eid-ul-adha disappears into the sunset, I am finally getting set to begin my final preparation for P2 and E2 after almost a four-day stretch of preparing for my weakest paper (F2).

Having taken a look over the May 2010 paper (another touch-and-go proposition), there is not much change in the existing strategy, though the pressing need for additional preparation continues to haunt me.

The final preparation list is as follows, which will probably take place once I have given in the P2 paper on the final eve and day-time hours before the paper, hopefully armed with the revision kit and some clarified concepts:


For the main bulk of the paper:

1. Understand clearly the requirements for subsidiaries, associates and joint ventures: when to consolidate fully/ partially and use equity accounting for consolidation of financial statements including SOCI, CSCIE, CSOFP and CCFS with crystal clear concepts relating to extent of ownership based on ownership of equity and entitled share of income between parent and NCI, as well as Comprehensive Income

2. Be particularly comfortable with goodwill calculation, fair value adjustments, intra-group trading and unrealized profit adjustments, sale of asset with corresponding effect on income statement, assets/ liabilities, Retained Earnings and NCI, and elimination of internal dividends and other transactions. The examiner's guide to passing F2 mentions 'the big three - goodwill, non-controlling interest and group retained earnings'.

3. Expect correction of entries relating to acquisition and disposal of investments such as disposal of subsidiary and accounting for retained investment as associate (e.g. May 2010 Part B Q6). Understand also the terms AFS, HFT and their implications on the SOFP

4. Be clear on how to use accounting ratios to critically evaluate business performance in terms of profitability (margins, their relations with each other and interpretation in context of horizontal/vertical comparisons), working capital management (turnover, changes over time), leverage (debt to equity ratios, interest cover).

Ascertain fundamentals of the business such as cash position, effective interest rates of financing and extent of using debt to equity, asset values etc. and make adjustments in the figures used for ratio analyses to capture the reality of the business. Reporting style using appropriate narrative and mentioning further opportunities for investigation should flow nicely. The examiner's guide mentions a key 'skill being tested is your ability to identify the big issues and select the ratios relevant to those issues' and always remember to use the word 'because':

"If your sentences include the word ‘because’, it means you must be identifying the issue or the solution and explaining why it is an issue or solution. That is what’s going to earn you marks."


Also, for potential lifesaving:

1. Understand how sub-subsidiaries are accounted for and piecemeal acquisitions (understanding the basic concept may be pivotal to a not-so-difficult 10 mark question or even a long answer question)

2. Understand the limitation of analysis of financial statements, defects in conventional accounting, especially with rising price levels, international differences and across markets, using different accounting policies etc.

3. Expect a question relating to foreign subsidiaries and the application of exchange rates (given that the specimen paper and May 2010 seem to 'forget' this part of the syllabus, so do anticipate the bombshell)

2. Be confident in EPS calculations including comparative, effect of dilution and their effect on investor confidence

4. Pay close attention to the 10% part of the syllabus for easy scoring theoretical questions: substance over form with examples, latest developments regarding IFRS convergence with US GAAP (mentioning shift of approach, Norwalk agreement, Roadmap, short and long term projects, dropping of recon and the most recent developments such as completion of first phase of conceptual framework and examples of technical areas where convergence was acheived), environmental and social reporting, voluntary disclosures and managerial reviews, and importantly, capital maintenance concepts

5. Form a basic understanding of share based payments and pension plans

6. While I have decidedly ignored the Financial Instruments part of the syllabus, basic knowledge of accounting entries with a feel for the substance over form should help


So that's a lot of work cut out for the 20 hours or so between exams (minus, say, two hours for commuting and five to six hours for resting and answering urgent calls from nature, leaving me with two or three 3-hour sessions or one or two long 4-hour sessions at best) in my last chance at preparing to clear the F2.

Please keep in mind that anyone who wants to get a high score on F2 should NOT use this advice. ALL the coverage mentioned above can help me scrape through to inch a mark or two past the 50 per cent mark.

There's also an online FOC session for F2 preparation intimated by email this Sunday 5:30 to 7 pm. I missed the email two days ago which required a response by the next day, so I'm a day late in responding. But with the media chosen as internet and preparation for the other exams starting so late, it may or may not be feasible anyway. In case it is, I don't want to miss it.


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