CA34S3: Advanced Management Accounting

CA34S3: Advanced Management Accounting is an Advanced Level paper in the KASNEB CPA qualification. It equips learners with advanced knowledge and practical skills required to support strategic planning, performance management, and organizational decision-making through the application of advanced management accounting techniques. The course emphasizes strategic cost management, performance evaluation, business analytics, and value creation in dynamic business environments.

Key Topics Covered

• Strategic management accounting information
• Sources of strategic management accounting information
• Role of strategic management accounting in strategic planning and control
• Governance and control of strategic management accounting information
• Scope and limitations of management accounting
• Ethical standards for management accountants
• Cost estimation and interpretation
• Ordinary least square (OLS) method. Single and multiple predictors; tests of significance (goodness of fit, ANOVA/P-Value, economic plausibility tests, significance of independent variable/t-test)
• Specifications/assumptions of OLS (implications of serial correlation, multi- collinearity)
• Computer output and technical versus managerial interpretation of OLS results
• Learning curve models and their application
• Planning and decision-making techniques
• Cost volume profit analysis (CVP) for single and multiple products under conditions of uncertainty
• Decision making under environments of uncertainty and risk, using conditional payoff tables and decision trees.
• Expected value of perfect information
• Relevant cost analysis
• Application of marginal costing (non-routine decisions): Limiting factor analysis,
• Throughput accounting, make or buy decision, continue or discontinue/drop decisions, special order decisions and other short-term decisions.
• Pricing decisions
• External pricing methods
• Transfer pricing in divisionalised companies: Domestic and international transfer pricing
• Product life cycle costing, Target costing and Kaizen costing
• Strategic performance measurement
• Functional and divisionalised organizational structures
• Responsibility accounting, responsibility centers and segmental reporting
• Divisional performance measures such as profit margin, asset turnover, return on investment (ROI), return on capital employed (ROCE), residual income (RI), accounting rate of return (ARR) and economic value added (EVA)
• Non-financial performance indicators
• Alternative performance measures such as balanced scorecard, performance
• pyramid, Fitzgerald and Moon’s building block model.
• Inventory control decisions
• Applications of certainty inventory models (EOQ and EBQ) in decision making
• Stochastic inventory models with and without stock out cost
• Marginal analysis for perishable stock items
• Application of simulation models in inventory control (with and without backorders)
• Application of strategic management decisions in inventory control: Just-in-time purchasing (JIT), ABC analysis and material requirement planning (MRP)
• Budgetary control techniques
• Applications of budgetary control systems: Top-down, bottom-up, rolling, zero- based (ZBB), activity-based (ABB), incremental, feedback and feed-forward controls.
• Use of operational variances in reconciling original budget with actual performance
• Advanced variance analysis, planning and operational analysis (Ex-post)
• Application of learning curve model and ABC in variance analysis
• Investigation models for variances.
• Environmental management accounting
• Role of accountants in managing and accounting for environmental cost
• Use of management accounting techniques in identification and allocation of environmental costs (Inflow/Outflow analysis, Flow cost accounting, Environmental lifecycle costing and Environmental Activity Based Costing).