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CPA Australia Strategic Management Accounting Study Notes (High Distinction)

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  • Course
  • CPA Strategic Management Accounting
  • Institution
  • CPA Australia
  • Book
  • Strategic Management Accounting

Written by a fully qualified CPA (Aust.) professional, these updated study notes represent the author's materials that were used to blast through the CPA Australia Professional Exams in one year with 4 high distinctions and 2 distinctions while working full time without any tuition support. In the...

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  • August 12, 2018
  • 88
  • 2018/2019
  • Study guide

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  • cpa australia
  • high distinction
  • cpa professional program
  • cpa australia study notes
  • strategic management accounting

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  • CPA Australia
  • CPA Strategic Management Accounting
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High Distinction
CPA Strategic Management Accounting
Study Notes (Version 16a)
Contents
Module 1 - Introduction to strategic management accounting ............................................................. 4
Part A: The role of strategic management accounting ....................................................................... 4
Role of strategic management accounting/accountant ................................................................. 4
Causes of change in the business environment.............................................................................. 7
Part B: Understanding and supporting management ......................................................................... 9
Part C: Management accounting systems ........................................................................................ 10
Management accounting systems ................................................................................................ 10
Risk management.......................................................................................................................... 11
Accounting techniques for supporting operational management ................................................... 12
Cost classifications ........................................................................................................................ 12
CVP ................................................................................................................................................ 13
Product Costing ............................................................................................................................. 13
Budgeting ...................................................................................................................................... 13
Working capital management ....................................................................................................... 14
Module 2 - Creating organisational value ............................................................................................. 16
Part A: Value creation ....................................................................................................................... 16
Organisation/Corporate Governance ........................................................................................... 16
Creating Value ............................................................................................................................... 19
Organisation value chain............................................................................................................... 21
Industry value chain ...................................................................................................................... 23
Management accountants and value analysis .............................................................................. 25
Part B: Strategic management .......................................................................................................... 27
Strategic management .................................................................................................................. 27
Strategic analysis........................................................................................................................... 29
Strategic planning ......................................................................................................................... 31
Strategy choice.............................................................................................................................. 34
Strategy implementation .............................................................................................................. 35


1

,Module 3 - Performance measurement ............................................................................................... 36
Part A: The tole of performance measurement................................................................................ 36
Part B: Strategy, management control and performance measurement ......................................... 40
Part C: Determining performance measures and setting performance targets ............................... 45
Module 4 - Techniques for creating and managing value .................................................................... 48
Activity Base Costing ......................................................................................................................... 48
Managing value-creating activities ................................................................................................... 51
Strategic cost management .............................................................................................................. 52
Product Life Cycle.......................................................................................................................... 54
Kaizen costing ............................................................................................................................... 56
Reverse value chain ...................................................................................................................... 57
Activity-base management ........................................................................................................... 58
Business process management (BPM) .......................................................................................... 59
Activity value analysis ................................................................................................................... 60
Continuous improvement (CI)....................................................................................................... 61
Strategic profit management ............................................................................................................ 62
Supplier management ................................................................................................................... 62
Total quality management (TQM)................................................................................................. 65
Outsourcing and Offshoring ......................................................................................................... 66
Customer profitability analysis ..................................................................................................... 68
Module 5 - Project management .......................................................................................................... 71
Part A: Project management defined ............................................................................................... 71
Part B: Roles in project management ............................................................................................... 74
Part C: The management accountant's role in project selection...................................................... 77
Part D: The management accountant's role in project planning ...................................................... 82
Part E: The management accountant's role in project monitoring and control ............................... 85
Part F: The management accountant's role in project completion and review ............................... 88



About the Author
The author is an international best seller for CPA Australia study notes, helping candidates across the
world taking the CPA Australia exam achieve success.

After scoring a perfect accounting score at high school, the author studied a BCom at Melbourne
University and won a maximum of three Deans Honours List which eventuated in being bestowed
the BCom undergraduate medal, awarded to the best graduating commerce scholar over their three

2

,years of study. The author proceeded to study a masters in the field of accounting while working full
time in the corporate world and graduated on the Melbourne Business School Deans Honours List.
Having a combination of professional experience and academic success, the author blasted through
six CPA exams in one year without the aid of any external tuition and scored high distinctions for
Ethics and Governance, Strategic Management Accounting, Financial Reporting and Advanced Audit
and Assurance and distinctions for Global Strategies and Leadership and Advanced Taxation.

Now a fully qualified CPA, the author has since updated the notes to incorporate student feedback
for further refinements.


