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P1 Management AccountingSyllabus Overview
Created by: Global CGMA University and Academic Center of Excellence
2020
“We attract, inspire and engage the next generation of
CIMA members and CGMAs by increasing awareness
among academics and university students
through identification of best practices, training,
resources and communications, working in partnership
with the regions.”
Global CGMA University and Academic Center of Excellence (COE)
The Association of International Certified Professional Accountants
Global CGMA University and Academic COE
The COE’s role
3
Establish consistent global strategy & performance for academic relations that compliments country efforts
Provide partnership & support
Develop best practices & tools
Align priorities & interests
Develop operational efficiency
Global CGMA University and Academic COE
What is this document about?
4
• This document is part of a series
that was developed to provide
reading materials, case studies,
videos, podcasts and other
resources that are relevant to a
specific exam in the 2019 CIMA
Professional Qualification (PQ).
• These resources will help you to
understand more about new
topics within a specific exam.
• All resources found in this
document can be shared with
faculty members and students.
• Each resource has a link to its
webpage and for ease of
access, just click on these icons
when you see them in the
following slides:
Global CGMA University and Academic COE
Quick links to each section
5
Click on any of these slides to
go directly to the section
The Performance Pillar
Global CGMA University and Academic COE
2019 CIMA Professional Qualification Framework
7
Performance Pillar
Global CGMA University and Academic COE
Summary of the Performance Pillar
8
Make a vision a
reality
How do we use
costing and
budgeting for
short-term
decision-
making?
How do we
monitor and
control activity
to ensure
performance?
How do we
identify,
mitigate against
and manage
risks to the
organisation?
Global CGMA University and Academic COE
Overview of the Performance pillar
9
P3: Risk Management
•A: Enterprise risk
•B: Strategic risk
•C: Internal controls
•D: Cyber risks
P2: Advanced Management Accounting
•A: Managing the costs of creating value
•B: Capital investment decision making
•C: Managing and controlling the performance of organisational units
•D: Risk and control
P1: Management Accounting
•A: Cost accounting for decision and control
•B: Budgeting and budgetary control
•C: Short term commercial decision making
•D: Risk and uncertainty in the short term
Global CGMA University and Academic COE
What changed in P1?
10
2015 syllabus
P1: Management Accounting
A: Cost accounting systems
B: Budgeting and budgetary control
C: Short-term decision making
D: Dealing with uncertainty in the short term
2019 syllabus
P1: Management Accounting
A: Cost accounting for decision and control
B: Budgeting and budgetary control
C: Short-term commercial decision making
D: Risk and uncertainty in the short term
New:
Digital issues
in costing
Global CGMA University and Academic COE
P1: Structure and outline
11
P1B:
Budgets to translate medium term decisions into
actionable short term plans
P1C:
Short-term decisions to exploit new opportunities to
create or preserve value
P1A:
Costing required to support the budgets and
decision making
P1D:
Use understanding of risk and uncertainty in the short term to
improve the quality of budgets and short- term decisions
30%
25%
15%
30%Primary topics
Exam weighting
Global CGMA University and Academic COE
CGMA competencies in a digital world
12
The competency framework reflects our
findings on how finance professionals are
expected to apply accounting and finance
skills within the context of the business/
organisations in which they operate.
It also reflects for the first time how
technology and a digital mindset will be
required to affect and influence their own
decisions, actions and behaviours and
those of their colleagues within the wider
organisation.
Exam blueprint
Global CGMA University and Academic COE
What are exam blueprints?
• They are based on the CIMA syllabus and set out
in detail what is examinable in each CIMA
examination.
• They are published annually, and provide
information about the format, structure and
weightings of the assessments.
14
Global CGMA University and Academic COE
Key features of the blueprints
• Updated annually
• 3 documents, one per level
• 4 sections
– Overview
– Case study exam business
simulation
– Objective test representative tasks
– Appendices (formulas etc.)
