SFMA / Management Accounting

R0N BURGUNDY

Ok - after looking at the syllabus for SFMA (see below) there are a few things I would like to get a bit more material on and do more exam style questions on:


Area 2.1 - Investment decisions

Area 2.5 - Company valuation, mergers and acquisitions etc.
Apply appropriate methods (asset based, earnings, dividend, discounted cash flow, market based approaches) to value a business or section of a business

Area 3.4 - Interest rate risk/swaps/futures etc.

Area 4.2 - Performance measurement decisions

Area 4.3 - Advanced variance analysis

Area 4.4 - Divisional performance

Area 4.5 - Transfer pricing


Has anyone seen any further sources for this stuff? Or anything on the syllabus actually? The more the merrier (I think)


I seen ACCA past papers had some of the stuff in them

Cheers in advance



1.
Financial Strategy Formulation and Environment (8% - 15%)

1.1
Financial strategy development
Demonstrate an understanding of the role of financial strategy and financial objectives, and its contribution to corporate objectives and shareholder wealth
Evaluate or develop the entity‟s short or long term financial objectives or strategy
Assess an organisation‟s current financial position and understand the impact of fiscal and monetary policy and the impact of business cycles and trends on the financing of an organisation
Explain the different stakeholder perspectives and evaluate how possible conflicts (including ethical conflicts) may be reconciled
Demonstrate an awareness of the legal and regulatory framework governing financial management, to include: financial services, Chartered Accountants Ireland code re investment business, directors‟ responsibilities, and the UK Corporate Governance Code2.
Demonstrate an awareness of the legal framework of Money Laundering

2.
Investment Decisions, Financing Decisions and Distribution Decisions (27% - 33%)

2.1
Investment Decisions
Perform investment appraisal calculations, giving due consideration to typical decision criteria
Consider and advise on investment decisions, taking into account the strategic objectives of the entity, availability of resources and the different stakeholder perspectives

2.2
External Sources of Finance
Critically evaluate and advise on short, medium and long term financial requirements, taking into account current and planned activities, including full consideration of working capital requirements

2.3
Stock market
Describe the process of raising capital (to include privately and in broader financial markets)
Explain Stock Exchange requirements, to include initial requirements and ongoing reporting requirements
Distinguish between alternative types of share issues and explain related factors
Explain the role of the accountant and other intermediaries in the context of raising finance on markets

2.4
Dividend decision
Advise on dividend policy
Consider and advise on the dividend decision including relevant practical, legal and taxation aspects
Compare the features of different means of making returns to owners and lenders (e.g. buybacks and alternatives etc.)

2.5
Company valuation, mergers and acquisitions
Summarize why valuations of entities or equity are needed, and describe the valuation process and economic rationale for such activities
Apply appropriate methods (asset based, earnings, dividend, discounted cash flow, market based approaches) to value a business or section of a business
Explain the limitations of the various methods
Identify due diligence issues which should be considered
Explain M&A finance options (equity, debt or alternatives)
Summarise the most common defence tactics and explain how a takeover/defence may take place
Distinguish between minority and controlling interests, in the context of a takeover/defence situation
Evaluated from an ethical perspective, comment on the appropriateness of proposed actions in the context of a takeover/defence for both the company and the chartered accountant
Outline the issues and process of post acquisition assimilation

2.6
Company in difficulty
Recognise a financially troubled entity
Evaluate, advise of or propose on options available (e.g. cease trading, refinancing, full or partial sell off ) from the perspective of the company‟s stakeholders

3.
Risk Decisions (15% - 23%)
3.1
The treasury function
Describe the advantages of a centralised and decentralised treasury function
Outline the potential control issues and methods of evaluating these

3.2
Business and financial risk management
Identify and describe the key business and financial risks facing a business
Summarise how key business and financial risks can be managed and measured
Outline how a risk management policy may be set and monitored, distinguishing different risk attitudes
Explain the terminology and definitions used in risk management
Outline the concept of value at risk and how it is used. Appreciate its importance for good corporate governance during different economic cycles of growth and decline.

