2019 CIMA

Professional
Qualification
Syllabus
Reinventing finance in a digital world
 “Digitalisation is transforming all industries. This is why digital
skills should be conveyed at all levels and in all forms of
education.”
Joe Kaeser, President and CEO Siemens AG

Foreword
I am pleased to introduce the 2019 CIMA Professional Qualification Syllabus, which further strengthens our
commitment to the employability needs of both business and people, and underpins the CGMA designation.

In an increasingly digital world, rapid changes in technology are creating challenges for the business models of
organisations. It is also making it difficult for business leaders and employees to create and preserve sustainable
value. Against this digital backdrop, it is imperative that finance professionals possess relevant technical skills, a
sound understanding of their organisation, as well as the ability to influence and lead people. This will make them
capable of providing the insight their organisations need to craft and successfully execute their strategies.

The 2019 Syllabus continues to bridge the skills gap of newly qualified finance professionals worldwide, meeting
the employability needs of both business and people. In designing the syllabus, we set out to enhance the relevance
of the syllabus to employers; ensure the rigour of the related examinations and align the learning experience of
candidates to the real world.

The changes in the syllabus are based on our three-stage research approach of employer interviews, roundtables
and a global survey to a range of stakeholders. We contacted over 6,500 finance professionals, from over 2,000
organisations, in over 150 countries. We have used the same research methodology as the previous syllabus
update but on a larger scale and with wider participation. This research has allowed us to capture the latest views
of finance professionals so that we can incorporate these into the syllabus.

Importantly, the updated syllabus includes how the digital world affects finance; this can be seen through the
introduction of digital costing and digital strategy. Topics such as cybersecurity and business models have also
been incorporated. Existing areas such as integrated reporting have been expanded to reflect their growing
prominence. Ultimately, these topics support CIMA’s desire to produce competent and confident management
accounting professionals who can guide and lead their organisations to sustainable success.

I strongly recommend the CIMA Professional Qualification to employers and to those wishing to pursue a
successful and rewarding career in business.

Noel Tagoe, Ph.D., FCMA, CGMA

Executive Vice President – MA Research and Curricula

2 CIMA Professional Qualification Syllabus

 Contents
2 Foreword 20 E1: Managing Finance in a Digital World

3 Contents 32 P1: Management Accounting

4 The CIMA Professional Qualification 42 F1: Financial Reporting

5 The CIMA Qualification Framework 52 The Management Level

6 The CGMA Competency Framework 56 E2: Managing Performance

8 Structure of the CIMA Syllabus 64 P2: Advanced Management Accounting

10 Learning outcomes and Exam blueprints 74 F2: Advanced Financial Reporting

12 CIMA assessment strategy 86 The Strategic Level

12 Suggested order of exams 90 E3: Strategic Management

14 The syllabus in the context of the finance 104  P3: Risk Management
function
114  F3: Financial Strategy
15 Summary of the 2019 Syllabus
124  Exam information and timetable
16 The Operational Level

Increasingly, the required skills of finance professionals are moving into the expert,
problem-solving arena and they must adopt competencies involved in influencing and
change management. The finance professional needs a mindset that enables them to adapt
through continuous learning.

Mindset and Learning

Challenges Performance
competencies systems

They Realise the challenges Comprehend the Understand the Use learning to
must … organisations face performance needed competencies and continually update
which threaten their from the finance mindset needed their competencies
success team to address to perform at the and maintain a flexible
those challenges required level mindset for new
challenges

3
The CIMA Professional Qualification
CIMA’s objective in designing the syllabus is to enhance requirements ensure members are competent in the
the employability of students and members. It intends essential accounting, finance and business-related skills.
to create a learning system that enables learners to It also provides them with the skills required to lead the
acquire skills, competencies and mindsets that are in finance function in a digital age.
high demand by employers. This has never been more
To complete the CIMA qualification, and be able to
important with the pace of change increasing and
use the Chartered Global Management Accountant®
traditional roles being redefined by technology and
(CGMA®) designation, students need to:
digital advances.
• M
 eet the entry requirements of the professional
The Professional Qualification comprises three pillars level qualification.
of domain knowledge divided into three levels of
• S
 tudy for and complete the relevant professional
achievement. The pillars are Enterprise, Performance and
level assessments, culminating in the Strategic
Financial. The levels are Operational, Management and Case Study Exam.
Strategic. When combined with the required practical
• C
 omplete three years of relevant practical
experience, CIMA qualified members will be capable
experience, which can be gained before,
of supporting and leading their organisations through
during and/or after studies.
the challenging environment of constant change.
The syllabus, assessments and practical experience

4 CIMA Professional Qualification Syllabus

The CIMA Qualification Framework
The diagram below shows the CIMA Qualification Framework. This includes the Certificate in Business Accounting;
the Professional Qualification; Assessment of Practical Experience; and Continuing Professional Development (CPD)
in the form of lifelong learning.

AWARD: Membership of The Chartered Institute of Management

Accountants (ACMA/FCMA) and the CGMA® designation

Assessment of practical experience requirements (PER)

Strategic Strategic Case Study Exam

Level

E3 P3 F3
Strategic Risk Financial
Management Management Strategy

Management AWARD: CIMA Advanced Diploma in Management Accounting (CIMA Adv Dip MA)
Level
Management Case Study Exam

Practical experience / lifelong learning

E2 P2 F2
Managing Advanced Management Advanced Financial
Performance Accounting Reporting

Operational AWARD: CIMA Diploma in Management Accounting (CIMA Dip MA)

Level
Operational Case Study Exam

E1 P1 F1
Managing Finance Management Financial
in a Digital World Accounting Reporting

Enterprise pillar Performance pillar Financial pillar

Certificate AWARD: CIMA Certificate in Business Accounting (CIMA Cert BA)

Level

BA1 BA2 BA3

Fundamentals of Fundamentals of Fundamentals of
Business Economics Management Accounting Financial Accounting

BA4 Fundamentals of Ethics,

Corporate Governance and Business Law

5
The CGMA Competency Framework
The CGMA Competency Framework was first introduced The digital world, in which organisations now operate,
with the 2015 syllabus. It set out the skills and is changing rapidly and in unpredictable ways. Our
competencies that employers identified as essential research shows that technology is seen as the key
for their finance staff across a range of industries, driver of change for both organisations and their finance
organisation sizes and role levels within an organisation. functions. Technology is transforming what finance
To update both the syllabus and competency framework, professionals do, and revolutionising how the finance
we once again undertook global research to better function is being deployed.
understand what is changing for both the finance
function within the organisation and the finance The competency framework reflects our findings on how
professional, against the backdrop of an ever-increasing finance professionals are expected to apply accounting
digital world. and finance skills within the context of the business/
organisations in which they operate. It also reflects for
Our three-stage research approach of employer the first time how technology and a digital mindset will
interviews, roundtables and a global survey to a be required to affect and influence their own decisions,
range of stakeholders, meant that we reached out actions and behaviours and those of their colleagues
to over 6,500 finance professionals, from over within the wider organisation. To be able to do this,
2,000 organisations, in over 150 countries, to five sets of skills have been identified — technical
answer the following questions; accounting and finance skills; business skills; people
• How will the future be different for your organisation? skills; leadership skills and digital skills — and a digital
mindset underpinning the categories.
• What are the drivers of change for your organisation?
• What are the implications for finance?
• How should finance prepare for the changes?

Technical Business
skills skills

Digital
skills

Leadership People
skills skills

6 CIMA Professional Qualification Syllabus

The knowledge, skills and behaviours within each area of the CGMA Competency Framework knowledge areas are:

Technical skills Leadership skills

Financial accounting and reporting; cost accounting Team building; coaching and mentoring; driving
and management; business planning; management performance; change management; and ability
reporting and analysis; corporate finance and treasury to motivate and inspire.
management; risk management and internal control;
accounting information systems; and tax strategy, Digital skills
planning and compliance. Information and digital literacy; digital content
creation; problem-solving; data strategy and
Business skills planning; data analytics; and data visualisation.
Strategy; business models; market and regulatory These remain underpinned by ethics, integrity
environment; process management; business and professionalism.
relations; business ecosystems management;
project management; and macroeconomic analysis.

People skills
Influence; negotiation and decision-making,
communication; and collaboration and partnering.

Based on the survey responses, the graph below shows the activities in which respondents currently spend their time,
depending on their role within the organisation. It is anticipated that these will alter as technology and digitalisation
continue to affect the role of the finance professional.

50

45
Points (0 to 100) represent time spent on

40
activities in each knowledge area.

35

30

25

20

15

10

0
Entry level Manager Senior manager CFO

Position held within the organisation

Technical accounting Business People Leadership

7
Structure of the CIMA Syllabus
The CIMA Syllabus comprises nine subjects that are organised in three pillars and three levels.

The pillars
The three pillars represent specific areas of knowledge. for organisations. It develops the ability of students to
progressively identify, classify and evaluate various risks
The content of each pillar develops as students move to an organisation, including enterprise risk, strategic risk
up the qualification. The three pillars are interlinked to and cyber risk and manage these risks predominantly
provide a coherent body of knowledge that will equip through internal controls.
successful students with the competencies they require.
The Financial Pillar focus is the financial accounting
The Enterprise Pillar focuses on the role of the finance and reporting obligations of the organisation. This
function and how it interacts with the organisation using includes an understanding of the regulatory framework
data and technology. It looks at business models and and external reporting requirements, including integrated
the management of people and projects to achieve reporting. The ability to construct and evaluate
organisational goals. It deals with the formulation and complex financial statements, including those relating
the effective implementation of strategy. to group accounts to show the financial position
and performance of an organisation is essential.
The Performance Pillar uses the tools and techniques
The principles of taxation and the tax implications
of management accounting and risk management
of financing decisions are covered. It also looks at
to ensure that strategy is realistic and to monitor its
formulating financial strategy, which is linked to the
implementation. It shows students how to use their
formulation of organisational strategy in the Enterprise
understanding of costs to construct budgets, make
Pillar and assessing risk in the Performance Pillar.
decisions about prices and capital expenditure, manage
costs and manage performance. Digital costing is The subjects in each learning pillar are designed to
introduced alongside traditional costing techniques and be sequential, from Operational to Strategic Level,
cost management is expanded to reflect its growing encouraging the progressive development
importance in an increasingly competitive environment of knowledge, techniques and skills.

The levels
The syllabus is also divided into three levels of manage organisational and individual performance,
achievement. Students progress from the Operational allocate resources to implement decisions; monitor and
Level to the Management Level and finally to the report implementation of decisions; as well as prepare
Strategic Level. At each level students study subjects and interpret financial statements to show performance.
across the three pillars.
The Strategic Level focuses on long-term strategic
The Operational Level focuses on the short term and decision-making. Candidates will be able to support
the implementation of decisions. Students will be able to organisational leaders to craft strategy; evaluate and
work with others in the organisation and use appropriate manage risks that might prevent organisations from
data and technology to translate medium-term decisions successfully implementing strategy; value organisations;
into short-term actionable plans. and source financial resources required to implement
the strategy.
The Management Level focuses on translating
long-term decisions into medium-term plans. Candidates
will be able to use data and relevant technology to

8 CIMA Professional Qualification Syllabus

The CIMA Syllabus

Strategic E3: Strategic Management P3: Risk Management F3: Financial Strategy
(Decide) A. The strategy process A. Enterprise risk A. Financial policy decisions
B. A
 nalysing the B. Strategic risk B. Sources of long-term
• M
 ake strategic organisational funds
C. Internal controls
decisions. ecosystem C. Financial risks
D. Cyber risks
• F
 ormulate and C. Generating strategic D. Business valuation
create strategy options
whilst managing D. M
 aking strategic
the associated choices
risks. E. Strategic control
F. Digital strategy

Management E2: Managing Performance P2: Advanced Management F2: Advanced Financial
A. Business models and Accounting Reporting
(Monitor)
value creation A. Managing the costs of A. Financing capital projects
• M onitor B. Managing people creating value B. Financial reporting
implementation performance B. Capital investment standards
of decisions. C. Managing projects decision-making C. Group accounts
• M
 onitor, manage C. Managing and controlling D. Integrated reporting
and analyse the performance of
organisational units E. Analysing financial
performance. statements
D. Risk and control

Operational E1: M
 anaging Finance in P1: Management Accounting F1: Financial Reporting
(Implement) a Digital World A. Cost accounting for A. Regulatory environment
A. Role of the finance decision and control of financial reporting
• Implementation function B. Budgeting and budgetary B. Financial statements
of decisions. B. Technology in a digital control C. Principles of taxation
• T
 ranslate medium- world C. Short-term commercial D. Managing cash and
term decisions C. Data and information in decision-making working capital
into short-term a digital world D. Risk and uncertainty in
actionable plans; D. Shape and structure the short term
then report on of the finance function
performance. E. Finance interacting with
the organisation

Enterprise Pillar Performance Pillar Financial Pillar

Articulate a vision in Make the vision a reality Communicate and report

a digital world. on the vision through a
How do we use costing
financial lens.
How do we articulate and budgeting for short-
the role of the finance term decision-making? How do we prepare
function in a digital financial statements?
How do we monitor and
world? control activity to ensure How do we interpret
How do we manage performance? financial statements
performance through and use them to support
How do we identify,
people and projects? strategy?
mitigate against and
How do we develop manage risks to the How does financial strategy
and manage strategy? organisation? drive the ambitions of the
organisation?

