CMA CONTENT SPECIFICATION OVERVIEW

(Source:http://www.imaet.or!"
Cotet Speci#icatio Out$ie% #or the
Certi#ie& Maa!emet Accoutat (CMA"
E'amiatio%
The content specification outlines presented below represent the body of knowledge that
will be covered on the CMA examinations. The outlines may be changed in the future
when new subject matter becomes part of the common body of knowledge.
Candidates for the CMA designation are required to take arts !" #" $" and %. art %"
&usiness Applications" may only be taken after successful completion of arts !" #" and $.
Candidates are responsible for being informed on the most recent developments in the
areas covered in the outlines. This includes understanding of public pronouncements
issued by accounting organi'ations as well as being up(to(date on recent developments
reported in current accounting" financial and business periodicals.
The content specification outlines serve several purposes. The outlines are intended to)
* +stablish the foundation from which each examination will be developed.
* rovide a basis for consistent coverage on each examination.
* Communicate to interested parties more detail as to the content of each examination
part.
* Assist candidates in their preparation for each examination.
* rovide information to those who offer courses designed to aid candidates in
preparing for the examinations.
,mportant additional information about the content specification outlines and the
examinations is listed below.
!. The coverage percentage given for each major topic within each examination part
represents the relative weight given to that topic in an examination part. The
number of questions presented in each major topic area approximates this
percentage.
#. +ach examination will sample from the subject areas contained within each major
topic area to meet the relative weight specifications. -o relative weights have
been assigned to the subject areas within each major topic. -o inference should be
made from the order in which the subject areas are listed or from the number of
subject areas as to the relative weight or importance of any of the subjects.
$. +ach major topic within each examination part has been assigned a coverage level
designating the depth and breadth of topic coverage" ranging from an introductory
knowledge of a subject area ./evel A0 to a thorough understanding of and ability
to apply the essentials of a subject area ./evel C0. 1etailed explanations of the
coverage levels and the skills expected of candidates are presented below.
%. The topics for arts !" #" and $ have been selected to minimi'e the overlapping of
subject areas among the examination parts. The topics within an examination part
and the subject areas within topics may be combined in individual questions.
2uestions within arts !" #" and $ will only cover subject areas outlined in the
respective content specifications. The exception is art %" &usiness Applications"
which may include any of the subject areas tested in arts !" #" and $.
3. 4ith regard to 5ederal income taxation issues" candidates will be expected to
understand the impact of income taxes when reporting and analy'ing financial
results. ,n addition" the tax code provisions that impact decisions .e.g."
depreciation" interest" etc.0 will be tested.
6. Candidates for the CMA designation are expected to have a minimum level of
business knowledge that transcends all examination parts. This minimum level
would include knowledge of basic financial statements" time value of money
concepts" and elementary statistics.
7. arts !" #" and $ are !889 objective and consist of carefully constructed multiple(
choice questions that test all levels of cognitive skills. arts ! and $ are three(hour
exams and contain !!8 questions each. art # is a four(hour exam and has !%8
questions. A small number of the questions on each exam are being validated for
future use and will not count in the final score.
:. art %" &usiness Applications" consists of several essay questions and problems
that are delivered in a computer(based format. &oth written and quantitative
responses will be required. Candidates will be expected to present written answers
that are responsive to the question asked" presented in a logical manner" and
demonstrate an appropriate understanding of the subject matter. ,t should be noted
that candidates are expected to have working knowledge in the use of word
processing and electronic spreadsheets.
;. +thical issues and considerations will be tested on art %" &usiness Applications.
At least one question in this part will be devoted to an ethical situation presented
in a business(oriented context. Candidates will be expected to evaluate the issues
involved and make recommendations for the resolution of the situation.
,n order to more clearly define the topical knowledge required by a candidate" varying
levels of coverage for the treatment of major topics of the content specification outlines
have been identified and defined. The cognitive skills that a successful candidate should
possess and that should be tested on the examinations can be defined as follows)
(ow$e&!e : Ability to remember previously learned material such as
specific facts" criteria" techniques" principles" and procedures
.i.e." identify" define" list0.