3.3
Foreign exchange rate risk
Outline the basic relationship between currencies
Explain different methods of managing currency risks, to include: spots, forwards, futures, options, internal and external hedging techniques and swaps
Perform simple calculations to determine the cost of the hedge
Select the appropriate method of managing currency risk for a given scenario, including quantitative and qualitative considerations

3.4
Interest rate risk: swaps forwards, futures and options
Explain different methods of managing interest rate exposure, to include swaps, forwards, futures, options and swaptions
Perform simple calculations to determine the cost of the hedge
Select the appropriate method of managing interest rate exposure for a given scenario, including quantitative and qualitative considerations


4.
Performance Management (35% - 45%)

4.1
Framework for performance measurement
Explain the purpose of:
Control within the organisation, particularly linking strategy to performance management and demonstrating the good use of management control systems to achieve strategic objectives
Department, divisions and responsibility centres, particularly the logic for same and the associated advantages and disadvantages from the perspective of the company
Demonstrate an understanding of Contingency Theory

4.2
Performance measurement decisions
Identify organisation strategy, goals and targets and design appropriate performance measures. Explain how they may be used to assist achieve the organisation‟s goals
Evaluate performance, including: product evaluation, quality control, business unit performance, consideration of non-financial indicators, environmental issues and ethical dimensions.
Explain and evaluate the use of the balance scorecard and other Key Performance Indicators (KPIs), including the ability to apply within specific contexts
Advise on the use of internal financial analysis (e.g. ratios and trends) and external benchmarking in providing improved management information for decision making on processes, products or services.
Analyse the practical issues which arise when using performance measures
Demonstrate a detailed understanding of typical conflicts (short term vs. long term, financial vs. non-financial, quantified and non-quantified)

4.3
Advanced Variance Analysis
Explain the role of variance analysis in performance measurement
Calculate variances (including mix/yield variances for materials and labour, market share and market yield variances for sales and planning and operating variances for material, labour and sales) and be able to interpret the results

4.4
Divisional performance measures and ethics
Differentiate between centralised and decentralised decision making approaches
Distinguish the alternative centres for departmental and divisional performance (cost, revenue, profit and investment centres) including how they are assessed and monitored
Advise on the advantages and limitations of divisionalisation
Compare alternative performance measures (including calculations), to include: profit, ROCE, residual income, economic value added
Calculate and advise on the most appropriate measure(s) for a given scenario.
Explain possible dysfunctional consequences of short term measures
Recognise and explain potential ethical dilemmas which occur in management of divisional performance

4.5
Transfer Pricing
Explain the context of transfer pricing
Identify and explain the issues involved for the company and the divisional managers in transfer pricing; aims and possible conflicts
Calculate, explain and advise on alternative approaches to transfer pricing, to include: cost based method, market based method and negotiated method.
Identify potential or existing sources of conflict and advise on resolution strategies

SBWife

You'll find questions (as well as the suggested answer) on many of those topics on the past F5 and F9 papers on the ACCA website.

R0N BURGUNDY

cheers for that!! i had already seen the acca f5 and p5 papers but had totally overlooked f9!!! which has alot of useful stuff on it. cheers again!!

KingEnda

those ACCA Questions and Answers are very useful. The material available for ACCA in general seems to be far superior to the stuff we get:mad:

R0N BURGUNDY

according to f9 acca exam (june-09):

"equity is risker than debt and so equity is more expensive than debt"

this is rubbish isnt it? or am i losing the plot?

An Citeog

R0N BURGUNDY wrote: »

according to f9 acca exam (june-09):

"equity is risker than debt and so equity is more expensive than debt"

this is rubbish isnt it? or am i losing the plot?

Equity is riskier for the investor as they're the last to be paid in the event of a liquidation.

ETA: The riskier the investment, the higher the return demanded by the investor will be and the more expensive it will be for the company.

R0N BURGUNDY

Ah right yes - riskier from the investors perspective and so a greater expense to the company. I was taking both from the company perspective before. Chairs

SBWife

Also remember equity holders need to be paid out of post tax earnings whereas the interest on the debt is a pretax expense.

KingEnda

Are Preference Shares Equity ot Debt?

SBWife

KingEnda wrote: »

Are Preference Shares Equity ot Debt?

