Strategic management accounting is a key component of the overall skills base of today’s professional accountant
This subject examines the strategic management accountant's role in dynamic organisations operating in the global business environment. In this role, the professional accountant engages with the organisation's management team and contributes to strategy development and implementation with the aim of creating customer and shareholder value, and a strong competitive position for the organisation. The subject highlights the management accounting tools and techniques of value chain analysis and project management which have become increasingly important in contemporary operational environments.
The subject includes discussions on the professional accountant's responsibilities and judgement as introduced in the Ethics and Governance subject. Also discussed are investment evaluation and strategic business analysis in the context of assessing and responding to risk, as covered in the Financial Risk Management and Advanced Audit and Assurance subjects. You are introduced to strategic management concepts which are expanded on in the Global Strategy and Leadership subject.
Strategic Management Accounting is a compulsory subject for candidates commencing the CPA Program from semester 2 2009. However, it is an elective subject in the CPA Program for candidates who commenced prior to semester 2, 2009.
The Strategic Management Accounting exam is comprised of a combination of multiple-choice and extended-response questions.
The aims of this subject are:
- to develop the skills of the professional accountant in creating, managing and enhancing sustainable value to the organisation through the use of various strategic management tools and techniques
- to examine techniques for developing, implementing, measuring and monitoring the performance of an organisation to provide feedback for improving strategies
On completion of this subject, you should be able to:
- explain the role of strategic management accounting in supporting strategy development and the day-to-day operations of an organisation
- explain and apply the strategic management process and organisational and industry value analysis to understanding value drivers, cost drivers and the reconfiguring value chains
- explain the role of performance measurement and control systems in value creation, strategy implementation and monitoring performance to improve strategies
- apply strategic management accounting tools and techniques to improve the contribution and sustainability of value-creating activities
- discuss the role of project selection, planning, monitoring and completion in strategy implementation
The ‘weighting’ column in the following table provides an indication of the emphasis placed on each module in the exam, while the ‘proportion of study time’ column is a guide for you to allocate your study time for each module.
||Recommended proportion of study time (%)
|1. Introduction to strategic management accounting
|2. Creating organisational value
|3. Performance measurement
|4. Techniques for creating and managing value
|5. Project management
|6. Case study
* Refer to the module descriptions – Case study.
The subject is divided into six modules. A brief outline of each module is provided below.
Module 1: Introduction to strategic management accounting
This module sets the framework for strategic management accounting. It discusses traditional management accounting and the key changes leading to the development of strategic management accounting. The module considers how the professional accountant and strategic management accounting systems play a critical role in business. This module also introduces the key contemporary concepts, tools and techniques that will be expanded on in subsequent modules.
Part A: The role of strategic management accounting
- Useful information for decision-making
- The evolution of management accounting
- Causes of change in the business environment
- The role of management accountants
Part B: Understanding and supporting management
- What managers do—creating and managing value
- Strategic management accounting—supporting managers
Part C: Management Accounting Systems
- The role of management accounting systems
- Risk management
- Problems with management accounting systems
- ERP software and management accounting systems
Module 2: Creating organisational value
The ability of an organisation to deliver value and secure a competitive position depends on how well it develops and executes its strategy. This module provides an overview of the role of the management accountant in supporting strategy development. Part A introduces the corporate governance framework, the concept of stakeholder value, and the organisational and industry value chains. In Part B, two approaches to strategic analysis, value analysis and SWOT, are shown to be fundamental to understanding the organisation and its environment. A completed strategic analysis then informs the development of a strategic management framework and strategies designed to deliver stakeholder value. The module introduces both established and new approaches to strategy development. The role of a management accountant in strategic analysis, strategic planning, strategy implementation, and in improving value chain performance is emphasised. All of these activities are critical contributions to enterprise and business governance.
Part A: Value creation
- Corporate governance
- Creating value
- Organisation value chain
- Industry value chain
- Management accountants and value analysis
Part B: Strategic management
- Strategic analysis
- Strategic planning
- Strategy choice
- Strategy implementation
- The CPA and strategic management
Module 3: Performance measurement
Sound design and an understanding of the use and implications of strategic performance measurement and control systems are gaining increasing importance in all organisations. This module focuses on understanding the key role that performance measurement plays in strategy and value creation. It discusses the characteristics of effective performance measures and control systems, the use of performance measures, and how to apply them to motivate and reward employees. The key themes are the importance of performance being socially responsible and sustainable; the leadership role of the professional accountant in performance measurement; and the importance of value adding activities.
Part A: The role of performance measurement
- The multiple roles of performance measurement
Part B: Strategy, management control, and performance measurement
- Models of performance measurement
Part C: Determining performance measures and setting performance targets
Module 4: Techniques for creating and managing value
This module shows how, through the use of a variety of strategic management accounting concepts, tools and techniques, the professional accountant is able to assist with the growth of organisational value. The module uses a case study to illustrate the implementation of strategies to enhance value. Module 4 focuses on managing the value chain and discusses the key components of strategic cost management and strategic profit management.
Part A: Applying SMA concepts, tools and techniques to the value chain
- Activity-based costing
- Time-driven activity-based costing
- Levers for managing value-creating activities
Part B: Strategic cost management
Part C: Strategic profit management
- Upstream activities: Supplier management
- Downstream activities: Customer profitability analysis
Module 5: Project management
Project management is an integral aspect of management strategy. This module explores the roles involved in project management, including project leadership and the professional accountant. It examines the strategic management accountant’s role in project selection, planning, implementation, control and monitoring and project completion and review.
Part A: Project management defined
- What is a project?
- What is project management?
- The steps in project management
- Organisational structures for projects
Part B: Roles in project management
- Project sponsor
- Project manager
- The project team
- International project teams
- Virtual project teams
Part C: The management accountant's role in project selection
- Developing a business case for projects
- Strategic analysis/fit
- Stakeholder identification and assessment
- Risk assessment
- Financial analysis—single project
- Financial analysis—multiple projects
- Balancing stakeholder interests with project specification and financial returns
Part D: The management accountant's role in project planning
- Project scheduling
- Project budgeting
Part E: The management accountant's role in project monitoring and control
- Monitoring progress
- Monitoring costs
- Monitoring specification and quality
- Designing performance measures
- The importance of probity in projects
- Risk management
- Stakeholder management
Part F: The management accountant's role in project completion and review
- The completion decision
- Specification satisfaction consensus
- Strategic fit assessment
- Stakeholder satisfaction assessment
- Financial closure
- Resource dispersion
- Final report
- Knowledge management
The case study module consolidates the understanding of strategic management accounting through completion of various tasks that require you to apply the concepts, tools and techniques covered in Modules 1 to 5 using a practical case study. Although the case study is not weighted for assessment purposes (i.e. it is not examinable). However, in order to gain the most benefit from your study of Strategic Management Accounting , it is important that you allocate time to complete the Case study, including attempting the case study tasks and reviewing the suggested answers.
Completeing the case study and case study tasks will help you prepare for the extended response section of the Strategic Management Accounting exam.