9
Learning outcomes Levels

Each syllabus section contains one or more lead learning outcomes,

related component learning outcomes, topics to be covered and
explanatory notes that help provide the context for that topic area.

Each lead learning outcome defines the skill or ability that a well-prepared
student should be able to demonstrate at the end of the period of learning.

The lead learning outcomes are part of a hierarchy of learning objectives.

The verbs used at the beginning of each learning outcome relate to a
specific learning objective.

Eg, ‘Analyse the features of internal control systems’. The verb ‘analyse’
indicates a high-level learning object (level 4). Because learning objectives
are hierarchical, it is expected that at this level, students will be able to
examine and communicate the role, features and purpose of internal
controls in managing organisational risks.

The following table lists the learning objectives and the verbs that appear
in the syllabus learning outcomes.

Examination blueprints
For the first time, from 2019 examinations onwards, CIMA will
publish examination blueprints based on the syllabus. It will
set out in detail what is examinable in each of the objective
tests and case study examinations for a given period and will
provide information about the format, structure and weightings
of the assessments. It is intended that blueprints will be
updated and published annually.

For more information, go to cimaglobal.com/examblueprints.

10 CIMA Professional Qualification Syllabus

Learning objective Verbs used Definition

Evaluation
How you are expected Advise Counsel, inform or notify
to use your learning Assess Evaluate or estimate the nature, ability or quality of
to evaluate, make Evaluate Appraise or assess the value of
decisions or Recommend Propose a course of action
recommendations Review Assess and evaluate in order, to change if necessary

Analysis
How you are Align Arrange in an orderly way
expected to analyse Analyse Examine in detail the structure of
the detail of what
Communicate Share or exchange information
you have learned
Compare and contrast Show the similarities and/or differences between
Develop Grow and expand a concept
Discuss Examine in detail by argument
Examine Inspect thoroughly
Interpret Translate into intelligible or familiar terms
Monitor Observe and check the progress of
Prioritise Place in order of priority or sequence for action
Produce Create or bring into existence

Application
How you are Apply Put to practical use
expected to apply Calculate Ascertain or reckon mathematically
your knowledge. Conduct Organise and carry out
Demonstrate Prove with certainty or exhibit by practical means
Prepare Make or get ready for use
Reconcile Make or prove consistent/compatible

Comprehension
What you are Describe Communicate the key features of
expected Distinguish Highlight the differences between
to understand. Explain Make clear or intelligible/state the meaning or purpose of
Identify Recognise, establish or select after consideration
Illustrate Use an example to describe or explain something

Knowledge
What you are List Make a list of
expected to know. State Express, fully or clearly, the details/facts of
Define Give the exact meaning of
Outline Give a summary of

11
CIMA assessment strategy
Each level of the CIMA Professional Qualification The case study examination at each level simulates
culminates in a case study examination, which integrates the job role linked to the level and focuses on the core
the knowledge, skills and techniques from across the activities which employers expect competent individuals
three pillars into one synoptic capstone examination. in those roles to routinely perform.

The case study examination is a role simulation, Objective tests for each of the individual subjects
requiring candidates to respond to authentic work-based ensure the acquisition of the breadth of knowledge,
activities presented during the examination, drawing skills and techniques which provide the foundation
together learning from each of the three subjects for approaching the case study examination.
to provide solutions to the issues and challenges
presented. More details of both types of assessment can
be found in the examination blueprints at
Case study materials are provided in advance of the cimaglobal.com/examblueprints.
examination to allow candidates time to immerse
themselves in the fictional organisation and industry All assessments are computerised and CIMA works in
within which the simulation will occur and to undertake partnership with Pearson VUE, who have over 20 years
analysis of the organisation’s current position prior to of experience in offering electronic testing. There are
the examination. currently over 5,000 Pearson VUE test centres in
180 countries. Locations of Pearson VUE test centres
can be found via the CIMA website.

Suggested order of examinations

The case study examination can only be attempted Performance Pillars operate. The Performance
after all objective tests for the level have been Pillar provides the context of what management
completed successfully. accountants do within an organisation, and the
Finance Pillar considers the reporting and the
Within each level, students are free to study and take implications of this activity. It is for these reasons
objective tests in any order they wish. CIMA’s suggested that this order is suggested.
order of study is to begin with the Enterprise Pillar
subject, then move to the Performance Pillar subject For example, CIMA would recommend students studying
and then to the Financial Pillar subject. The syllabus the Operational Level to start with E1, then move to
has been designed so that, at each level, the Enterprise P1 and then to F1 before sitting the Operational Case
Pillar gives the broad context in which the Finance and Study examination.

12 CIMA Professional Qualification Syllabus

 AWARD: Membership of The Chartered Institute of Management
Accountants (ACMA/FCMA) and the CGMA® designation

Assessment of practical experience requirements (PER)

Strategic Strategic Case Study Exam

Level

E3 P3 F3
Strategic Risk Financial
Management Management Strategy

Management AWARD: CIMA Advanced Diploma in Management Accounting (CIMA Adv Dip MA)
Level
Management Case Study Exam

E2 P2 F2
Managing Advanced Management Advanced Financial
Performance Accounting Reporting

Operational AWARD: CIMA Diploma in Management Accounting (CIMA Dip MA)

Level
Operational Case Study Exam

E1 P1 F1
Managing Finance Management Financial
in a Digital World Accounting Reporting

Enterprise pillar
Enterprise Pillar Performance pillar
Performance Pillar Financial pillar
Financial Pillar

13
Syllabus in the context of the structure
and shape of the finance function

Beyond the scope of the syllabus; Strategic leadership

covered by CPD of the finance team
to achieve desired impact

Strategic Level and

covered by Continued Strategic partnership through interaction with internal
Professional and external stakeholders to influence and shape
Development (CPD) how the organisation creates and preserves value

Technical specialists generate insights

Management Level about value creation and preservation in
their respective areas

Managing processes and applying accounting

Operational Level rules to assemble and extract data to
provide information and insight

14 CIMA Professional Qualification Syllabus

 The syllabus in context

Summary of 2019 Syllabus

E3: Strategic Management P3: Risk Management F3: Financial Strategy

A. The Strategy process A. Enterprise risk A. Financial policy decisions
B. Analysing the organisational B. Strategic risk B. Sources of long-term funds
ecosystem C. Internal controls C. Financial risks
C. Generating strategic options D. Cyber risks D. Business valuation
D. Making strategic choices
E. Strategic control
F. Digital strategy

E2: Managing Performance P2: Advanced Management F2: Advanced Financial Reporting
A. B
 usiness models and value Accounting A. Financing capital projects
creation A. M
 anaging the costs of B. Financial reporting standards
B. Managing people performance creating value
C. Group accounts
C. Managing projects B. C
 apital investment
decision-making D. Integrated reporting

C. M
 anaging and controlling E. A
 nalysing financial
the performance of statements
organisational units
D. Risk and control

E1: Managing Finance in P1: Management Accounting F1: Financial Reporting

a Digital World A. C
 ost accounting for decision A. R
 egulatory environment
A. Role of the finance function and control of financial reporting
B. Technology in a digital world B. B
 udgeting and budgetary B. Financial statements
C. D
 ata and information in control C. Principles of taxation
a digital world C. S
 hort-term commercial D. M
 anaging cash and
D. S
 hape and structure of the decision-making working capital
finance function D. R
 isk and uncertainty in
E. F
 inance interacting with the the short term
organisation

15
 The
Operational
Level

16 CIMA Professional Qualification Syllabus

 The operational Level

Operational Level E1
Managing Finance

summary in a Digital World

How the finance function
is organised
On completion candidates should be able to: work with
others in the organisation and use appropriate data
and technology: translate medium-term decisions into
short-term actionable plans; analyse new situations that
arise in the short term to support decisions that create
further value for the organisation; evaluate and manage
risks associated with the short term; and report on the
performance, position and prospects of organisations. P1
Management
Narrow scope
Accounting
Financial but some quantitative non-financial What the finance
information function does

Past and present

Short term

Implementation of decisions and analysis

of short-term decisions

Internal orientation
F1
Focus on details rather than the big picture Financial Reporting
What the finance function
Information and some insight
does and its
implications

17
Summary of the Operational
Level Syllabus
E1: Managing Finance in P1: Management Accounting F1: Financial Reporting
a Digital World A. C
 ost accounting for decision A. R
 egulatory environment
A. Role of the finance function and control of financial reporting
B. Technology in a digital world B. B
 udgeting and budgetary B. Financial statements
C. Data and information in control C. Principles of taxation
a digital world C. S
 hort-term commercial D. M
 anaging cash and
D. S
 hape and structure of the decision-making working capital
finance function D. R
 isk and uncertainty in
E. F
 inance interacting with the short term
the organisation

18 CIMA Professional Qualification Syllabus

19
 E1: Managing
Finance in a
Digital World
A. Role of the finance function

B. Technology in a digital world

C. Data and information in a digital world

D. Shape and structure of the finance function

E. Finance interacting with the organisation

20 CIMA Professional Qualification Syllabus

E1: Structure and outline

Role of finance in the organisation

and the activities it performs
to fulfil its role

The technology landscape and

its impact on organisations Data usage by the finance function
and the finance function

Structure and shape of the finance

function linked to the roles

How the finance function interacts

with the organisation to create
and preserve value

21
E1A: Role of the finance function
This section examines the roles that finance plays in organisations and why. It describes in detail the activities that
finance professionals perform to fulfil these roles. Consequently, it is the foundation of the whole qualification and
answers the question: what do finance professionals do and why? It provides links with other topics within the subject
and what is covered in other areas of the Operational Level.

Lead outcome Component outcome

1. E xplain the roles of the finance function Explain how the finance function:
in organisations. a. Enables
 organisations to create and
preserve value
b. S
 hapes how organisations create and
preserve value
c. N
 arrates how organisations create and
preserve value

2. D
 escribe the activities that finance professionals Describe how the finance function:
perform to fulfil the roles. a. C
 ollates data to prepare information about
organisations
b. P
 rovides insight to users by analysing
information
c. Communicates insight to influence users
d. S
 upports the implementation of decisions to
achieve the desired impact
e. C
 onnects the different activities connect to
each other

22 CIMA Professional Qualification Syllabus

 E1: Managing Finance in a Digital World

Topics to be covered Explanatory notes

• T
 he fast-changing and unpredictable Describe the increasingly disruptive contexts
contexts in which organisations operate in which organisations and their finance teams
• E
 nabling value creation through planning, operate and how these contexts shape the role
forecasting and resource allocation of finance. Take each role and show how finance
performs it in a typical organisational setting.
• S
 haping value creation through performance The coverage should be introductory and brief.
management and control It is meant to set the scene for subsequent
• N
 arrating the value creation story through sections and draw a link between the roles and
corporate reporting the topics that will be covered in other areas of the
Operational Level.
• T
 he role of ethics in the role of the
finance function

• H
 ow data is collected, cleaned and Use “information to impact” framework to describe
connected by finance the primary activities finance professionals
• Types of analysis to produce insights perform. Relate it to how data is generated,
transformed and used. Link it to how technology
• H
 ow finance communicates to influence could be used to improve the productivity of
key stakeholders (audiences, frequency, finance professionals in these areas and the threat
format, etc.) of automation.
• H
 ow finance uses resource allocation
and performance management to enable
organisations to achieve their objectives
• Potential impact of technology

23
E1B: Technology in a digital world
This section focuses on the technologies that define and drive the digital world in which finance operates. It provides
awareness of the technologies used in organisations and deepens understanding of the impact of the technologies
on what finance does. It draws on the issues raised in the previous section about the role of finance and the activities
finance performs to fulfil these roles. Given that the digital world is underpinned by technology and the use of data, this
section provides a foundation to the next section on data.