Comprehe%io : Ability to grasp and interpret the meaning of material .i.e."
classify" explain" distinguish between0.
App$icatio : Ability to use learned material in new and concrete situations
.i.e." demonstrate" predict" solve" modify" relate0.
Aa$)%i% : Ability to break down material into its component parts so
that its organi'ational structure can be understood< ability to
recogni'e causal relationships" discriminate between behaviors"
and identify elements that are relevant to the validation of a
judgment .i.e." differentiate" estimate" order0.
S)the%i% : Ability to put parts together to form a new whole or proposed
set of operations< ability to relate ideas and formulate
hypotheses .i.e. combine" formulate" revise0.
E*a$uatio : Ability to judge the value of material for a given purpose on
the basis of consistency" logical accuracy" and comparison to
standards< ability to appraise judgments involved in the
selection of a course of action .i.e." critici'e" justify" conclude0.
The three levels of coverage can be defined as follows)
+e*e$ A ) =equiring the skill levels of knowledge and comprehension.
+e*e$ , : =equiring the skill levels of knowledge" comprehension"
application" and analysis.
+e*e$ C : =equiring all six skill levels" knowledge" comprehension"
application" analysis" synthesis" and evaluation.
The levels of coverage as they apply to each of the major topics of the Content
>pecification ?utlines are shown on the following pages with each topic listing. The
levels represent the manner in which topic areas are to be treated and represent ceilings"
i.e." a topic area designated as /evel C may contain requirements at the @A"A @&"A or @CA
level" but a topic designated as /evel & will not contain requirements at the @CA level.
The percentages below show the relative weight range given to each topic in each part.
The level designations indicate the depth and breadth of topic coverage in each part. A
detailed content specification outline can be downloaded from our website in the
certification section.
Part -
,u%ie%% Aa$)%i%
Part - ,u%ie%% Aa$)%i% .$ hours B !!8 questions0
,u%ie%% Ecoomic% ./0 +e*e$ ,
1$o2a$ ,u%ie%% .30 +e*e$ ,
Itera$ Cotro$% -/0 +e*e$ A
4uatitati*e Metho&% -/0 +e*e$ ,
Fiacia$ Statemet Aa$)%i% ./0 +e*e$ ,
A. ,u%ie%% Ecoomic% .#390 ./evel &0 5actors affecting the individual firm including
demand" supply" and elasticity< consumption of goods< production factors and their cost<
market structures and pricing< issues in macroeconomics such as inflation" employment"
and economic growth< C1< the nature of business cycles< fiscal and monetary policies.
,. 1$o2a$ ,u%ie%% .#890 ./evel &0 Comparative advantages of trade< free trade and
protectionism< barriers to international trade< nature and theory of foreign exchange<
international capital investments< financing international trade< legal and ethical issues.
C. Itera$ Cotro$% .!390 ./evel A0 ,nternal control environment" procedures" and
standards< responsibility and authority for internal auditing< types of audits< assessing the
adequacy of the accounting information system.
5. 4uatitati*e Metho&%
.!390 ./evel &0
2uantitative methods and techniques including regression analysis" learning curves"
linear programming" sensitivity analysis" network analysis" probability concepts" expected
values" decision trees" simulation" and other appropriate aids to decision making.
E. Fiacia$ Statemet Aa$)%i% .#390 ./evel &0
1evelopment of accounting standards< financial statement assurance< interpretation and
analysis of financial statements including ratio analysis and comparative analysis<
limitations of ratio analysis< market value vs. book value< international issues.