Global CGMA University and Academic COE
Exam overview
16
Skill level
Remembering
Understanding
Application
Exam content
weighting
4 major topics
Exam weighting
for each topic
(refer to P1
Structure and
Outline)
Exam format
Objective test
On-demand /
home based
Computerised
60 questions / 90
minutes
Students are
now allowed to
take exams from
the comfort of
their own home.
Do check our
website to see if
it’s available in
your country.
Global CGMA University and Academic COE
CIMA pass rates
Due to the launch of the 2019 Professional
Qualification the pass rates for the objective tests,
including P1, are unavailable. We expect to update
the pass rate table by July 2020 and will then
continue to update it every quarter.
17
Global CGMA University and Academic COE
Examination purpose
18
• The Objective Tests assure that learners have acquired the fundamental
knowledge, skills and techniques for the role that will be simulated in the
culminating Case Study Examination.
• The Objective Tests will cover all areas of the syllabus and will ensure
that learning has taken place across the breadth of the syllabus.
• The Objective Tests at the operational level are weighted towards
remembering, understanding and application with analysis and
evaluation in highly structured scenarios.
Global CGMA University and Academic COE
“I can” statements
19
• In the exam blueprint, you will
find representative task
statements.
• Each statement is a plain English
description of what a CIMA
finance professional should know
and be able to do i.e. “I can….”.
Student
I can
evaluate the
cost and
benefit of….
Employer
Great! We are
hiring someone
who can….
Global CGMA University and Academic COE
“I can” statements (cont’d)
20
• The content and skill level determine
the language and verbs used in the
representative task.
• CIMA will test up to the level of the
task statement in the objective test
(an objective test question on a
particular topic could be set at a
lower level than the task statement in
the blueprint).
• The task statements in the blueprint
are representative and are not
intended to be (nor should they be
viewed as) an all-inclusive list of
tasks that may be tested on the
Examination.
• The number of tasks associated with
a particular content group or topic is
not indicative of the extent such
content group, topic or related skill
level will be assessed on the test.
Global CGMA University and Academic COE
Beyond the blueprint
• The blueprint may indicate models and
frameworks which may lead to the learning
outcomes stated in the syllabus.
• However, learning providers and academics may
use other models and aides to develop these
learning outcomes.
21
Global CGMA University and Academic COE
A snapshot of the P1 exam blueprint
22
P1: Cost accounting for
decision and control
Skill level
Representative task statement
Lead
outcome
Component
outcome
Remembering and
understanding
Application Analysis Evaluation
1. Rationales
for costing
a. Definition of
costing
Understand costing and the
different reasons for calculating
costs.
The slides below will list all these representative task statements.
P1A P1B P1DP1C
Topic A – Cost accounting for decision and control
P1 Management Accounting
Global CGMA University and Academic COE
Overview of P1A
24
• This section is about
understanding why costing is
done and what it is used for.
• It introduces candidates to the
basic building blocks of costing
and how to apply them in the
costing methods and techniques
organisations use.
• In a fast-changing digital world
this understanding is critical and
can enable candidates to
develop their own ways of
calculating costs when existing
methods are no longer
appropriate.
• Digital costing is introduced in
this section.New
Global CGMA University and Academic COE
P1A – Cost accounting for decision and control
25
•Distinguish between the different rationales for costing.
•Apply the main costing concepts to organisations and cost objects.
•Apply costing methods to determine the costs for different purposes.
There are 3 lead learning outcomes for
topic A.
•Remembering & understanding
•ApplicationSkill level required
•Review where P1A sits in the overall structure and outline of P1. Structure & outline
•Review how P1A was covered in the 2015 syllabus2015 syllabus
Global CGMA University and Academic COE
P1A: Cost accounting for decision and control – Explanatory notes
26
Lead outcome Explanatory notes
1. Distinguish between the
different rationales for
costing
• This seeks to address the following pertinent questions:
• What are reasons for calculating costs?