It depends AFAIR

- if they are redeemable for a certain amount on a certain date, are redemable at the behest of the holder or the issuer is contactually compelled to pay the dividend they are considered debt.

- Otherwise they are equity.

Diagnostics

Question regrads the F9 papers? I dont understand their system at all!!
where are they on the ACCA website??

SBWife

For now they are here http://www2.accaglobal.com/students/acca/exams/f9/past_papers who knows where they will be tomorrow.

Some brain surgeon/rocket scientist at ACCA decided that it would be a good idea to put through a bloody site redesign a few weeks before the exams :mad::mad::mad:

collegeme

Thanks for that link SBWife.

I am in the middle of studying this subject at the moment.

Does anyone know where on the CAI website the pilot papers are and i also can't find the old prof3???

This studying has my brain fried.

Trainee2010

According to an exam booklet that we received from an employer they said that the chapters to be covered in the finance book for Sfma are 2-7, 13,14,16,18 and 19. Are people covering the whole finance book or just relevant chapters? Also for management accounting do we need to know management accounting chapters other than variance, divisional and also transfer pricing(chapter 15 &16)

Pawwed Rig

KingEnda wrote: »

Are Preference Shares Equity ot Debt?

It depends. A redeemable preference share is debt as are cumulative irredeemable preference shares. Iredeemable non cumulative preference shares are equity

EveT

Trainee2010 wrote: »

According to an exam booklet that we received from an employer they said that the chapters to be covered in the finance book for Sfma are 2-7, 13,14,16,18 and 19. Are people covering the whole finance book or just relevant chapters? Also for management accounting do we need to know management accounting chapters other than variance, divisional and also transfer pricing(chapter 15 &16)

oh boo I didnt think all of 2-7 were examinable, why did I only think 2 and 3 were?! 17 is also right?? we did that in class

An Citeog

EveT wrote: »

oh boo I didnt think all of 2-7 were examinable, why did I only think 2 and 3 were?! 17 is also right?? we did that in class

There's a much bigger crossover from CAP1 to CAP2 in SFMA than there is in the others, particularly wrt finance. Also yeah, 17 definitely is.

EveT

An Citeog wrote: »

There's a much bigger crossover from CAP1 to CAP2 in SFMA than there is in the others, particularly wrt finance. Also yeah, 17 definitely is.

so what chapters are actually examinable for it? all the above plus 17? some will be revision of CAP 1 right?

argh nightmare. I didnt think they were on it but if they are revision its not as bad as all new stuff. how are people tacking sfma?

Andy3.16

EveT wrote: »

so what chapters are actually examinable for it? all the above plus 17? some will be revision of CAP 1 right?

argh nightmare. I didnt think they were on it but if they are revision its not as bad as all new stuff. how are people tacking sfma?

Hi Guys, does anyone know what to look at for the cap1 crossover for revision purposes. I am really struggling to know what to cover for the cap1 part of the cap2 course and where to find material for it , apart from ratios and variances.

Any help would be great.

Username2011

Andy3.16 wrote: »

Hi Guys, does anyone know what to look at for the cap1 crossover for revision purposes. I am really struggling to know what to cover for the cap1 part of the cap2 course and where to find material for it , apart from ratios and variances.

Any help would be great.

definitlely know your cap 1 variances and investment appraisal.

penneyes

3.2
Business and financial risk management
Identify and describe the key business and financial risks facing a business
Summarise how key business and financial risks can be managed and measured
Outline how a risk management policy may be set and monitored, distinguishing different risk attitudes
Explain the terminology and definitions used in risk management
Outline the concept of value at risk and how it is used. Appreciate its importance for good corporate governance during different economic cycles of growth and decline.

I dont see these parts covered in the finance book or notes given? any idea where to get these sections? or am i missing something?

Andy3.16

Username2011 wrote: »

definitlely know your cap 1 variances and investment appraisal.

Thanks Username2011, I have looked at the ratios and variances already. When you say investment appraisal do you mean NPV and Wacc. Im just trying to find good material to cover as the book is not great at all.

R0N BURGUNDY

value at risk:

http://en.wikipedia.org/wiki/Value_at_risk

ferike1

Books from the institute aren't worth the paper they are printed on. Get the ACCA notes.