Lead outcome Component outcome

1. Outline and explain the technologies that affect a. O

 utline the key features of the fourth industrial
business and finance. revolution.
b. O
 utline and explain the key technologies that define
and drive the digital world.

2. E
 xamine how the finance function uses digital Examine how finance uses the following to guide how it
technologies to fulfil its roles. performs its roles:
a. Digital technology
b. Digital mindsets
c. Automation and the future of work
d. Ethics of technology usage

24 CIMA Professional Qualification Syllabus

 E1: Managing Finance in a Digital World

Topics to be covered Explanatory notes

• C
 haracteristics and dynamics of the fourth The aim is to create awareness of the technologies
industrial revolution that drive the digital world and how they interact
• Cloud computing with each other. The technologies outlined by the
major advisory firms and the World Economic
• Big data analytics Forum digital transformation initiative provide the
• Process automation material on which learning and related activities can
be based.
• Artificial intelligence
• Data visualisation
• Blockchain
• Internet of things
• Mobile
• 3-D printing

• How finance uses technologies listed above Examine how finance professionals use the relevant
• A
 reas of finance susceptible to automation technologies to fulfil their roles. Explain how the
and why technologies affect various activities finance
professionals perform in the “information to impact”
• New areas for finance to focus on framework. The intention is to move from creating
• Digital mindsets for finance awareness to generating understanding of how
finance can use these technologies to increase its
• Ethics of the use of technology
value and relevance to organisations.

25
E1C: Data and information in a digital world
This section draws out one of the major implications of using technology in organisations and the finance function —
namely the collection and processing of information can be done more effectively by machines rather than by people.
It asserts that the role of finance professionals should be to use data to create and preserve value for organisations.
Five ways of using data are examined. The key competencies required to use data in these ways are also highlighted.
The primary objective is to help finance professionals understand what they can do with data and how to build the
skills needed to use data.

Lead outcome Component outcome

1. Describe the ways in which data is used by the Identify the ways in which the finance function
finance function. uses data:
a. In a general sense
b. S
 pecifically in each of the primary activities
of finance

2. E
 xplain the competencies required to Explain the competencies that finance professionals
use data to create and preserve value need in:
for organisations. a. Data strategy and planning
b. Data engineering, extraction and mining
c. Data modelling, manipulation and analysis
d. Data and insight communication

26 CIMA Professional Qualification Syllabus

 E1: Managing Finance in a Digital World

Topics to be covered Explanatory notes

Using data for: Build on the previous section on technology to

• Decision-making explain why, in the digital world, finance professionals
must place more focus on using information than on
• Understanding the customer collecting and/or processing information. Outline and
• D eveloping customer value proposition describe the various uses of information. Link them
to the primary activities that the finance function
• Enhancing operational efficiency
performs and to the topics to be covered in other
• Monetising data modules of the Operational Level.
• Ethics of data usage

• A ssessment of data needs Highlight and explain the data competencies required
• E
 xtraction, transformation and loading in the digital world. Locate where finance has a
(ETL) systems competitive advantage and where finance will need
to work with data scientists.
• Business Intelligence (BI) systems
• Big data analytics
• Data visualisation

27
E1D: Shape and structure of the finance
function
This section brings together the implications of the previous sections. It reveals how the finance function is structured
and shaped. This structure and shape enables finance to perform its role in the organisation and with other internal and
external stakeholders. In this sense, it prepares candidates for the next section, which looks at how finance interacts
with key internal stakeholders in operations, marketing and human resources.

Lead outcome Component outcome

1. Describe the structure and shape of the Describe the:

finance function. a. Evolution of the shape of the finance function
b. Shape of the finance function in the digital era

2. E
 xplain what each level of the finance Explain the activities of:
function does. a. Finance operations
b. S
 pecialist areas including financial reporting
and financial planning and analysis (FP&A)
c. S trategic partnering for value
d. S trategic leadership of the finance team

28 CIMA Professional Qualification Syllabus

 E1: Managing Finance in a Digital World

Topics to be covered Explanatory notes

• Structure
 of the finance function from the roles Introduce candidates to the structure of the finance
that generate information to the roles that turn function and outline the broad areas of finance such
information into insight and communicate as finance operations, external reporting, financial
insight to decision-makers planning and analysis (FP&A), decision support etc.
• Hierarchical shape of finance function Describe the evolving shape of the finance function
from the triangle to the diamond shape. Link the
• S
 hared services and outsourcing of finance description to the impact of digital technology and
operations automation on the finance function.
• Retained finance
• A
 utomation and diamond shape of
finance function

• F
 inance operations to generate information and The focus is the diamond shape and the four levels
preliminary insight within this shape. Explain what each level does, the
• F
 P&A, taxation, corporate reporting, decision relationship between the levels, and the link between
support to produce insight the levels and the basic finance activities covered
under the role of finance.
• B
 usiness partnering to influence organisation to
make appropriate decisions
• L
 eading the finance team to create the required
impact for the organisation

29
E1E: Finance interacting with the
organisation
The finance function is not the only area of activity in organisations. Finance joins with others to create and preserve
value for their organisations. This section brings together what has been learned in the previous section to describe
how finance can interact with other parts of the organisation to achieve the objectives of finance, those other areas
and crucially the objectives of the whole organisation. The aim is to show how finance can work collaboratively in a
connected (and joined-up) organisation and not in isolation.

Lead outcome Component outcome

1. Describe how the finance function interacts Describe:

with operations. a. Main role of operations
b. Areas of interface with finance
c. Key performance indicators

2. Describe how the finance function interacts Describe:

with sales and marketing. a. Main role of sales and marketing
b. Areas of interface with finance
c. Key performance indicators

3. Describe how the finance function interacts Describe:

with human resources. a. Main role of human resources
b. Areas of interface with finance
c. Key performance indicators

4. Describe how the finance function interacts Describe:

with IT. a. Main role of IT
b. Areas of interface with finance
c. Key performance indicators

30 CIMA Professional Qualification Syllabus

 E1: Managing Finance in a Digital World

Topics to be covered Explanatory notes

• Process management Describe how finance plays its role by interacting

• Product and service management with the rest of the organisation. Bring together the
issues raised in the previous sections and link them
• S upply chain management to what the other areas of the organisations do.
For example, address how finance and marketing
interact using data and collaborative technology
to achieve organisational goals and the individual
• Market segmentation functional goals of both finance and marketing.
• Big data analytics in marketing Describe how the use of KPIs influence these
interactions and how the KPIs of finance and these
• Channel management
areas can be aligned to ensure they work together
• S ales forecasting and management effectively.

• Staff acquisition
• Staff development
• Performance management
• Motivation and reward systems

• IT infrastructure
• IT systems support
• C osts and benefits of IT systems

31
 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

32
P1: Structure and outline

Costing required to support the

budgets and decision-making

Primary topics

Budgets to translate Short-term decisions to exploit

medium-term decisions into new opportunities to create
actionable short-term plans or preserve value

Use understanding of risk and uncertainty

in the short term to improve the quality
of budgets and short-term decisions.

33
P1A: C
 ost accounting for decision
and control
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.

Lead outcome Component outcome

1. Distinguish between the different rationales a. Define costing

for costing. b. Distinguish between the rationales for costing

2. A
 pply the main costing concepts to organisations a. E xplain the main costing concepts
and cost objects. b. A
 pply costing concepts to different organisations
and cost objects

3. A
 pply costing methods to determine the costs Apply the following:
for different purposes. a. C
 ost accumulation, allocation, apportionment
and absorption
b. Standard costing
c. Variance analysis (without mix and yield variance)
d. Activity based costing
e. Digital costing

34 CIMA Professional Qualification Syllabus

 P1: Management Accounting

Topics to be covered Explanatory notes

• Inventory valuation This seeks to address the following pertinent

• Profit reporting questions: What are reasons for calculating costs?
What types of costs are appropriate for a particular
• C ost management and transformation purpose and why?
• Decision-making

• C ost elements Examine the basic building blocks of costing and how
• Costs structure they apply to different types of organisations and
operating contexts (e.g., manufacturing and service
• Cost behaviour sectors). How has the digital world affected the nature
• Cost drivers of these building blocks of costing?
• C
 osting applied to different types of
of organisations
• C osting applied to digital cost objects

• Trace, classify and allocate costs Investigate how costs are traced, classified,
• Marginal costing accumulated, allocated, apportioned and absorbed to
arrive at the costs of a product, service or other cost
• Absorption costing object. Calculate the costs of products or services
• Price and rate variances using various costing methods. Determine which
costing methods are appropriate and why?
• Usage and efficiency variances
• Interpretation of variances
• Product and service costing using ABC
• Advantages of ABC over other costing systems
• Features of digital costing

35
P1B: Budgeting and budgetary control
Taken together, budgeting and budgetary control is one way 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.

Lead outcome Component outcome

1. Distinguish between the different rationales a. E xplain the role of budgets.

for budgeting. b. D
 istinguish between the different rationales
for budgeting.

2. Prepare budgets. a. E
 xplain forecasting and its relationship
with budgeting.
b. Prepare master budgets.
c. Conduct what-if analysis in budgeting.
d. D
 escribe the technologies available for
improving budgeting.

3. D
 iscuss budgetary control. Discuss:
a. The concept of budgetary control
b. Human dimensions of budgeting

36 CIMA Professional Qualification Syllabus

 P1: Management Accounting

Topics to be covered Explanatory notes

• Planning Why do organisations prepare budgets? In what ways

• Communication are the different rationales for preparing budgets
compatible with each other? How do organisations get
• Coordination the most out the budgeting process?
• Motivation
• Control

• T
 ime series and trend analysis to forecast What is the process by which budgets are prepared?
sales volumes What types of budgets are required by organisations?
• C
 omponents of master budgets and their What data do they use and where do they get the
interaction with each other data from? How are those budgets prepared and
presented? What technologies are available for
• Limiting factors improving the quality of the budgets?
• Stress testing budgets
• Big data analytics and budgets
• A lternative approaches to budgeting

• Feedback and feedforward control What is budgetary control? Describe and discuss
• Flexed budgets how and why the budgetary control system provides
feedback and feedforward to the organisation. What
• Target setting and motivation are the behavioural impacts of budgetary control and
• C ontrollable and uncontrollable outcomes how are they managed?
• D ysfunctional behaviours in budgeting
• Ethical considerations in budgeting

37
P1C: Short-term commercial decision-making
Organisations cannot foresee every opportunity that might arise during 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.

Lead outcome Component outcome

1. Describe the main types of short-term decisions a. D

 escribe pricing and revenue maximising
made by organisations. decisions.
b. Describe product decisions.

2. E
 xplain the underlying concepts used for a. E xplain the objectives of decision-making.
short-term decision-making. b. E
 xplain the underlying concepts of short-term
decision-making.

3. Apply appropriate techniques to support Apply the following to support short-term

short-term decisions. decision-making:
a. Relevant cost analysis
b. Break-even analysis
c. Product mix decisions with constraints
d. Data and technology

38 CIMA Professional Qualification Syllabus

 P1: Management Accounting

Topics to be covered Explanatory notes

• M
 arginal and full cost recovery for pricing Describe the types of short-term decisions
decisions organisations make and the circumstances that
• D
 ifferences in pricing and revenue maximisation give rise to them. What do these short-term
for the short term and long term decisions seek to achieve? How important are they to
performance of organisations? The emphasis is on
• Product mix both revenue and costs.