• What types of costs are appropriate for a particular purpose and why?
2. Apply the main costing
concepts to
organisations and cost
objects
• Examine the basic building blocks of costing and how they apply to different types of
organisations and operating contexts (e.g., manufacturing and service sectors).
• How has the digital world affected the nature of these building blocks of costing?
3. Apply costing methods
to determine the costs
for different purposes
• Investigate how costs are traced, classified, accumulated, allocated, apportioned and
absorbed to arrive at the costs of a product, service or other cost object.
• Calculate the costs of products or services using various costing methods.
• Determine which costing methods are appropriate and why?
Global CGMA University and Academic COE
P1A: Cost accounting for decision and control
27
Lead outcome Component outcome Representative task statement Topics to be covered
1. Distinguish
between the
different
rationales
for costing
a. Define costing
b. Distinguish between
the rationales for
costing
• Understand costing and the different reasons for
calculating costs.
• Understand the difference between financial
accounting and cost accounting.
• Identify inventory costs and period costs.
• Understand how management accounting fits into and
supports a business’ operations.
• Understand how the cost management and
transformation model is designed to help businesses
achieve and maintain cost competitiveness.
• Recognise how management accountants help make
tactical business decisions.
• Inventory valuation
• Profit reporting
• Cost management and
transformation
• Decision-making
Global CGMA University and Academic COE
P1A: Cost accounting for decision and control
28
Lead outcomeComponent
outcomeRepresentative task statement Topics to be covered
2. Apply the main
costing
concepts to
organisations
and cost
objects a. Explain the
main costing
concepts
b. Apply costing
concepts to
different
organisations
and cost
objects
• Define a cost element and understand how the amount paid for a resource is
consumed by an activity and included in a cost object or pool.
• Define a cost object or a cost pool.
• Understand the difference between direct costs and indirect costs.
• Understand the difference between variable costs and fixed costs.
• Define overhead costs.
• Understand the relationship between direct and variable costs and direct and
fixed costs.
• Understand the relationship between indirect and variable costs and indirect
and fixed costs.
• Determine the activity that causes the change in cost.
• Determine why product costs are calculated using different methods for
different purposes for different types of organisations.
• Cost elements
• Costs structure
• Cost behaviour
• Cost drivers
• Costing applied to
different types of
organisations
• Costing applied to
digital cost objects
Global CGMA University and Academic COE
P1A: Cost accounting for decision and control
29
Lead
outcome
Component
outcomeRepresentative task statement
Topics to be
covered
3. Apply
costing
methods
to
determine
the costs
for
different
purposes
a. Cost
accumulation,
allocation,
apportionment
and
absorption
b. Standard
costing
• Apply marginal (or variable) throughput and absorption accounting methods for profit reporting
and inventory valuation, including the reconciliation of budget and actual profit using
absorption and/or marginal costing principles.
• Apply standard costing methods including the reconciliation of budgeted and actual profit
margins, distinguishing between planning and operational variances.
• Establish manufacturing standards for material, labour, variable overhead and fixed overhead.
• Calculate standards and variances for service industries, public services and manufacturing
companies.
• Calculate price/rate and usage/efficiency variances for material, labour and variable overhead.
• Calculate subdivision of total usage/efficiency variances into mix and yield variances.
• Calculate fixed overhead expenditure and volume variances.
• Calculate subdivision of the fixed overhead volume variance into capacity and efficiency
variances.
• Calculate sales price and sales volume variances (calculation of the latter on a unit basis
related to revenue, gross profit and contribution).
• Calculate sales mix and sales quantity variances. Apply these variances to all sectors
including service industries, public services and manufacturing companies.
• Trace,
classify
and
allocate
costs
• Marginal
costing
• Absorption
costing
Global CGMA University and Academic COE
P1A: Cost accounting for decision and control
30
Lead outcome Component outcome Representative task statement Topics to be covered
3. Apply costing
methods to
determine the
costs for
different
purposes
c. Variance analysis
(without mix and yield
variance)
d. Activity based costing
e. Digital costing
• Use material, labour, variable overhead, fixed overhead
and sales variances.