Stu&) P$a O# Part -
STRATE1IC MANA1EMENT
6it% Ru7%hi
Career
Ru7%hi Career
4ue%tio ,a7 (S/W"
No. O#
5a)%
A ,u%ie%% Ecoomic%
a 5actors Affecting the
,ndividual 5irm
/esson ! $ hrs ! day
b Consumption of Coods /esson ! $ hrs ! day
c roduction Cost 5unctions /esson ! $ hrs ! day
d Market >tructures and ricing /esson # $ hrs D day
e The economy as a system of
markets
/esson # $ hrs D day
f ,ssues in Macroeconomics /esson # $ hrs D day
g 1omestic ?utput" -ational
,ncome and rice /evels
/esson # $ hrs ! day
h &usiness Cycles /esson # $ hrs D day
i 5iscal olicy /esson # $ hrs ! day
j Money and Monetary olicy /esson # $ hrs ! day
Re*iew o# A. ,u%ie%%
Ecoomic% - &a)
, 1$o2a$ ,u%ie%%
a Clobal Trade /esson $ $ hrs # days
b 5oreign +xchange /esson % $ hrs # days
c ?ther Clobal Topics /esson % $ hrs # days
Re*iew o# ,. 1$o2a$
,u%ie%% - &a)
C Itera$ Cotro$%
a =isk Assessment and controls /esson 3 $ hrs # days
b ,nternal Auditing /esson 3 $ hrs # days
c >ystems controls and security
measures
/esson 6 $ hrs # days
Re*iew o# C Itera$
Cotro$% - &a)
5 4uatitati*e Metho&%
a 5orecasting Analysis /esson 7 $ hrs ! day
b /inear rogramming /esson 7 $ hrs ! D
days
c -etwork Analysis /esson 7 $ hrs ! day
d robability Concepts /esson : $ hrs ! D
days
e 1ecision tree Analysis /esson : $ hrs ! day
f ?ther quantitative techniques /esson : $ hrs ! day
Re*iew o# 5 4uatitati*e
Metho&% . &a)%
E Fiacia$ Statemet
Aa$)%i%
a 1evelopment of Accounting
>tandards
/esson ; $ hrs # days
b 5inancial >tatement
Assurance
/esson ; $ hrs ! day
c >hort(term liquidity /esson ; $ hrs ! day
d Capital >tructure and solvency /esson ; $ hrs # days
e =eturn on ,nvested Capital /esson !8 $ hrs ! day
f rofitability Analysis /esson !8 $ hrs ! day
g +arnings(based analysis /esson !8 $ hrs ! day
h ?ther Analytical ,ssues /esson !8 $ hrs # days
Re*iew o# E. Fiacia$
Statemet Aa$)%i% . &a)%
Cotet Speci#icatio Out$ie% #or the
Certi#ie& Maa!emet Accoutat (CMA"
E'amiatio%
Part - 8 ,u%ie%% Aa$)%i%
- A. ,u%ie%% Ecoomic% (./0 8 +e*e$ ,"
-. Factor% a##ecti! the i&i*i&ua$ #irm
a. The laws of supply and demand
b. +lasticity of demand and elasticity of supply
! c. Covernment intervention in market operations
# d. E.>. antitrust policies
.. Co%umptio o# !oo&%
a. Marginal utility theory
! b. ,ndifference curve analysis
9. Pro&uctio co%t #uctio%
a. +conomic costs
b. +conomic profits
c. roduction costs in the short run
d. roduction costs in the long run
e. +conomies and diseconomies of scale
:. Mar7et %tructure% a& prici!