• I mplications of commercial decision-making What are the objectives and underlying concepts that
in the short term are used to guide short-term decision-making and
• Relevant revenues why? Distinguish between those concepts of revenue,
costs and information from other concepts.
• Relevant costs
• Difference with profit reporting

• Make or buy decisions Use data (financial and non-financial) and the
• Discontinuation decisions appropriate concepts and techniques to support
decision-making to achieve organisational objectives
• Multi-product break-even analysis of value creation and preservation.
• U
 se of data and technology to analyse
product mix decisions
• E
 thical considerations in short-term
decision-making

39
P1D: Risk and uncertainty in the short term
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.

Lead outcome Component outcome

1. Apply basic risk management tools in the a. E

 xplain nature of risk and uncertainty in
short term. short term.
b. A
 pply basic sensitivity analysis to budgeting
and short-term decision-making.

40 CIMA Professional Qualification Syllabus

 P1: Management Accounting

Topics to be covered Explanatory notes

• Stress testing What types of risks and uncertainties do organisations

• S ensitivity and what-if analysis face when preparing and implementing budgets and
when making short-term decisions? How are those
• Probability distributions risks and uncertainties identified, assessed and
• Decision trees managed?

41
 F1: Financial
Reporting
A. Regulatory environment of financial reporting

B. Financial statements

C. Principles of taxation

D. Managing cash and working capital

42
F1: Structure and outline

Regulatory issues that provide the basis

for preparing financial statements

Prepare basic financial statements

for external stakeholders.

Implications

Use financial statements to gain

Calculate taxation and explain its understanding of short-term
affects and how it is affected by the financing to improve the ability
organisation’s performance. of the organisation to create
and preserve value.

43
F1A: R
 egulatory environment of financial
reporting
The preparation of financial statements is regulated by laws, standards, generally accepted accounting principles and
by codes. The regulations ensure that financial statements of different entities are comparable and that they present a
reasonably accurate picture of the performance, position and prospects of the organisation to their users. This section
covers who the regulators are, what they do and why and how the regulations are applied. The objective is to provide
candidates with a strong foundation for preparing and interpreting financial statements.

Lead outcome Component outcome

1. Identify regulators and describe their role. a. Identify the major regulators.
b. Describe what they do.
c. E xplain why they regulate financial reporting.

2. A
 pply corporate governance principles a. D
 escribe the role of the board in corporate
to financial reporting. governance.
b. Apply corporate governance and financial
stewardship principles to financial reporting.

44 CIMA Professional Qualification Syllabus

Topics to be covered Explanatory notes

• National regulators Who are the regulators who determine how financial
• IFRS foundation statements are prepared? What do they do? What
value do they contribute to the production of financial
• IASB statements? Coverage will include national and
• I nternational Organisation for Securities international regulators, stock exchange regulators and
Commissions (IOSCO) various accounting and financial reporting standards
boards and major influential bodies like the IIRC.
• S tandard setting process
• D
 ifferences between rules-based and
principles-based regulations
• O
 thers such as International Integrated
Reporting Council (IIRC)

• N
 eed and scope for corporate governance Boards have overall responsibility for ensuring that
regulations executives of organisations create value for their
• D
 ifferent approaches to corporate governance stakeholders and safeguard their assets. The role of
regulations boards is incorporated in various corporate governance
codes. What are the main principles as they apply to
financial reporting and the oversight of boards?

45
F1B: Financial statements
One of the roles of finance is to narrate how organisations create and preserve value. The financial statements are the
means by which narration is done to particular audiences. This section enables candidates to prepare basic financial
statements using financial reporting standards. It covers the main elements of the financial statements, what they
intend to convey, the key financial reporting standards and how they are applied to prepare financial statements.

Lead outcome Component outcome

1. Identify the main elements of financial a. Identify the main elements of financial
statements. statements contained in the IFRS conceptual
framework.

2. E xplain specific financial reporting standards.  xplain the specific financial reporting standards
E
related to:
a. Non-current assets
b. Leases
c. Impairment
d. Inventory
e. Events after the period

3. A
 pply financial reporting standards to prepare Apply financial reporting standards to prepare:
basic financial statements. a. S tatement of financial position
b. S tatement of comprehensive income
c. S tatement of changes in equity
d. S tatement of cash flows

46 CIMA Professional Qualification Syllabus

 F1: Financial Reporting

Topics to be covered Explanatory notes

• O
 bjectives and overall purpose of This sets the main principles that underpin the
financial reporting preparation of financial statements. The focus is
on the main principles. No detailed treatments are
• Q
 ualitative characteristics of financial
expected.
information
• Reporting entity and its boundaries
• Recognition (and derecognition)
• Measurement bases
• Presentation and disclosure
• C oncept of capital maintenance

• I AS 16 — Property, Plant & Equipment Examine the requirements for how major items of the
• I FRS 5 — Non-current Assets Held for Sale financial statements are to be recognised, measured
or Discontinued Operations and disclosed. This covers the main areas and not
specialist topics.
• IFRS 16 — Leases
• I AS 36 — Impairment of Assets
• IAS 2 — Inventories
• I AS 10 — Events After the Reporting Period

• IAS 1 — Presentation of Financial Statements Give hands-on experience of preparing basic financial
• I AS 7 — Statement of Cash Flows statements by bringing in all the elements.

47
F1C: Principles of taxation
One of the implications of value creation is how that value is distributed to different stakeholders. Taxation is part of
this distribution. This section helps candidates distinguish between types of taxes and to calculate corporate taxes. In a
digital world where revenue is earned through online trading that spans national boundaries, candidates are introduced
to the issues relating to taxation across international borders and the ethics of taxation.

Lead outcome Component outcome

1. Distinguish between different types of taxes. Distinguish between

a. Direct versus indirect
b. Corporate versus personal

2. Calculate tax for corporates. a. E xplain the basis of taxation

b. E
 xplain the difference between accounting profit
and taxable profit
c. Calculate corporate tax

3. E
 xplain some relevant issues that Explain:
affect taxation. a. Taxation across international borders
b. Ethics of taxation

48 CIMA Professional Qualification Syllabus

 F1: Financial Reporting

Topics to be covered Explanatory notes

• Features of direct and indirect taxes Gives a broad overview of the different types of taxes,
• Features of corporate and personal taxes who they affect and why they are used.

• E xempt income The focus shifts here to corporate taxation. The main
• Income taxed under different rules area covered is the difference between accounting
profit and profit for taxation purposes. No national law
• Allowable expenditure is applied here. The main thing here is coverage and
• Capital allowances application of principles.
• Reliefs
• Tax on sale of asset

• C orporate residence Given the increase of cross-border trading and revenue

• T
 ypes of overseas operations (e.g., subsidiary generation in the digital world what are the key issues
or branch) affecting international taxation? What are the ethical
issues that arise in the computation and payment of
• Double taxation taxes?
• Transfer pricing
• Tax avoidance
• Tax evasion

49
F1D: Managing cash and working capital
Cash is the life blood of any organisation. The ability to provide cash, at the appropriate cost when it is needed is one
of the key contributions that finance makes to organisations. It fulfils finance’s role of enabling organisations to create
and preserve value. This section provides candidates with the tools to ensure that the organisation has enough cash to
ensure its continuing operations.

Lead outcome Component outcome

1. Distinguish between the types and sources of Distinguish between

short-term finance. a. Types of short-term finance
b. Financial institutions

2. E xplain and calculate operating and cash cycles. Explain and calculate
a. Operating cycle
b. Cash flow cycle

3. A
 pply different techniques used to manage a. A
 pply policies relating to elements of operating and
working capital. cash cycle
b. Prepare forecasts
c. E xplain risks relating to working capital

50 CIMA Professional Qualification Syllabus

 F1: Financial Reporting

Topics to be covered Explanatory notes

• Trade payables What are the main types of funds needed for the short
• Overdrafts term? Where can those funds be accessed? How
does one determine which type or source of finance is
• Short-term loans appropriate?
• Debt factoring
• Trade terms
• Trade partners
• Banks

• Inventory days The operating and cash cycle is one of the main
• Trade receivable days means of putting together various elements of cash
and near-cash items in a coherent manner to explain
• Trade payable days the cash needs of the organisation. What are these
elements? How do they affect the availability and
adequacy of cash for short-term operations?

• Receivables management What are the policies that organisations should

• Payables management put in place to manage working capital? How is
the appropriate level determined, forecasted and
• Inventory management accessed? What are the risks associated with
• Risk of overtrading accessing such funds?
• S hort-term cash flow forecasting
• Investing short-term cash

51
 The
Management
Level

52 CIMA Professional Qualification Syllabus

 E2

Management Managing
Performance

Level summary Mechanisms to

implement decisions
and manage people
On completion, candidates should be able to performance
use data and relevant technology to: manage
organisational and individual performance;
translate long-term decisions into medium-term
plans; allocate resources to implement decisions;
monitor and report implementation of decisions; P2
provide feedback up and down the organisation; Advanced
and prepare and interpret financial statements Management
to show the performance, position and prospects Accounting
of their organisations. Making medium-term
decisions and
Wider scope managing costs and
performance
Integrated within limits

Financial and quantitative non-financial

Link present to past and future

Medium term F2
Advanced
Monitor implementation of decisions Financial Reporting

Internal (whole organisation) Analysing and

communicating insights
Lesser detail but broader picture about the performance
of the organisation
Insight

53
 Summary of the Management
Level Syllabus

E2: Managing performance P2: A

 dvanced management F2: Advanced financial reporting
A. B
 usiness models and accounting A. Financing capital projects
value creation A. M
 anaging the costs B. Financial reporting standards
B. Managing people performance of creating value
C. Group accounts
C. Managing projects B. C
 apital investment
decision-making D. Integrated reporting

C. M
 anaging and controlling E. Analysing financial statements
the performance of
organisational units
D. Risk and control

54 CIMA Professional Qualification Syllabus

 E2: Managing
Performance
A. Business models and value creation

B. Managing people performance

C. Managing projects

56
E2: Structure and outline

The business model as a framework

to understand and manage
how to create value.

Managing people performance to Implementing organisational goals

implement organisational goals through project management

57
E2A: Business models and value creation
The digital world is characterised by disruptions to business models by new entrants and incumbents who seek superior
performance and competitive advantage. This section covers the fundamentals of business models and how new
business and operating models can be developed to improve the performance of organisations.

Lead outcome Component outcome

1. E xplain the ecosystems of organisations. Explain:

a. Markets and competition
b. Society and regulation

2. E xplain the elements of business models. Explain the following

a. Concept of value and the business model
b. Defining value
c. Creating value
d. Delivering value
e. Capturing and sharing value

3. A
 nalyse new business models in a. A
 nalyse digital business models and their related
digital ecosystems. operating models

58 CIMA Professional Qualification Syllabus

 E2: Managing Performance

Topics to be covered Explanatory notes

• D efinition of ecosystems What is the nature of the ecosystem? What are its
• Participants and roles critical elements and how do they interact with each
other? How do they impact the organisation?
• Interactions and dynamics
• Rules and governance
• Technology
• Risks and opportunities

• S takeholders and relevant value This section covers the concept of value from different
• Stakeholder analysis stakeholder perspectives. It examines the various
elements of the business model, their interaction
• R
 esources, process, activities and people with each other and their implication for costs and
in creating value revenue. The section also covers the connectivity and
• P
 roducts, services, customer segments, alignment between the ecosystem and the elements
channels and platforms to deliver value of the business model.
• Distribution of value to key stakeholders

• Disruption New business models have evolved to disrupt

• W
 ays to build disruptive and resilient industries and their ecosystems. What are they?
business models How have they redefined their industries?

• Creating digital operating models

• Types of digital operating models

59
E2B: Managing people performance
Human capital is one of the key intangible assets of organisations in an age where intangible assets are the dominant
means by which organisations create and preserve value. Leadership is a crucial means for managing individual
performance and the relationships between people. This section examines how different styles of leadership can be
used to improve the performance of individuals so they can achieve organisational goals.