• Calculate the costs for products or services using
activity-based costing.
• Determine the advantages and disadvantages of
activity-based costing compared with traditional
marginal and absorption costing methods.
• Determine the potential differences and difficulties of
costing digital products as compared to costing
traditional products.
• Price and rate variances
• Usage and efficiency variances
• Interpretation of variances
• Product and service costing using
ABC
• Advantages of ABC over other
costing systems
• Features of digital costing
Resource list
Topic A – Cost accounting for decision and control
Global CGMA University and Academic COE
Cost transformation | Case studies
32
Global CGMA University and Academic COE
Cost transformation
33
Global CGMA University and Academic COE
Cost savings through 3D printing
34
Read more
Global CGMA University and Academic COE
Cost management
35
Global CGMA University and Academic COE
Case study – cost management
36
BP has moved a significant portion of its IT resources
to the Microsoft Azure cloud platform over the past
five years as part of a company-wide digital
transformation. BP has been able to reduce its cloud
spend by 40 percent with the insights it has gained.
Global CGMA University and Academic COE
Digital costing | Cost of digital products
Global CGMA University and Academic COE
Cost optimization
38
Topic B: Budgeting and budgetary control
P1 Management Accounting
Global CGMA University and Academic COE
Overview
40
• Taken together budgeting and
budgetary control is one of the
means by which the finance
function enables and shapes how
organisations create and
preserve value.
• This section examines the
various reasons organisations
prepare and use budgets, how
the budgets are prepared, the
types and sources of data, the
technologies used to improve
the quality of budgets, how
budgets are implemented and
the impact on the people who
work with the organisation.
Global CGMA University and Academic COE
P1B – Budgeting and budgetary control
41
•Distinguish between the different rationales for budgeting
•Prepare budgets
•Discuss budgetary control
There are 3 lead learning outcomes for
topic B.
•Remembering & understanding
•ApplicationSkill level required
•Review where P1B sits in the overall structure and outline of P1. Structure & outline
•Review how P1B was covered in the 2015 syllabus2015 syllabus
Global CGMA University and Academic COE
P1B: Budgeting and budgetary control – Explanatory notes
42
Lead outcome Explanatory notes
1. Distinguish
between the
different
rationales for
budgeting
• Why do organisations prepare budgets?
• In what ways are the different rationales for preparing budgets compatible with
each other?
• How do organisations get the most out of the budgeting process?
2. Prepare
budgets
• What is the process by which budgets are prepared?
• What types of budgets are required by organisations?
• What data do they use and where do they get the data from?
• How are those budgets prepared and presented?
• What technologies are available for improving the quality of the budgets?
Global CGMA University and Academic COE
P1B: Budgeting and budgetary control – Explanatory notes
43
Lead outcome Explanatory notes
3. Discuss
budgetary
control
• What is budgetary control?
• Describe and discuss how and why the budgetary control system provides
feedback and feedforward to the organisation.
• What are the behavioural impacts of budgetary control and how are they
managed?
Global CGMA University and Academic COE
P1B: Budgeting and budgetary control
44
Lead outcomeComponent
outcomeRepresentative task statement
Topics to be
covered
1. Distinguish
between
the different
rationales
for
budgeting
a. Explain the
role of
budgets
b. Distinguish
between the
different
rationales for
budgeting
• Understand the purpose of budgeting and the advantages and
disadvantages of implementing budgets.
• Understand the potential impact of different legal environments, currency
fluctuations and/or political climate on usefulness of budgets.
• Understand the period when budgets should be created and what time
periods are covered and how that impacts the usefulness of budgets.
• Understand how budgets can help create accountability and
communication between individuals and teams.
• Understand how budgets can help further the strategic and operating plans
of a business.
• Understand how budgets can help energize and motivate individuals and
teams.