a. ure competition
b. Monopoly
c. Monopolistic competition
d. ?ligopoly
e. +ffects of boycotts and cartels on prices and output
/. The ecoom) a% a %)%tem o# mar7et%
a. roduction and demand for economic resources
! b. The labor market
;. I%%ue% i Macroecoomic%
a. ,nflation
b. +mployment and unemployment
! c. +conomic growth
<. 5ome%tic Output= Natioa$ Icome= a& Price +e*e$%
a. Cross domestic product
b. ?ther national accounts
c. rice levels
>. ,u%ie%% c)c$e%
a. -ature of business cycles
b. Terminology used to explain business cycles
c. =easons for fluctuations
d. /eading economic indicators
?. Fi%ca$ po$ic)
a. Theory of fiscal policy
b. Tools of fiscal policy
! c. Taxation policies
-3. Moe) a& moetar) po$ic)
a. -ature of money
b. Creation of money
c. Money supply and the demand for money
d. =elationship between money and national income
e. The 5ederal =eserve &oard
f. ,nstruments and objectives of monetary policy
,. 1$o2a$ ,u%ie%% (.30 8 +e*e$ ,"
-. 1$o2a$ tra&e
a. Trade terminology
b. Comparative advantage in trade
c. 5ree trade
d. Tariffs
e. -on(tariff trade barriers
f. ,nternational agreements on trade and tariffs
.. Forei! e'cha!e
a. &alance of payments
b. Trade deficits and surpluses
! c. 5ixed" flexible and floating exchange rates
9. Other !$o2a$ topic%
a. 4orld &ank and ,nternational Monetary 5und
b. ,nternational capital investments
c. 5inancing international trade
d. Transfer pricing
e. /egal and ethical issues in global business
C. Itera$ Cotro$% (-/0 8 +e*e$ A"
-. Ri%7 a%%e%%met a& cotro$%
a. ,nternal control structure and management philosophy
b. ,nternal control policies for safeguarding and assurance
c. ,nternal control risk
d. E.>. 5oreign Corrupt ractices Act internal control requirements
.
.. Itera$ au&iti!
a. =esponsibility and authority of the internal audit function
b. Types of audits conducted by internal auditors
! c. ,nternal audit assistance provided to management
9. S)%tem% cotro$% a& %ecurit) mea%ure%
a. Ceneral accounting system controls
b. Application and transaction controls
c. -etwork controls
d. 5lowcharting to assess controls
e. &ackup controls
f. 1isaster recovery procedures
5. 4uatitati*e Metho&% (-/0 8 +e*e$ ,"
-. Foreca%ti! aa$)%i%
a. =egression analysis
b. /earning curve analysis
c. +xponential smoothing
! d. Time series analysis
.. +iear pro!rammi!
a. >carce resource considerations
! b. Capacity constraints
9. Networ7 aa$)%i%
a. Critical ath Method .CM0
! b. rogram +valuation =eview Technique .+=T0
:. Pro2a2i$it) cocept%
a. robability distribution tables
b. +xpected value
/. 5eci%io tree aa$)%i%
a. Assumptions of decision tree analysis
b. +stimating cash flow and probability values
;. Other @uatitati*e techi@ue%
a. >ensitivity analysis
b. >imulation
c. 2ueuing theory
d. Markov process
E. Fiacia$ Statemet Aa$)%i% (./0 8 +e*e$ ,"
-. 5e*e$opmet o# accouti! %ta&ar&%
a. 1ue process in developing E.>. accounting standards
b. 2ualitative characteristics of accounting information
c. =ole of the >+C in E.>. standard setting
d. Eser groups that influence accounting standards
e. Types of pronouncements issued
f. ,nternational Accounting >tandards &oard
.. Fiacia$ %tatemet a%%urace
a. Auditor and management responsibilities
b. Audit reports
9. Short8term $i@ui&it)
a. 4orking capital analysis
b. ?perating activity analysis
c. ?ther ratios and liquidity
:. Capita$ %tructure a& %o$*ec)
a. Capital structure analysis
b. >olvency analysis
c. Asset(based measures
d. +arnings coverage
e. ?ther ratios and solvency measures
/. Retur o i*e%te& capita$
a. Components of return on invested capital
b. =eturn on assets
c. =eturn on common equity
d. ?ther measures of return and capital growth
;. Pro#ita2i$it) aa$)%i%
a. ,ncome measurement analysis
b. =evenue analysis
c. Cost of sales analysis
d. +xpense analysis
e. Fariation analysis
f. ?ther ratios and profitability measures
<. Eari!%82a%e& aa$)%i%
a. +arnings quality
b. +arnings persistence
c. +arnings(based valuation
d. +arnings power and forecasting
e. ?ther ratios and earnings measures
>. Other aa$)tica$ i%%ue%
a. Common(si'e statements
b. ,nternational considerations
c. +ffects of changing prices and inflation
d. /imitations of ratio analysis
e. Accounting versus economic profitGvalue
f. Market value versus book value