Disclaimer
The materials represent the author's study notes to achieve a High Distinction.

The materials are not, and not intended to be professional advice. These materials may not reflect
the most recent developments and judgement befalls on the reader to examine the suitability of the
materials for their own purposes, having full regard for any inaccuracies or omissions that may arise
in the materials. The author of the material expressly exclude themselves from any contractual,
tortuous or any other form of liability on whatever basis to any person, whether a participant in this
subject or not, for any loss or damage sustained or for any consequences which may be thought to
arise either directly or indirectly from reliance on statements made in these materials.

Any opinions expressed in these materials are from the point of view of a student preparing for an
examination and not necessarily those of any qualified professional, affiliated organisations or
members.

The materials are sold for the exclusive use of the purchaser and the author continues to reserve all
rights. No part may be reproduced, hired out, loaned, given out, resold, stored or transmitted in any
form or by any means without the written permission of the author.




3

,Module 1 - Introduction to strategic management accounting



Module 1 - Introduction to strategic management accounting

Part A: The role of strategic management accounting


Role of strategic management accounting/accountant
1. Definition of strategic management accounting [p15]

To create sustainable value by

 supporting the formation, selection, implementation and evaluation of organisational
strategy; and
 providing information that captures financial and non-financial perspectives for both the
internal and external environments to enable effective resource allocation.



What are the essential requirements for value creation for organisations [p15]

 to generate products and services with value that consumers are willing to pay for
 to constantly develop and improve the resources and activities used to generate that value.



What is value? [p17]

 Value is combining resources together in a manner that creates desirable outcomes; it is
more than just increasing shareholder wealth and need to consider various stakeholders.
 The development of CSR indicates people are interested in both pure economic value and
consider the social and environmental impacts.

Stakeholder Value
Shareholder Obtain an appropriate return for the risk involved
Guide the direction of the company
Customer Safely standards
High quality
Reasonable price
Warranty support
Lenders Lend capital in return for principal and interest payments and the company
can pay when it falls due.
Suppliers Contracts that generate sufficient revenue for the costs involved
Strong and reliable working relationships
Employees Appropriate rewards including monetary and qualitative returns (job
satisfaction)
Community groups Products are safe to use
Sustainable in terms of raw materials used
Recyclable




4

,Module 1 - Introduction to strategic management accounting


What is strategic management [p21]

Strategic management describes the process by which an organisation decides the direction it will
take, the industry it will operate within, the types of products or services it will provide and its goals
and objectives.



List of titles used to describe management accountants [p22]



What is the role of strategic management accounting? [p21 ,22]

 The role is to provide useful information that supports both the day-to-day and strategic
decisions of internal management [p22 for list of decision-making by management] to
improve organisational outcomes.
 It proves a wide range of tools and techniques [p44 for list of tools and techniques] that
support each stage of the strategic management process so becomes an enabler that helps
initiate and drive strategic management activity.
 It helps organisations in their desire to create long-term, sustainable value that is of benefit
to all stakeholders.



What is the role of strategic management accountant? [p40]

 The role has expanded from traditional management accounting to a business partner role
[p42] that include a focus on helping managers solve problems and improve their
competitive position by focusing on assisting the formation, selection and operational
implementation of strategies.
 The accountants have to do more than just be familiar with numbers; financial skills need to
be coupled with [p43]



Difference between financial reporting and strategic management accounting [p23]

Difference between traditional management accounting and strategic management accounting
[p41]



The evolution of management accounting [p24-25]

Horizon Role Activity
Prior to Technical activity: determine costs and Cost accounting and budgeting
1950 providing financial control
1950-1965 Management activity: creation and Responsible accounting
presentation of information for planning and


5

, Module 1 - Introduction to strategic management accounting


control
1965-1985 Increasing efficiency: increasing efficiency of
business processes to eliminate wasted
resources
1985-2000 Value creation: improve the effective use of Understand the cause and drivers of
resources customer value and shareholder value
as well as effective use of technology
Involved in improving strategic and
operational decision0making and
resource allocation
2000 to Strategic and externally focused: creating Strategic business advisors [p25 list of
now value in a responsible and sustainable activities]
manner.


Contemporary skills of a management accountant [p43-44]

1. Intellectual skills,
2. Technical skills
3. Personal and interpersonal skills
4. Communication skills
5. Organisational or business management skills



Challenges facing management accountants [p45-46]

1. Technology: keeping information secure and maintaining customer privacy.
2. Managing resources: managing cash flow, supply chain, intangible assets
3. Promoting innovation: which requires a clear understand of customers and customer value.




6

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