• Understand the organisational structure of costs and revenues and their
relationship to controllability of costs.
• Planning
• Communication
• Coordination
• Motivation
• Control etc
Global CGMA University and Academic COE
P1B: Budgeting and budgetary control
45
Lead outcome Component outcome Representative task statement Topics to be covered
2. Prepare
budgets
a. Explain forecasting
and its relationship
with budgeting
b. Prepare master
budgets
• Prepare time series analysis including moving totals and
averages, treatment of seasonality, trend analysis using
regression analysis and applicability in forecasting
product and service volumes.
• Determine the budget setting process, limiting factors
and the interaction between component budgets and the
master budget.
• Prepare a budget for any account in the master budget
based on projections/ forecasts and managerial targets.
• Determine causality in cost function estimates and
impact on budgets.
• Calculate revenue and cost estimates using quantitative
analyses.
• Time series and trend
analysis to forecast sales
volumes
• Limiting factors
• Components of master
budgets and their interaction
with each other
Global CGMA University and Academic COE
P1B: Budgeting and budgetary control
46
Lead outcome Component outcome Representative task statement Topics to be covered
2. Prepare
budgets
c. Conduct what if analysis
in budgeting
d. Describe the
technologies available
for improving budgeting
• Prepare “what-if” analyses based on alternative
projections of volumes, prices and cost
structures.
• Use the output of computer or spreadsheet based
planning models for sensitivity analysis (e.g.,
calculate the impact of changes in material prices
on budgeted net income).
• Determine potential data problems when
estimating revenues and costs for budgeting
purposes. Determine if data and assumptions are
reliable, identify any missing data and determine
the impact of data outliers.
• Determine the benefits and costs of incremental,
zero-based, rolling and activity-based budgets
and beyond budgeting approaches to budgeting.
• Stress testing budgets
• Big data analytics and budgets
• Alternative approaches to
budgeting
Global CGMA University and Academic COE
P1B: Budgeting and budgetary control
47
Lead
outcome
Component
outcomeRepresentative task statement Topics to be covered
3. Discuss
budgetar
y control
Discuss:
a. The concept
of budgetary
control
b. Human
dimensions
of budgeting
• Understand how and why the budgetary control system may provide
feedback and feedforward to the organisation.
• Understand how flexible and flexed budgets are utilized in the budgeting
process and their relationship to actual output and costs.
• Calculate and interpret overall flexed budget variances.
• Understand the conditions necessary to set effective budgets and how
target setting impacts motivation and behaviour.
• Understand how effective budgets must identify controllable and
uncontrollable outcomes.
• Determine the behavioural impacts of budgetary control (short-termism,
budgetary slack, ignoring of non-financial factors) and how they can be
managed.
• Determine the ethical implications in budgeting on organisations in the
context of a competitive market, a government agency, or subsidiaries.
• Feedback and
feedforward control
• Flexed budgets
• Target setting and
motivation
• Controllable and
uncontrollable
outcomes
• Dysfunctional
behaviours in
budgeting
• Ethical considerations
in budgeting
Resource list
P1B: Budgeting and budgetary control
Global CGMA University and Academic COE
Beyond budgeting
49
Global CGMA University and Academic COE
Budgeting during a crisis
50
Global CGMA University and Academic COE
Pandemic disrupts budgets across the world
51
Global CGMA University and Academic COE
Best practices for budgeting and planning
52
Global CGMA University and Academic COE
Technology for budgeting and forecasting
53
Global CGMA University and Academic COE
Technologies to improve budgeting
54
• CFOs and their companies are becoming inundated with
data.
• Finance teams are continuously incorporating big data
sources and tools, Internet of Things technologies,
artificial intelligence and machine learning solutions,
advanced computing power, and evolving finance
software and systems into their work processes.
• Download this research report on how CFO’s can
integrate new technologies into their work processes.