g. -on(financial considerations
Certi#ie& Maa!emet Accoutat
+eari! Outcome Statemet%
PART - A ,6SINESS ANA+BSIS
Sectio A. ,u%ie%% Ecoomic% (+e*e$% A a& ,"
art ! B >ection A.!. 5actors affecting the individual firm
The candidate should be able to)
a0 1emonstrate an understanding of the laws of supply and demand
b0 ,nterpret a graph of supply and demand
c0 1emonstrate an understanding of how prices are determined by the interaction of
supply and demand
d0 1ifferentiate between changes in demand and changes in the quantity demanded
e0 1ifferentiate between changes in supply and changes in the quantity supplied
f0 ,dentify the market equilibrium price
g0 1emonstrate an understanding of how surpluses and shortages affect the market
price
h0 Calculate the price elasticity of demand
i0 1efine elastic and inelastic demand and identify each on a graph
j0 +stimate total revenue given changes in prices and demand as well as elasticity
coefficients
k0 Calculate the price elasticity of supply
l0 Calculate the cross elasticity of demand and the income elasticity of demand
m0 1efine externalities and identify their impacts
n0 Apply the law of supply and demand and the concepts of elasticity of supply and
demand to government intervention in the market< such as price supports"
minimum wages" rent control" mandated regulation" etc.
o0 ,dentify the major provisions of E.>. 5ederal antitrust legislation" including the
>herman Act" the Clayton Act" the =obinson(atman Act" the 5ederal Trade
Commission Act" and other relevant legislation
p0 /ist the objectives of antitrust legislation
q0 ,dentify antitrust enforcement sanctions available to the 5ederal government
r0 1emonstrate an understanding of government regulation of natural monopolies
s0 ,dentify the impact of antitrust regulation on a firm
t0 ,dentify the impact of antitrust regulation on an industry
u0 ,dentify the impact of government regulation on a firmHs sales" prices" and costs"
v0 ,dentify the impact of government regulation on an industry
w0 1etermine the impact of economic factors on the demand for a firmHs product
x0 1etermine the impact of economic factors on the market price and supply of a
firmHs factors of production .labor" materials" services" etc0
art ! B >ection A.#. Consumption of goods
The candidate should be able to)
a0 1efine the term utility
b0 1ifferentiate between total utility and marginal utility and analy'e the difference
between the two on a graph
c0 1emonstrate an understanding of the law of diminishing marginal utility
d0 Analy'e the relationship of marginal utility theory to the demand curve and to the
price elasticity of demand
e0 ,dentify the point of utility maximi'ation
f0 1emonstrate an understanding of indifference curves" including the marginal rate
of substitution and the consumerHs equilibrium position
art ! B >ection A.$. roduction cost functions
The candidate should be able to)
a0 1efine explicit and implicit costs
b0 1emonstrate an understanding of normal profit as a cost
c0 ,dentify and calculate economic profit
d0 1ifferentiate short(run costs from long(run costs
e0 1istinguish between fixed costs and variable costs
f0 ,dentify and calculate total product" marginal product" and average product
g0 1efine the law of diminishing returns and identify and analy'e the point of
diminishing return on a graph
h0 ,dentify and calculate total cost" average fixed cost" average variable cost" and
average total cost
i0 ,dentify and calculate marginal cost
j0 ,nterpret the graphical relationship of marginal cost" average variable cost"
average fixed cost" and average total cost
k0 1emonstrate an understanding of the long(run average total cost curve
l0 1efine economies of scale" constant returns to scale" and diseconomies of scale
m0 ,dentify and calculate fixed costs and variable costs
n0 Contrast economic profit with accounting profit and calculate economic profit
given financial statement information and opportunity costs
art ! B >ection A.%. Market structures and pricing
The candidate should be able to)
a0 ,dentify the defining characteristics of pure competition" monopoly" monopolistic
competition" and oligopoly
b0 1ifferentiate the demand curve of an individual firm in a purely competitive