Lead outcome Component outcome

1. Compare and contrast different types of Compare and contrast:

leadership and management styles. a. Different leadership concepts
b. Types of leadership
c. Leadership in different contexts

2. Analyse individual and team performance. Analyse the following:

a. Employee performance objective setting
b. Employee appraisals
c. Coaching and mentoring
d. Managing workplace environment

3. E xplain how to manage relationships. Explain the following in the context of managing
relationships:
a. Building and leading teams
b. Communications
c. Negotiations
d. Managing conflicts

60 CIMA Professional Qualification Syllabus

 E2: Managing Performance

Topics to be covered Explanatory notes

• Power, authority, delegation and empowerment Leadership is key to performance management. In a

• C ontingent and situational leadership digital world it is an area that is least susceptible to
automation. What constitutes leadership? What are the
• Transactional and transformational leadership different types of leadership? How does one choose a
• Leadership of virtual teams style of leadership that is appropriate for the particular
context?
• Leadership and ethics

• Target setting and employee alignment Individual performance is achieved through structured
• Employee empowerment and engagement processes and approaches. These include objective
setting and regular review of performance against
• Performance reporting and review objectives. How should these processes be developed
• R
 ewards and sanctions in managing to ensure employee engagement, empowerment
performance and alignment? How should the work environment
be configured to enhance performance? What is the
• D
 ifferent approaches to coaching and mentoring
role of the leader in coaching and mentoring for high
to improve performance
performance?
• Diversity and equity practices
• Health and safety
• Organisational culture

• Characteristics of high-performing teams Individuals work in teams and their performance

• Motivating team members contributes to the team performance. How should
teams be built and led to improve performance? How
• C ommunication process is collaboration enhanced using technology? How can
• Digital tools for communication conflicts be managed?
• Negotiation process
• S trategies for negotiation
• S ources and types of conflicts
• S trategies for managing conflicts
• Leadership and ethics

61
E2C: Managing projects
Projects have become pervasive means by which organisations execute their strategies. This section shows candidates
how to use project management concepts and techniques to implement strategies effectively and efficiently. It is linked
to capital investment decision-making that is covered in other areas of the Management Level.

Lead outcome Component outcome

1. Describe the concepts and phases of projects. Describe the following:

a. Project objectives
b. Key stages of the project life cycle
c. Project control

2. Apply tools and techniques to manage projects. Apply the following to manage projects:
a. Project management tools and techniques
b. Project risk management tools

3. E
 xplain the concepts of project leadership. Explain
a. Project structure
b. Roles of key project personnel
c. How to manage project stakeholders

62 CIMA Professional Qualification Syllabus

 E2: Managing Performance

Topics to be covered Explanatory notes

• O verall project objectives Projects are the primary means by which many
• O bjectives relating to time, cost and quality organisations implement strategic decisions. It is
also how organisations ensure cross-functional
• P
 urpose and activities associated with key collaboration. This section covers the key elements
stages of the project life cycle of project management. It seeks to provide both
awareness and understanding of the project
management process and the ability to apply tools
and techniques to participate in projects and to
identify, evaluate and manage project risks. The
objective is not to train project managers but to
equip finance people to work within projects and to
• Workstreams
lead some parts of projects.
• W
 ork breakdown schedule, Gantt charts, network
analysis
• PERT charts
• S ources and types of project risks
• Scenario planning
• Managing project risks
• Project management software

• P
 roject structures and their impact on project
performance
• Role of project manager
• R
 ole of key members
of project team
• Life cycle of project teams
• Managing key stakeholders of projects
• Leading and motivating project team

63
 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

64 CIMA Professional Qualification Syllabus 64

P2: Structure and outline

Managing costs using costing Capital investment decisions to acquire

and cost driver analysis the capacity to create value

Managing and controlling the

performance of organisational units

Risk and control in

the medium term

65
P2A: Managing the costs of creating value
Cost management and transformation are priorities for organisations facing intense competition. This section examines
how to use cost management, quality and process management, and value management to transform the cost
structures and drivers to provide organisations with cost advantage.

Lead outcome Component outcome

1. Apply cost management and cost Apply the following to manage costs and
transformation methodology to manage improve profitability:
costs and improve profitability. a. Activity based management (ABM) methodology
b. Cost transformation techniques

2. C
 ompare and contrast quality management Compare and contrast:
methodologies. a. Just-in-time (JIT)
b. Quality management
c. Kaizen
d. Process re-engineering

3. A
 pply value management techniques to manage Apply the following to manage costs and value
costs and improve value creation. creation:
a. Target costing
b. Value chain analysis
c. Life cycle costing

66 CIMA Professional Qualification Syllabus

Topics to be covered Explanatory notes

• Engendering a cost-conscious culture One of the reasons for calculating costs is to enable
• L
 ogic of ABC as the foundation or organisations to manage and possibly transform
managing costs their costs. ABM is a key technique that is used to
achieve this objective because of its link to ABC.
• A
 BM to transform efficiency of repetitive This revolves around the logic of ABC that links
overhead activities costs to resource consumption and levels of activity
• A
 BM to analyse and improve and is related to the business model framework.
customer profitability Customer and channel analysis have become
very important in the digital world — particularly
• A
 BM to analyse and improve
as customers shift from products and services to
channel performance
experience. How profitable are the segments and
channels they use?

• I mpact of JIT and quality management on Quality management is an important part of

efficiency, inventory and costs managing and transforming costs. What are the key
• B enefits of JIT and TQM methodologies? How do they affect the costs of
products, services and the channels that are used to
• K
 aizen, continuous improvement and cost deliver them?
of quality reporting
• E
 limination of non-value adding activities and the
reduction of costs using process re-engineering

• D etermination of target costs from target prices Cost transformation must always be linked to the
• C omponents of the value chain value that organisations create. This part provides
the link between costs and value.
• Profitability along the value chain
• L
 ife cycle costing and its implication for
market strategies

67
P2B: Capital investment decision-making
Organisations have to allocate resources and key strategic initiatives to ensure that their strategies are properly
implemented. Capital investment decision-making is the primary means by which such resources are allocated
between competing needs. This section covers the criteria, process and techniques that are used to decide which
projects to undertake. Of particular interest is the financial appraisal of digital transformation projects.

Lead outcome Component outcome

1. Apply the data required for decision-making. Apply the following for decision-making:
a. Relevant cash flows
b. Non-financial information

2. E
 xplain the steps and pertinent issues E xplain:
in the decision-making process. a. Investment decision-making process
b. Discounting
c. Capital investments as real options

3. A
 pply investment appraisal techniques Apply the following to evaluate projects:
to evaluate different projects. a. Payback
b. Accounting rate of return
c. IRR
d. NPV

4. D
 iscuss pricing strategies. Discuss:
a. Pricing decisions
b. Pricing strategies

68 CIMA Professional Qualification Syllabus

 P2: Advanced Management Accounting

Topics to be covered Explanatory notes

• Incremental cash flows The quality of decisions depends on the quality and
• Tax, inflation and other factors type of data that is available to decision-makers.
What type of data do decision-makers need for
• Perpetuities medium-term decisions? Where do they get this
• Qualitative issues data? In a digital world this would come from data
lakes through to data warehouses and business
• S ources and integrity of data
intelligence systems.
• Role of business intelligence systems

• O
 rigination of proposals, creation of capital What are the steps in the investment decision-making
budgets, go/no go decisions process for simple as well as complex decisions?
• Time value of money What key concepts underpin the techniques that are
used? What are the criteria for accepting projects?
• Comparing annuities How is uncertainty dealt with?
• Profitability index for capital rationing
• D
 ecision to make follow-on investment,
abandon or wait (capex as real options)

• Process and calculation This part covers a straight forward application of the
• S trengths and weaknesses techniques used to appraise projects. These should
be extended to deal with the evaluation of digital
• Appropriate usage transformation projects that do not have the same
• U
 se in prioritisation of mutually profile as other capital projects.
exclusive projects

• P
 ricing decisions for maximising profit in What pricing strategies are open to organisations
imperfect markets operating in imperfect markets? How do these affect
• Types of pricing strategies the capital investment decision process?

• F inancial consequences of pricing strategies

69
P2C: Managing and controlling the
performance of organisational units
The structure and strategies of organisations should align with each other to ensure effective strategy implementation.
Responsibility centres are the organisational units that are allocated resources and charged with implementing
organisational strategy. This section shows how to manage the performance of these organisational units to ensure
that they achieve the strategic and other organisational objectives. Key concepts, techniques and issues are explored
and examined.

Lead outcome Component outcome

1. Analyse the performance of responsibility centres a. A

 nalyse performance of cost centres, revenue
and prepare reports. centres, profit centres, and investment centres.
b. Prepare reports for decision-making.

2. D
 iscuss various approaches to the performance a. Discuss budgets and performance evaluation.
and control of organisations. b. D
 iscuss other approaches to performance
evaluation.

3. E
 xplain the behavioural and transfer Explain:
pricing issues related to the management a. Behavioural issues
of responsibility centres.
b. Use and ethics of transfer pricing

70 CIMA Professional Qualification Syllabus

 P2: Advanced Management Accounting

Topics to be covered Explanatory notes

• O bjectives of each responsibility centre What are responsibility centres and how should they
• C
 ontrollable and uncontrollable costs be matched to the strategy of organisations? What
and revenue are the KPIs of each type of responsibility centre?
How is their performance evaluated and why? What
• C
 osts variability, attributable costs and revenue types of reports are prepared for responsibility centre
and identification of appropriate measures managers? How do they use analytics, visualisation
of performance and self-service technologies to enhance the
• U
 se of data analytics in performance performance management of responsibility centres?
management of responsibility centres

• K
 ey performance indicators (e.g., profitability, How are budgets used to evaluate the performance
liquidity, asset turnover, return on investment of responsibility centres? What is best practice in this
and economic value) area? How are other methodologies like the balanced
• B enchmarking (internal and external) scorecard useful in managing performance?

• Non-financial performance indicators

• Balanced scorecard

• Internal competition What are the behavioural issues in responsibility

• Internal trading centre performance management — in particular
as they affect controllable and non-controllable
• T
 ransfer pricing for intermediate goods where costs and revenue? How should they be managed
markets exist and where no markets exist so that responsibility centres work effectively with
• Types of transfer prices and when to use them each other to maximise performance of the whole
organisation rather than each responsibility centre?
• E
 ffect of transfer pricing on autonomy, and
What role can transfer pricing play in this area?
motivation of managers of responsibility centre
• E
 ffect of transfer pricing on responsibility centre
and group profitability

71
P2D: Risk and control
Risk is inherent in the operations of all organisations. This section analyses risks and uncertainties that organisations
face in the medium term. The risks are mainly operational in nature.

Lead outcome Component outcome

1. Analyse risk and uncertainty associated with Conduct

medium-term decision-making. a. Sensitivity analysis
b. Analysis of risk

2. Analyse types of risk in the medium term. a. Analyse types of risk

b. Manage risk

72 CIMA Professional Qualification Syllabus

 P2: Advanced Management Accounting

Topics to be covered Explanatory notes

• Quantification of risk What risks do organisations face in relation to

• U
 se of probabilistic models to interpret capital investment decision-making and the
distribution of project outcomes implementation of those decisions? How are those
risks incorporated in the decision-making process
• S tress-testing of projects and managed in the implementation of
• Decision trees the decisions?
• D ecision-making under uncertainty

• Upside and downside risks

• TARA framework — transfer, avoid, reduce, accept
• Business risks
• U
 se of information systems and data in
managing risks

73
 F2: Advanced
Financial
Reporting
A. Financing capital projects

B. Financial reporting standards

C. Group accounts

D. Integrated reporting

E. Analysing financial statements

74
F2: Structure and outline

Financial reporting standards

for preparing group accounts

Financing capital Prepare group accounts Integrated reporting in a

projects for stakeholders. multi-stakeholder world

Analyse financial statements

to provide insights.

75
F2A: Financing capital projects
For selected strategic (capital investment) projects to be implemented, funds must be sourced at the right cost and at
the right time. This is a key role of the finance function and shows how it enables the organisation to create value. This
section looks at the sources and types of funds and how much they cost.