Global CGMA University and Academic COE
Case studies
55
Topic C: Short-term commercial decision making
P1 Management Accounting
Global CGMA University and Academic COE
Overview
57
• Organisations cannot foresee every
opportunity that might arise in the
course of their operations so they
need mechanisms by which to
identify and take advantage of these
opportunities as they arise.
• The primary objective of this section
is to guide candidates in how to do
this in the short term through
effective decision making.
• The finance function supports such
decisions (e.g. pricing and product
choice) using techniques such as
relevant revenue and cost analysis
and break-even analysis.
• Candidates are introduced to these
techniques and the concepts that
underpin the techniques. They are
expected to be able to apply the
techniques to support short term
decision making.
Global CGMA University and Academic COE
P1C – Short-term commercial decision making
58
•Describe the main types of short term decisions made by organisations
•Explain the underlying concepts used for short term decision making
•Apply appropriate techniques to support short term decision
There are 3 lead learning outcomes for
topic c.
•Remembering & understanding
•ApplicationSkill level required
•Review where P1C sits in the overall structure and outline of P1. Structure & outline
•Review how P1C was covered in the 2015 syllabus2015 syllabus
Global CGMA University and Academic COE
P1C: Short-term commercial decision making – Explanatory notes
59
Lead outcome Explanatory notes
1. Describe the main types of
short term decisions made by
organisations
• Describe the types of short term decisions made by organisations and the
circumstances that give rise to them.
• What do these short term decisions seek to achieve?
• How important are they to performance of organisations?
• The emphasis is on both revenue and costs.
2. Explain the underlying
concepts used for short term
decision making
• What are the objectives and underlying concepts that are used to guide short-
term decision making and why?
• Distinguish between those concepts of revenue, costs and information from
other concepts.
3. Apply appropriate techniques
to support short term decision
• Use data (financial and non-financial) and the appropriate concepts and
techniques to support decision making to achieve organisational objectives of
value creation and preservation.
Global CGMA University and Academic COE
P1C: Short-term commercial decision making
60
Lead outcomeComponent
outcomeRepresentative task statement
Topics to be
covered
1.Describe the
main types of
short term
decisions
made by
organisations a.Describe pricing
and revenue
maximising
decisions
b.Describe product
decisions
• Understand the issues that arise in pricing decisions and the conflict
between marginal cost principles and the need for full recovery of all
costs incurred.
• Understand relevant cash flows and their use in pricing decisions.
• Understand the strategic implications of short-term decision-making.
• Use the principles of decision-making, including the identification and
use of relevant cash flows and qualitative factors.
• Understand short-term pricing decisions for special orders or special
projects and the challenge with short-term decision making and the
related impact on long-term decisions making.
• Next page
• Marginal and full
cost recovery for
pricing decisions
• Differences in
pricing and
revenue
maximisation for
the short-term and
long term
• Product mix
Global CGMA University and Academic COE
P1C: Short-term commercial decision making
61
Lead outcomeComponent
outcomeRepresentative task statement
Topics to be
covered
1.Describe the
main types of
short term
decisions
made by
organisations
b. Describe
product
decisions
• Apply relevant cost analysis to short-term decisions, including
special selling price decisions, make or buy decisions,
discontinuation decisions and further processing decisions.
• Prepare a multi-product break-even analysis, including break-even
and profit/ volume charts, contribution/sales ratios and margin of
safety.
• Apply break-even analysis in multiple product contexts.
• Product mix
Global CGMA University and Academic COE
P1C: Short-term commercial decision making
62
Lead outcome Component outcome Representative task statement Topics to be covered
2. Explain the
underlying
concepts
used for
short term
decision
making
a. Explain the objectives
of decision making
b. Explain the underlying
concepts of short term
decision making
• Understand the conflicts between cost
accounting methods used for short-term
decision-making and financial accounting
concepts used for profit reporting and inventory
valuation.
• Understand whether a cost/revenue/cash flow
estimate is relevant when considering a short-
term decision or project.