Lead outcome Component outcome

1. Compare and contrast types and sources of Compare and contrast:

long-term funds. a. Long-term debt
b. Equity finance
c. Markets for long-term funds

2. Calculate cost of long-term funds. Calculate:

a. Cost of equity
b. Cost of debt
c. Weighted average cost of capital

76 CIMA Professional Qualification Syllabus

 F2: Advanced Financial Reporting

Topics to be covered Explanatory notes

• C
 haracteristics of different types of shares and What are the types of funds that can be used to
long-term debts finance medium to long-term projects? What are their
• O rdinary and preference shares unique and shared profiles and under what conditions
are they suitable for organisations seeking long-term
• B onds and other types of long-term debt funds? What is the impact of these funds on the risk
• O perations of stock and bond markets profile of organisations? Where can these funds be
sourced? What are the criteria that organisations must
• Issuance of shares and bonds
fulfil to access funds from these sources?
• Role of advisors

• C
 ost of equity using dividend valuation model What is the cost of each type of funds? What is the
(with or without growth in dividends) cost of the total funds used by the organisation to
• Post-tax cost of bank borrowing fund its projects? How can the organisation minimise
the cost of funds whilst ensuring the availability of
• Y
 ield to maturity of bonds and post-tax cost adequate funds at the right time and at the same time
of bonds maintaining an appropriate risk profile?
• P
 ost-tax costs of convertible bonds up to and
including conversion

77
F2B: Financial reporting standards
The finance function is responsible for narrating how organisations create and preserve value. Different types of narratives
are used for different audiences. Financial reporting is used for external stakeholders. This section examines the building
blocks for constructing the narratives in the financial statements. It covers the key financial reporting standards on which
the financial statements will be based.

Lead outcome Component outcome

1. E xplain relevant financial reporting standards for Explain the financial reporting standards for:
revenue, leases, financial instruments, intangible a. Revenue
assets and provisions.
b. Leases
c. Provisions
d. Financial instruments
e. Intangible assets
f. Income taxes
g. Effect of changes in foreign currency rates

2. E
 xplain relevant financial reporting standards for a. E
 xplain the financial reporting standards for the key
group accounts. areas of group accounts

78 CIMA Professional Qualification Syllabus

 F2: Advanced Financial Reporting

Topics to be covered Explanatory notes

• I FRS 15 — Revenue from Contracts with How should important elements of the financial
Customers statement be treated in the books? What principles
• IFRS 16 — Leases should underpin these? How do financial reporting
standards help to ensure this? Using financial reporting
• I AS 37 — Provisions, Contingent Liabilities standards terminology this part will be looking at
and Contingent Assets issues in recognition and measurement. The most
• IFRS 9 — Financial Instruments important issues will be considered here.
• I AS 32 — Financial Instruments: Presentation
• I AS 38 — Intangible Assets
• IAS 12 — Income Taxes
• I AS 21 — Effect of Changes in on Foreign
Exchange Rates

• I AS 1 — Presentation of Financial Statements What are the key principles that should govern the
• I AS 27 — Separate Financial Statements preparation of group accounts? How are they reflected
in financial reporting standards? The approach should
• I AS 28 — Investment in Associates and focus on the aspects of group accounts that are
Joint Ventures essential for discussions with the rest of the business.
• IFRS 3 — Business Combinations Therefore, the emphasis should be on awareness
• I FRS 5 — Non-current Assets Held for Sale or creation and basic understanding of the technical
Discontinued Operations elements.

• IFRS 10 — Consolidated Financial Statements

• IFRS 11 — Joint Arrangements

79
F2C: Group accounts
Organisations sometimes acquire or merge with other organisations to improve their strategic performance, position
and prospects. The performance and position of combined operations are reported through group accounts. This
section covers the application of the relevant financial reporting standards to prepare group accounts. The topics
covered are those that are essential to conducting conversations with different parts of the business about the
performance of the group and its component parts.

Lead outcome Component outcome

1. Prepare group accounts based on IFRS. Prepare the following based on financial
reporting standards:
a. Consolidated statement of financial position
b. Consolidated statement of comprehensive income
c. Consolidated statement of changes in equity
d. Consolidated statement of cash flows

2. D
 iscuss additional disclosure issues related to the Discuss disclosure requirements related to:
group accounts. a. Transaction between related parties
b. Earnings per share

80 CIMA Professional Qualification Syllabus

 F2: Advanced Financial Reporting

Topics to be covered Explanatory notes

• I AS 1 — Presentation of Financial Statements This is about the preparation of basic group accounts
• I AS 27 — Separate Financial Statements applying the financial reporting standards learned
in the previous section. Basic understanding of the
• I AS 28 — Investment in Associates and technical issues is required. Thus, it should cover the
Joint Ventures rules of consolidation, goodwill, foreign subsidiaries,
• IFRS 3 — Business Combinations minority interests and associated companies.
These should be placed in the context of the
• I FRS 5 — Non-current Assets Held for Sale or
organisation’s strategy as executed through mergers
Discontinued Operations
and acquisitions and the setting up of subsidiaries.
• IFRS 10 — Consolidated Financial Statements In addition, it can be linked to the performance
• IFRS 11 — Joint Arrangements management of responsibility centres.

• I AS 24 — Related Party Disclosures What other issues should be disclosed outside the
• I AS 33 — Earnings Per Share financial statements? Why? Again, the focus is on
building awareness and basic understanding of the
technical issues in order to equip finance professionals
to conduct meaningful discussions with the rest of
the organisation about the performance, position and
potential of the organisation.

81
F2D: Integrated reporting
In a multi-stakeholder world, there has been a call for broader forms of reporting to cover wider audiences and issues of
concern to them. The International Integrated Reporting Framework developed by the International Integrated Reporting
Council (IIRC) is one of the most influential frameworks that seeks to fulfil this role. This section introduces candidates to
the Framework and its components.

Lead outcome Component outcome

1. Discuss the International <IR> Framework a. D

 escribe the role of the International Integrated
activities. Reporting Council.
b. E xplain integrated thinking.
c. Discuss the International <IR> Framework.

2. E xplain the Six Capitals of Integrated Reporting. E xplain the measurement and disclosure issues of:
a. Financial capital
b. Manufactured capital
c. Intellectual capital
d. Human capital
e. Social and relational capital
f. Natural capital

82 CIMA Professional Qualification Syllabus

 F2: Advanced Financial Reporting

Topics to be covered Explanatory notes

• C ontext of integrated reporting This section looks at the International <IR> Framework
• International Integrated Reporting Council as a means of addressing the need for wider
forms of reporting in a multi-stakeholder world. It
• Integrated thinking introduces the role of the IIRC and uses the concept
• International <IR> Framework of integrated thinking as the foundational concept of
the International <IR> Framework. It also discusses the
• B enefits and limitations of the Framework
Framework, its benefits and limitations.

• D efinition of the six capitals The six capitals are a key part of the International
• M
 easurement and disclosure issues relating <IR> Framework. This section defines the six capitals
to the six capitals and explains the measurement and disclosure issues
relating to them.

83
F2E: Analysing financial statements
The analyses of financial statements enable organisations to explain their performance and to compare their
performance and prospects over time and against others. It can show how vulnerable they and their business models
are to disruption. This section shows how these analyses are conducted and their limitations.

Lead outcome Component outcome

1. Analyse financial statements of organisations. Analyse financial statements to provide insight on:
a. Performance
b. Position
c. Adaptability
d. Prospects

2. R
 ecommend actions based on insights from a. Recommend actions
the interpretation of financial statements.

3. D
 iscuss the limitations of the tools used for Discuss:
interpreting financial statements. a. Data limitations
b. Limitations of ratio analysis

84 CIMA Professional Qualification Syllabus

 F2: Advanced Financial Reporting

Topics to be covered Explanatory notes

• Ratio analysis The financial statements narrate how organisations

• Interpretation of ratios create and preserve value using financial numbers.
Analyses of financial statements allows finance
• R
 eporting of ratios along the dimensions of professionals to go beyond the numbers and put
the Gartner Data Analytics maturity model — the narrative into everyday business language to
descriptive, diagnostic, predictive and prescriptive facilitate discussions and collaboration with the rest
• Link to organisation’s business model of the organisation. The analysis could be based on
the Gartner Data Analytics model which presents
information as descriptive, diagnostic, predictive and
prescriptive. Thus, it will cover hindsight, insight and
foresight into the organisation’s performance, position,
resilience (or adaptability) and prospects. The analyses
can be linked to the organisation’s business model.

• Linkages between different areas of performance Draw logical conclusions from the analysis. The
• Predictive and prescriptive ratios focus is mainly predictive and prescriptive areas of
data analytics. The recommendations should also
• I mpact of recommendations on wider be organisation wide and must encompass the
organisational ecosystem ecosystem. A link with the business model framework
in E2 is essential.

• Q uality and type of data used What are the limitations of the data and techniques
• C
 omparability — both in segment used in the analyses of financial statements? How do
and internationally they affect the recommendations? How could they
be overcome?

85
 The Strategic
Level

86 CIMA Professional Qualification Syllabus

 The Strategic Level

E3
Strategic Level Strategic
Management

summary Formulate strategy

and create conditions
for successful
On completion candidates should be able to: implementation.
support organisational leaders to craft strategy;
evaluate and manage risks that might prevent
organisations from successfully implementing
strategy; value organisations; and source financial
resources required to implement of strategy.
P3
Wide scope Risk Management

Fully integrated Analyse, evaluate and

manage strategic,
Financial and both quantitative operational and
and qualitative non-financial cyber risks.

Future and some present

Long-term decision-making

External combined with internal

(whole organisation)
F3
Financial Strategy
Aggregate (fewer details)
Create financial strategy,
Influence evaluate and manage
financial risk and assess
organisational value.

87
Summary of the
Strategic Level Syllabus
E3: Strategic Management P3: Risk Management F3: Financial Strategy
A. The Strategy process A. Enterprise risk A. Financial policy decisions
B. A
 nalysing the organisational B. Strategic risk B. Sources of long-term funds
ecosystem C. Internal controls C. Financial risks
C. Generating strategic options D. Cyber risks D. Business valuation
D. Making strategic choices
E. Strategic control
F. Digital strategy

88 CIMA Professional Qualification Syllabus

 E3: Strategic
Management
A. The strategy process

B. Analysing the organisational ecosystem

C. Generating strategic options

D. Making strategic choices

E. Strategic control

F. Digital strategy

90
E3: Structure and Outline

The strategy process

Deploy strategic control

Analyse organisational
systems to create and
ecosystem to diagnose Search for, develop Make strategic choices
communicate action
the opportunities and evaluate strategic and integrate them into
plans and allocate
and challenges to options. a coherent strategy.
resources to
create value.
implement strategy.

Create a digital strategy

that enables the digital
transformation of the
organisation.

91
E3A: The strategy process
Strategy is at the heart of what organisations do. This section provides the foundation of strategic management for the
organisation. It introduces the strategy process that is elaborated on in the rest of the subject.

Lead outcome Component outcome

1. E xplain the purpose of strategy. a. Define strategy.

b. E xplain the purpose of strategy.

2. Discuss the types and levels strategy. Discuss

a. Types of strategy
b. Levels of strategy

3. O
 utline the strategy process. a. O
 utline the rational and emergent processes of
arriving at strategy.

92 CIMA Professional Qualification Syllabus

Topics to be covered Explanatory notes

• Different definitions of strategy This section introduces the rest of E3. It provides
• Essential features and characteristics of strategy the various definitions of strategy and outlines
its essential features and characteristics. It
discusses the different types and levels of
strategy and the leaders who have responsibility
for them. Finally, it looks at the strategy
• Intended and emergent strategy process from both the rational and emergent
perspectives.
• C orporate, business and functional strategies

• A nalysis of organisational ecosystem

• Generating options
• Strategic choice
• Strategic control

93
E3B: Analysing the organisational ecosystem
Every organisation inhabits an ecosystem within which it adapts and evolves. This ecosystem comprises markets and
society, has its players and its own system of governance. Organisations can also join with others to form a smaller
ecosystem within the broader one to reflect their strategic preferences. This section provides candidates with an
understanding of the dynamics of the ecosystem (both the wider and the smaller more deliberate ones formed by
organisations) and how it affects the strategy of the organisation.

Lead outcome Component outcome

1. Analyse the elements of the ecosystem. Analyse

a. Markets and competition
b. Society and regulation

2. Discuss drivers of change in the ecosystem. Discuss the following drivers of change:
a. Institutional and systemic
b. Social
c. Market
d. Technology
e. Sustainability

3. D
 iscuss the impact of the ecosystem on a. D
 iscuss the impact of strategic networks and
organisational strategy. platforms on organisational strategy
b. Conduct stakeholder analysis in networks

94 CIMA Professional Qualification Syllabus

 E3: Strategic Management

Topics to be covered Explanatory notes

• S WOT analysis What types of markets do organisations operate in?

• PESTEL analysis What are the “rules of the game” in these markets?
What are the sources and opportunities for disruption
• Competitor analysis in the market? How does society regulate the markets
• Customer analysis and provide “permission to play” for organisations?
• Wider ecosystems
• Industry ecosystems

• Globalisation What are the drivers of change in the ecosystem?

• Geopolitics How are the individual drivers linked? What type of
outcomes do they bring individually and collectively?
• Demography What risks and opportunities do they bring
• Customer empowerment organisations?
• Digital technology
• Automation

• Value creation in ecosystems In a digital world what is the importance of networks

• P
 articipants and interactions in networks and platforms? What are the roles, interactions, and
and platforms governance systems in the ecosystems? Who are the
key players? How does this affect the business model
• Technology enablers in networks of organisations?
• Process of creating networks and platforms
• S takeholder analysis in networks
• C orporate social responsibility

95
E3C: Generating strategic options
Strategy is about choice of options. These options must be generated and developed based on the dynamics of the
ecosystem in which the organisation operates and the foundational contexts of the organisation (e.g. its purpose, values
etc). This section covers how options are generated and links them to the purpose, values and vision of the organisation.
In addition, it looks at the role of various parts and levels of the organisation in the strategy process.

Lead outcome Component outcome

1. Discuss the context of generating options. Discuss:

a. T
 he role of governance and ethics in the
strategy process
b. T
 he purpose, vision and values of the organisation
and their impact on strategy

2. Discuss how to generate and develop options. Discuss how to:

a. Frame key strategic questions
b. Diagnose organisation’s starting position
c. F
 orecast potential organisational operating
ecosystem
d. Use various frameworks to generate options

96 CIMA Professional Qualification Syllabus

 E3: Strategic Management

Topics to be covered Explanatory notes

• R
 oles and responsibility of leaders of Who is responsible for various aspects of the strategy
organisations for strategy formulation process? How are those roles determined
• D
 efinition of purpose, vision and values and governed? How does the organisation derive its
of organisations purpose, vision and values? What processes exist to
ensure that strategy is based on and/or are aligned
• L
 inkage between purpose, vision and values to these?
to each other and to strategy

• Product/market matrix What are the core strategic questions to ask and what
• Generic strategies are the criteria and constraints for asking them? What
is the organisation’s starting point? Where and how
• Trend analysis does it make money? What potential futures might
• System modeling it inhabit and what are the forces potentially driving
these futures? What are the potential pathways to this
• Scenario planning
future? What new business models are in play?
• T
 angible and intangible value drivers and
data to measure them
• Game theory perspectives
• Real option perspectives

97
E3D: Making strategic choices
Once options have been generated in various areas of the organisation’s operations the organisation has to choose
between the alternatives. The choice is based on predefined criteria and an evaluation of the options against these
criteria. The various options chosen must then be integrated into a coherent whole to form the organisation’s strategy.
This section covers how the options are evaluated, chosen and integrated coherently to form the strategy of the
organisation.

Lead outcome Component outcome

1. Evaluate options. a. Develop criteria for evaluation.

b. Evaluate options against criteria.
c. Recommend appropriate options.

2. P
 roduce strategy by the integration of choices into Conduct:
coherent strategy. a. Value analysis
b. Portfolio analysis

98 CIMA Professional Qualification Syllabus

 E3: Strategic Management

Topics to be covered Explanatory notes

• S uitability, acceptability and feasibility framework What are the different criteria to guide the choice of
options, one how are they prioritised and why?

• Value chain analysis What are the criteria to ensure effective integration and
• Managing product portfolio why? What are the trade-offs to be made when putting
the individual choices together? How does one ensure
integrated thinking?

99
E3E: Strategic control
Once strategy has been formulated, it has to be implemented. This involves developing and communicating action
plans, allocating resources and monitoring the implementation of the plans. In addition, implementing strategy involves
significant change. The nature of these changes should be evaluated and appropriate ways of managing change have
to be developed and implemented. This section examines how these implementation objectives are achieved and how
change is managed.

Lead outcome Component outcome

1. Develop strategic performance management a. Develop detailed action plans

system. b. Communicate action plans
c. Monitor implementation
d. Align incentives to performance

2. A
 dvise on resource allocation to support strategy a. Advise on resource availability
implementation. b. Align resource allocation to strategic choices

3. R
 ecommend change management techniques a. Assess impact of strategy on organisation
and methodologies. b. Recommend change management strategies
c. Discuss the role of the leader in managing change

100 CIMA Professional Qualification Syllabus

 E3: Strategic Management

Topics to be covered Explanatory notes

• Action plans How does the organisation prepare the grounds

• Target setting for executing strategy? How does it create and
communicate action plans for implementation? How
• Critical success factors (CSFs) is the whole organisation mobilised, motivated and
• Key performance indicators (KPIs) incentivised to implement the plans? What role can
integrated reporting play?

• A
 udit of key resources and capabilities required What are the resources needed to implement strategy?
to implement strategy Where are the resources needed? How does the
• Matching resources to strategy organisation re-align resource allocation from existing
units or projects to new ones that match the strategic
choices made?

• Types of change What is the impact of the new strategy on the whole
• Impact of change on organisational culture organisation, parts of the organisation and partners of
the organisation? What transformation is required
• Resistance to change and how does the organisation drive these changes?
• A pproaches and styles of change management
• Role of change leader in communication

101
E3F: Digital strategy
Strategy takes place within specific organisational contexts and ecosystems. The primary characteristics of the current
context is digital transformation. Organisations need to think through their approach to strategy within this perspective.
This section covers how to introduce thinking about digital transformation in the strategy of organisations.

Lead outcome Component outcome

1. Describe the governance of digital transformation. a. D

 escribe the roles and responsibilities of the board
and executive leadership in digital strategy.

2. Analyse digital transformation. Analyse

a. Digital technologies
b. Digital enterprise

3. D
 iscuss the various elements of Discuss:
digital strategies. a. Economics of digitisation
b. Digital ecosystems
c. Digital consumption
d. Data and metrics
e. Leadership and culture

102 CIMA Professional Qualification Syllabus

 E3: Strategic Management

Topics to be covered Explanatory notes

• R
 ole of board and senior leadership in digital Who is responsible for leading the process of
strategy digital transformation? What is their role in the
process and why?

• Cloud computing What are the technologies that underpin digital

• Big data analytics transformation? How are they evolving and what
impact do they have on the organisation and its
• Process automation immediate and wider operating environment? What
• Artificial intelligence type of organisation do such technologies create?
What are the elements of the business and operating
• Data visualisation
models of such digital enterprises.
• Blockchain
• Internet of things
• Mobile
• 3-D printing

• Business case for digital transformation What is the economic and business case for
• P
 articipants, interactions and dynamics of digitisation? How does the organisation create
ecosystem and impact on strategy partnerships in the ecosystem to ensure strategic
success? What are key trends underlying the
• T
 rends in consumption (e.g., hyper personalisation,
consumption of the organisation’s products and
move from products and services to experience)
services by customers and consumers? What data and
• N
 ew metrics (scale, active usage and metrics should organisations use to evaluate success
engagement metrics) of digital enterprises? How should leaders and their
• Leadership in digital transformation organisations think, act and react differently because
of digital transformation?

103
 P3: Risk
Management
A. Enterprise risk

B. Strategic risk

C. Internal controls

D. Cyber risks

104
P3: Structure and outline

Identify and evaluate

enterprise risks and their
sources that can impede the
implementation of strategy.

Evaluate the use of internal Develop processes to identify,

controls to manage evaluate and manage
enterprise risks. cyber risks.

Develop appropriate responses

to strategic risks.

105
P3A: Enterprise risk
Not all intended strategies are implemented due to various factors. These factors constitute the operating
enterprise-wide risks of the organisation. This section covers how to identify, evaluate and manage these risks.

Lead outcome Component outcome

1. Analyse sources and types of risk. Analyse:

a. Sources of risks
b. Types of risks

2. Evaluate risk. a. Evaluate the impact of risk

b. Assess the likelihood of risks
c. Analyse the interaction of different risks

3. D
 iscuss ways of managing risks. Discuss:
a. Roles and responsibilities
b. Risk tolerance, appetite and capacity
c. Risk management frameworks
d. Risk analytics

106 CIMA Professional Qualification Syllabus

 P3: Risk Management

Topics to be covered Explanatory notes

• Upside and downside risks What are the types and sources of risks that would
• Risks arising from internal and external sources prevent organisations from implementing their
intended strategy?
• Risks arising from international operations
• S trategic and operational risks

• Q uantification of risk exposure What is the impact of the risks on the organisation?
• Risk maps What techniques are available to evaluate the impact
of such risks?

• R
 ole of board and others in the organisation for How is risk managed in the organisation? How is
identifying and managing risks responsibility for various aspects of risk management
• R
 isk mitigation including TARA – transfer, avoid, distributed in the organisation? How does the
reduce, accept organisation align its risk tolerance, appetite and
capacity to its decisions and actions? What risk
• Assurance mapping management frameworks are there? How is risk
• Risk register information communicated to the organisation?
• Risk reports and responses
• E
 thical dilemmas associated with risk
management

107
P3B: Strategic risk
A fundamental risk of the organisation is that its strategy is the wrong one and that even if implemented perfectly, it will
achieve the wrong outcome for the organisation. In addition, some risks are of such high significance that they can
affect the very existence of the organisation. This section covers where these risks emanate from, evaluates them
and explains how oversight of such risks is critical to the governance of the organisation.

Lead outcome Component outcome

1. Analyse risks associated with formulating strategy. a. A

 nalyse relevance of the assumptions on which
strategy is based.
b. D
 iscuss potential sources and types of disruptions
to strategy.

2. E
 valuate the sources and impact of Evaluate:
reputational risks. a. Sources of reputational risk
b. Impact of reputational risk on strategy

3. E
 xplain governance risks. Explain:
a. T
 he role of board and its committees in managing
strategic risk
b. Failure of governance and its impact on strategy

108 CIMA Professional Qualification Syllabus

 P3: Risk Management

Topics to be covered Explanatory notes

• A nalysis of strategic choice What are the risks that the strategy of the
• Scenario planning organisation is wrong? What are the sources of such
risks? How does the organisation evolve its strategy
• Stress-testing strategy in a dynamic environment to keep it relevant?

• Risks of unethical behaviour What is reputational risk and why is it an important

• Impact on brand and reputation of organisation strategic risk? What are the types and sources of
reputational risks and what is their impact on the
organisation? How can they be managed?

• S eparation of the roles of CEO and chairman What is the role of the board in risk management?
• Role of non-executive directors How does governance risk occur? How is this role
governed by the various corporate governance
• R
 oles of audit committee, remuneration codes and principles?
committee, risk committee and
nomination committee
• Directors’ remuneration

109
P3C: Internal controls
Control systems are an integral part of managing risks. Various control frameworks have been developed to assist
in this process. In addition, the internal audit function performs a vital role in helping to implement and monitor
implementation and adherence to the control frameworks. This section covers how internal control systems can be
used effectively in the risk management process.

Lead outcome Component outcome

1. Analyse internal control systems. a. D

 iscuss roles and responsibilities for internal
controls.
b. Discuss the purpose of internal control.
c. Analyse the features of internal control systems.

2. R
 ecommend internal controls for risk a. D
 iscuss the Committee of Sponsoring Organisations
management. of the Treadway Commission (COSO) internal control
and risk management framework.
b. Assess control weakness.
c. Assess compliance failures.
d. R
 ecommend internal controls for
risk management.

3. D
 iscuss various issues relating to Discuss:
internal audit in organisations. a. Forms of internal audit
b. Internal audit process
c. Effective internal audit
d. The internal audit report

110 CIMA Professional Qualification Syllabus

 P3: Risk Management

Topics to be covered Explanatory notes

• R
 ole of risk manager as distinct from What are the roles of internal control systems in
internal auditor managing risks? What are its key features and why?
• C ontrol systems in functional areas
• O perational features of internal control

• Governance and culture This introduces the COSO framework as a

comprehensive way of looking at internal controls in
• S trategy and objective setting
risk management. The objective is to get candidates
• Performance to understand the key elements and know how to
• Review and revision apply them in evaluating internal controls.