• Implications of
commercial decision
making in the short term
• Relevant revenues
• Relevant costs
• Difference with profit
reporting
Global CGMA University and Academic COE
P1C: Short-term commercial decision making
63
Lead outcome Component outcome Representative task statement Topics to be covered
3.Apply
appropriate
techniques to
support short
term decision
Apply the following to
support short term
decision making
a.Relevant cost
analysis
b.Break-even analysis
c.Product mix
decisions with
constraints
d.Data & Technology
• Understand relevant cash flows and non-financial
factors and how it affects make or buy decisions.
• Understand relevant cash flows and non-financial
factors and how it affects discontinuation
decisions.
• Calculate the associated revenues and costs with
make or buy and discontinuation decisions.
• Calculate the breakeven point and output level
required to meet income targets.
• Perform simple product mix analyses in situations
where there are limitations on product / service
demand and one other production constraint.
• Next page
• Make or buy decisions
• Discontinuation decisions
• Multi-product break even analysis
Global CGMA University and Academic COE
P1C: Short-term commercial decision making
64
Lead outcome Component outcome Representative task statement Topics to be covered
3. Apply
appropriate
techniques
to support
short term
decision
Apply the following to
support short term decision
making
d. Data & Technology • Understand the benefits and costs of financial and
non-financial data and computer, spreadsheet, or
visualization outputs to help with make or buy
decisions, product mix decisions with constraints,
discontinuation decisions, or breakeven point
calculations.
• Prepare the inputs for the use of linear programming
for situations involving multiple constraints.
• Use results of graphical methods and simultaneous
equations of two variable problems to identify optimal
solutions.
• Use of data and technology
to analyse product mix
decisions
• Ethical considerations in
short term decision making
Resource list
P1C: Short-term commercial decision making
Global CGMA University and Academic COE
Decision making during a crisis
Global CGMA University and Academic COE
Case studies
67
Global CGMA University and Academic COE
Product mix decisions – an introduction & using data analytics
68
Global CGMA University and Academic COE
Using data and technology to analyse product performance
69
Global CGMA University and Academic COE
Importance of data analytics for product managers
70
Global CGMA University and Academic COE
Cash flow for short term decision making
71
Topic D: Risk and uncertainty in the short term
P1 Management Accounting
Global CGMA University and Academic COE
Overview
73
• Budgets and decisions focus on
the future.
• This introduces uncertainties and
risks that need to be identified,
assessed and managed.
• The aim of this section is to help
candidates identify, assess and
manage the risks and
uncertainties associated with the
short term.
Global CGMA University and Academic COE
P1D – Risk and uncertainty in the short term
74
•Apply basic risk management tools in the short term.There is 1 lead learning outcomes for topic D.
•Remembering & understanding
•ApplicationSkill level required
•Review where P1D sits in the overall structure and outline of P1. Structure & outline
•Review how P1D was covered in the 2015 syllabus2015 syllabus
Global CGMA University and Academic COE
P1D: Risk and uncertainty in the short term – Explanatory notes
75
Lead outcome Explanatory notes
1.Apply basic risk
management tools in
the short term.
• What types of risks and uncertainties do organisations face
when preparing and implementing budgets and when making
short-term decisions?
• How are those risks and uncertainties identified, assessed
and managed?
Global CGMA University and Academic COE
P1D: Risk and uncertainty in the short term
76
Lead outcome Component outcome Representative task statement Topics to be covered
1.Apply basic
risk
management
tools in the
short term.
a.Explain nature of risk and
uncertainty in short term.
b.Apply basic sensitivity
analysis to budgeting and
short-term decision-
making.
• Understand the types of risk and uncertainties
organisations face when preparing and implementing
budgets and when making short-term decisions.
• Understand the impact of individuals’ risk attitudes on
decision-making in the short term.
• Quantify risk using sensitivity analysis, expected values,
standard deviations and probability tables.