• Information, communication and reporting

• I dentifying and evaluating control weakness and
compliance failures

• C
 ompliance audit, fraud investigation, value This part looks at the critical role that the internal
for money audit and management audit audit function can play in risk management. The
objective is to create awareness and understanding
• O peration of internal audit
of the various issues in internal audit and how they
• A ssessment of audit risk link to each other.
• Process of analytical review
• I ndependence, staffing and resourcing
of internal audit
• P
 reparation and interpretation of internal
audit reports

111
P3D: Cyber risks
In a digital world one of the major threats is cyber risk. How are data and operating systems protected from
unauthorised access and manipulation? How are breaches identified, analysed, remedied and reported?
These are some of the questions covered in this section.

Lead outcome Component outcome

1. Analyse cyber threats. Analyse:

a. Nature and impact of cyber risks
b. Types of cyber risks
c. Risk of security vulnerabilities.

2. Review cyber security processes. Review:

a. Cyber security objectives
b. Security controls
c. Centralisation in cyber security

3. D
 iscuss cyber security tools and techniques. Discuss:
a. Forensic analysis
b. Malware analysis
c. Penetration testing
d. Software security

4. E
 valuate cyber risk reporting. a. Evaluate cyber risk reporting frameworks

112 CIMA Professional Qualification Syllabus

 P3: Risk Management

Topics to be covered Explanatory notes

• Malware This part looks at where and how organisations

• Application attacks can be vulnerable to cyber threats and the type and
sources of such threats. In addition, it looks at the
• Hackers impact such threats can have on organisations.
• R
 esult of vulnerabilities including downtime,
reputational loss, customer flight, legal and
industry consequences

• Protection, detection and response The principal aim here is to enable candidates to
• C entralised management understand how to manage cyber threats through
cyber security processes. What objectives should
• C entralised monitoring organisations set in this area? What controls are
available to organisations?

• S
 ystem level analysis, storage analysis and This part looks at the tools and techniques available
network analysis to manage cyber risks. Candidates are expected to
• R
 everse engineering, decompilation and have a basic understanding of the techniques and
disassembly how they can be deployed together.

• N
 etwork discovery, vulnerability probing,
exploiting vulnerabilities
• T iers of software security

• D
 escription criteria including nature of business How should cyber risks be reported? What reporting
and operations, nature of information at risk, frameworks are available?
risk management programme objectives,
cybersecurity risk governance structure etc.

113
 F3: Financial
Strategy
A. Financial policy decisions

B. Sources of long-term funds

C. Financial risks

D. Business valuation

114
F3: Structure and outline

Analyse and evaluate the sources

of long-term finances to meet
the organisation’s financing
requirements.

Make financial policy decisions Identify, assess and manage

that align to the organisation’s financial risks associated with
strategic objectives. cash flows and capital projects.

Develop and apply business

valuation techniques to measure
the tangible and intangible value
of organisations.

115
 F3A: Financial policy decisions
The overall strategy of the organisation must be supported by how its finances are organised. This requires an
understanding of the different strategic financial objectives and policy options that are open to organisations. The choice
of these objectives and policy options will be heavily influenced by the financial market requirements and the regulatory
environment in which the organisation operates. This section examines these issues.

Lead outcome Component outcome

1. Advise on strategic financial objectives. a. Analyse different types of organisations and

their objectives.
b. Advise on financial objectives.
c. Advise on non-financial objectives.

2. Analyse strategic financial policy decisions. Analyse the following policy decision areas:
a. Investment
b. Financing
c. Dividends
d. Interrelationships between policy decision areas

3. D
 iscuss the external influences on financial Discuss the influence of the following on financial
strategic decisions. strategic decisions
a. Market requirements
b. Taxation
c. Regulatory requirements

116 CIMA Professional Qualification Syllabus

 F3: Financial Strategy

Topics to be covered Explanatory notes

• Profit and not-for-profit organisations This section is about aligning financial objectives and
• Quoted and unquoted companies policies to the strategies of the organisation. The key
aim is to make sure that the organisation has a proper
• Private and public sector organisations basis to determine what types of funds to access and
• Value for money, maximising shareholder wealth how to use those funds. To do this effectively finance
professionals must be able to evaluate the opportunities
• Earnings growth, dividend growth
and constraints placed on them in the operating
• Impact of underlying economic conditions and environment — particularly financial market requirements,
business variables on financial objectives the impact of taxation and the requirements of industry
• Enhancing the value of other non-financial capitals and financial market regulators.
(human capital, intellectual capital and social and
relational capital)
• United Nations Sustainability Development Goals

• Use of policy decisions to meet cash needs of entity

• Sensitivity of forecast financial statements and future
cash position to these policy decisions
• Consideration of the interests of stakeholders

• Lenders’ assessment of creditworthiness

• Consideration of domestic and international
tax regulations
• Consideration of industry regulations such as
price and service controls

117
F3B: Sources of long-term funds
What types of funds are available to organisations to finance the implementation of their strategies? How much of each type
should they go for? And what is the impact on the organisation? Where and how do they get these funds? And how do they
provide incentives to providers of such funds so that the funds are available at the right time, in the right quantities and at
the right cost? These are some of the questions covered by this section.

Lead outcome Component outcome

1. Evaluate the capital structure of a firm. Evaluate:

a. Choice of capital structure
b. Changes in capital structure

2. Analyse long-term debt finance. Analyse:

a. Selecting debt instruments
b. Target debt profile
c. Issuing debt securities
d. Debt covenants
e. Tax considerations

3. E
 valuate equity finance. a. Evaluate methods of flotation
b. Discuss rights issues

4. E
 valuate dividend policy. Evaluate policy in the following areas:
a. Cash dividends
b. Scrip dividends
c. Share repurchase programmes

118 CIMA Professional Qualification Syllabus

 F3: Financial Strategy

Topics to be covered Explanatory notes

• C
 apital structure theories (traditional theory and How should important elements of the financial
Miller and Modigliani (MM) theories) statement be treated in the books? What principles
• C
 alculation of cost of equity and weighted cost of should underpin these? How do financial reporting
capital to reflect changes in capital structure standards help to ensure this? Using financial
reporting standards terminology this part will be
• I mpact of choice of capital structure on financial looking at issues of recognition and measurement.
statements The most important issues will be considered here.
• S
 tructuring debt/equity profiles of companies
in a group

• T
 ypes of debt instruments and criteria for
selecting them
• M
 anaging interest, currency and refinancing risks
with target debt profile
• P
 rivate placements and capital market issuance
of debt
• Features of debt covenants

• M
 ethods of flotation and implications for
management and shareholders
• R
 ights issues, choice of discount rates and
impact on shareholders
• C
 alculation of theoretical ex-rights price (TERP)
and yield adjusted TERP

• Features and criteria

• I mpact on shareholder value and entity value,
financial statements and performance

119
F3C: Financial risks
There is always a risk that the organisation will not be able to attract enough funds to finance its operations and in
extreme conditions will fail to survive as a result. This section covers the sources of such risks and how to evaluate and
manage such financial risks appropriately.

Lead outcome Component outcome

1. Discuss the sources and types of financial risks. Discuss:

a. Sources of financial risk
b. Types of financial risk

2. Evaluate of financial risks. a. Evaluate how financial risks are quantified

3. R
 ecommend ways of managing financial risks. a. R
 ecommend ways to manage economic
and political risks
b. Discuss currency risk instruments
c. Discuss interest rate risk instruments

120 CIMA Professional Qualification Syllabus

 F3: Financial Strategy

Topics to be covered Explanatory notes

• Economic risk Managing risks related to finances is similar to

• Political risk managing other types of risks in general approach
and methodology. However, there are specific
• Currency risk differences such as the sources and types of
• Interest rate risk financial risks, how they can be quantified and
ways in which they are managed. This section
looks at the very specific issues related to
managing financial risks within a general risk
• T
 heory and forecasting of exchange rates management framework
(e.g. interest rate parity, purchasing power
parity and the Fisher Effect)
• Value at risk

• R
 esponses to economic transaction and
translation risks
• O
 perations and features of swaps, forward
contracts, money market hedges, futures
and options
• T
 echniques for combining options in order to
achieve specific risk profile such as caps,
collars and floors
• Internal hedging techniques

121
F3D: Business valuation
The primary objective of all strategic activity is to create and preserve value for organisations. How does the organisation
know whether it has succeeded in this objective? Sometimes, in order to implement strategies, organisations have to
acquire other organisations. How does the acquirer determine the value of its acquisition? This section covers how to use
techniques in business valuation to answer such questions.

Lead outcome Component outcome

1. Discuss the context of valuation. Discuss:

a. Listing of firms
b. Mergers and acquisitions (M&A)
c. Demergers and divestments

2. Evaluate the various valuation methods. a. Evaluate different valuation methods

b. D
 iscuss the strengths and weaknesses of each
valuation method

3. A
 nalyse pricing and bid issues. Analyse:
a. Pricing issues
b. Bid issues

4. D
 iscuss post-transaction issues. Discuss:
a. Post-transaction value
b. Benefit realisation

122 CIMA Professional Qualification Syllabus

 F3: Financial Strategy

Topics to be covered Explanatory notes

• Reasons for M&A and divestments This section looks at the conditions under which
• Taxation implications organisations need to calculate their own value
or the value of other organisations or sub-units
• P
 rocess and implications of management thereof. It introduces candidates to valuation
buy-outs techniques. Of particular importance in the digital
• A
 cquisition by private equity and world is the valuation of intangibles. This links also
venture capitalist to how to report intangible value and their drivers
in integrated reporting. In addition, how should
digital assets be valued? One of the reasons for
valuation is when merging or acquiring firms. How
• Asset valuation should such deals be structured, implemented
• Valuation of intangibles and closed? For example what should the forms
of the consideration be? What are the terms of
• D
 ifferent methods of equity valuation (share
the acquisition? How does one enable benefit
prices, earnings valuation, dividend valuation,
realisation, particularly for synergies once the
discounted cash flow valuation)
acquired organisation has been integrated into the
• Capital Asset Pricing Model (CAPM) acquiring organisation?
• Efficient market hypothesis

• Forms of consideration
• Terms of acquisition
• Target entity debt
• M
 ethods of financing cash offer and refinancing
target entity debt
• Bid negotiation

• P
 ost-transaction value incorporating effect of
intended synergies
• M&A integration and synergy benefit realisation
• Exit strategies

123
Exam information and timetable
Exams Availability Type of Length of Location
assessment assessment

Objective tests Can be sat globally

at Pearson VUE
E3 P3 F3 On-demand and Computerised 90 minutes test centres
year round objective tests
E2 P2 F2 Locations of
Pearson VUE
E1 P1 F1 centres can be
found via the
CIMA website
Case study exams

Strategic Level Four sittings Case study 3 hours

Management Level per year exam

Operational Level

Actual dates for the case study exam sittings are available on the CIMA website.

International Accounting Standards and Exposure Drafts

The examinations will be set in accordance with relevant International Accounting Standards and International
Financial Reporting Standards. This also applies to material contained in Financial Reporting Exposure Drafts. Details
of examinable standards for a given period will be communicated in the relevant examination blueprint.

Mathematical tables and formulae

Relevant mathematical tables and formulae will be included within the appropriate examination and will be provided in
the relevant examination blueprint.

For more information, go to cimaglobal.com/examblueprints.

124 CIMA Professional Qualification Syllabus

Programme design and the international
education standards
International education standards
CIMA is a member of the International Federation of Accountants (IFAC) and supports the principles, standards and
guidelines set out within the IFAC International Education Standards for Professional Accountants.

CIMA pre-qualification education programmes

Designers and deliverers of CIMA tuition programmes are requested to refer to the IFAC International Education
Standards and reflect the contents when developing learning programmes for CIMA students.

CIMA initial professional development – practical experience

Those responsible for managing, supervising and mentoring CIMA students as they acquire relevant practical
experience are requested to refer to the IFAC International Education Standards and reflect the contents when
developing work-based experience programmes.

125
Copyright © CIMA 2019

Published in 2019 by:

The Chartered Institute of Management Accountants
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Whilst CIMA allows the syllabus to be used to promote the CIMA Professional Qualification, no responsibility
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CIMA recognises and aims to protect both economic and moral rights in this work and object to any distortions of
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CIMA reserves the right to make changes to the qualification structure and syllabus, as it deems necessary.
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International Certified Professional Accountants. These trademarks are registered in the United States and in
other countries.

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128 CIMA Professional Qualification Syllabus