• Use a basic sensitivity analysis and “what if” in decision
modelling to identify variables that might have impacts
on project outcomes.
• Use decision trees for multi-stage short-term decision
problems.
• Apply decision models to deal with uncertainty in
decision-making.
• Stress testing
• Sensitivity and what-if
analysis
• Probability distributions
• Decision trees
Resource list
P1D: Risk and uncertainty in the short term
Global CGMA University and Academic COE
Risk appetite
78
COSO is a joint initiative
of five private-sector
organisations, including
the American Institute of
CPAs, dedicated to
providing thought
leadership on enterprise
risk management,
internal control, and
fraud deterrence.
Global CGMA University and Academic COE
Risk management
79
Global CGMA University and Academic COE
Business risks
80
Global
highlights
&
video
Global CGMA University and Academic COE
Fraud & recent case studies
81
Global CGMA University and Academic COE
More case studies
82
Global CGMA University and Academic COE
Videos on case studies
83
Additional resources
Global CGMA University and Academic COE
Classroom business game
85
A proposal has been prepared for the
Kadgee Board to review for survival long-
term and become more successful financially
by undergoing transformational change.
However, in order to allow the Kadgee Board
time to agree on what direction it should
take, you will need to make suggestions on
short term measures to cut costs before
presenting these to the board (your fellow
students and academic staff).
Download | Play
Global CGMA University and Academic COE
Additional classroom business games
86
View at
CGMA Academic
Partners Website
Global CGMA University and Academic COE
Do your learning before taking any Practice Tests
87
Global CGMA University and Academic COE
Pass P1 with CIMA Aptitude practice tests
88
Extensive question
bank for only £15.
Take as many times
as you want and
each time you will
face a different set of
60 questions.
The question bank
covers the whole P1
syllabus.
Global CGMA University and Academic COE
Practice Test – Free of charge
89
Available on the Pearson Vue platform.
35 sample questions to help you familiarize with the
question types you are likely to encounter in the live
exam. These exams should not be considered as
a fully balanced test.
To start, create an account with Pearson Vue (free)
and choose the exam from the “Exam Catalogue”.
You’ll be asked to “purchase” exams but they are
FREE.
.
Summary of resources in each section
Global CGMA University and Academic COE
P1A - Cost accounting for decision and control(just click on the picture to go to that slide)
Global CGMA University and Academic COE
P1B - Budgeting and budgetary control(just click on the picture to go to that slide)
92
Global CGMA University and Academic COE
P1C - Short-term commercial decision making(just click on the picture to go to that slide)
93
Global CGMA University and Academic COE
P1D - Risk and uncertainty in the short term(just click on the picture to go to that slide)
94
Global CGMA University and Academic COE
Other Syllabus Overview documents
95
Syllabus resource for E1; Syllabus resource for E1 - revised 2020
Syllabus resource for E2; Syllabus resource for E2 - revised 2020
Syllabus resource for E3; Syllabus resource for E3 - revised 2020
Syllabus resource for P1
Syllabus resource for P2
Syllabus resource for P3
Syllabus resources for F1
Syllabus resources for F2
Syllabus resources for F3
Syllabus resources OCS
Syllabus resources MCS
Syllabus resources SCS
Contact:
Thank you© 2018 Association of International Certified Professional Accountants. All rights reserved.
Thank you© 2019 Association of International Certified Professional Accountants. All rights reserved. This presentation’s images are subject to copyright protection and used under license from
third parties. Do not use images from this presentation in other presentations or documents without first consulting with Legal. The use of copyrighted images outside the
licensed scope constitutes copyright infringement and subjects the user to monetary damages and other penalties.
Thank you© 2020 Association of International Certified Professional Accountants. All rights reserved. This presentation’s images are subject to copyright protection and used under license from
third parties. Do not use images from this presentation in other presentations or documents without first consulting with Legal. The use of copyrighted images outside the
licensed scope constitutes copyright infringement and subjects the user to monetary damages and other penalties.