market from the demand curve of the market itself
c0 ,dentify" calculate" and demonstrate an understanding of the graphical
representation of average" total" and marginal revenue for a firm in a purely
competitive market
d0 ,dentify and define the point of profit maximi'ation for the purely competitive
firm in the short(run
e0 ,dentify" calculate" and demonstrate an understanding of the graphical
representation of average" total" and marginal cost for a firm in a purely
competitive market
f0 1emonstrate an understanding of the short(run equilibrium price for the firm and
for the industry in a purely competitive market
g0 1emonstrate an understanding of profit maximi'ation in the long run for the
purely competitive firm
h0 ,dentify" calculate" and demonstrate an understanding of the graphical
representation of the demand" marginal revenue" and total revenue of a pure
monopolist
i0 1etermine the point of profit maximi'ation for a monopolist
j0 1etermine the economic consequences of monopoly
k0 ,dentify and demonstrate an understanding of the graphical representation of the
demand curve for a monopolistically competitive firm
l0 ,dentify and define the point of profit maximi'ation for a monopolistically
competitive firm in the short run
m0 +xplain the long(run profit for a monopolistically competitive firm
n0 ,dentify forms of non(price competition
o0 1emonstrate an understanding of the kinked demand curve of an oligopoly
p0 redict the likely effects of boycotts and cartels on prices and output
q0 1emonstrate an understanding of the factors impacting a firm in an oligopoly
r0 1etermine the impact of market structures on a firm
art ! B >ection A.3. The economy as a system of markets
The candidate should be able to)
a0 +xplain the nature and significance of resource planning
b0 1efine derived demand
c0 1efine and calculate marginal revenue product and marginal resource cost
d0 ,dentify the determinants of resource demand
e0 1efine substitution resources and complementary resources
f0 Apply the principles of elasticity to resource demand
g0 1emonstrate an understanding of the profit maximi'ing combination of resources
h0 Contrast nominal wages and real wages
i0 1escribe how productivity affects the level of wages
j0 Compare labor demand and labor supply in a purely competitive market and in a
monopoly
k0 1etermine the impact of unions on the level of wages
l0 1emonstrate an understanding of the issues related to the minimum wage
m0 ,dentify the impact of unioni'ation on a firm
n0 ,dentify the extent to which the minimum wage impacts a firm
art ! B >ection A.6. ,ssues in macroeconomics
The candidate should be able to)
a0 ,dentify the controversies surrounding the issues of inflation" unemployment" and
economic growth
b0 1efine the rate of inflation
c0 1istinguish nominal from real income
d0 /ist the macroeconomic effects of inflation
e0 1efine demand(pull inflation and cost(push inflation
f0 1efine the unemployment rate
g0 ,dentify and define the different types of unemployment" including frictional
unemployment" structural unemployment" and cyclical unemployment
h0 +xplain full employment" including the concepts of the natural rate of
unemployment and the economyHs potential output
i0 1escribe the macroeconomic effects of unemployment
j0 ,nterpret the graphical representation of the trade(off between inflation and
unemployment
k0 1emonstrate an understanding of aggregate demand and aggregate supply both in
the short run and long run" including the graphical representation of both
l0 1efine economic growth and explain why it is an economic goal
m0 ,nterpret the production possibilities curve
n0 1emonstrate an understanding of demand(side and supply(side policies as used to
increase economic growth and identify the limitations of each
o0 1etermine the impact of demand(side and supply(side policies on a firm
p0 1etermine the impact of inflation on the demand for and price of a firmHs output
q0 1etermine the impact of inflation on the supply and cost of a firmHs factors of
production
art ! B >ection A.7. 1omestic output" national income" and price levels
The candidate should be able to)
a0 1efine Cross 1omestic roduct .C10 and demonstrate an understanding of its
components
b0 Calculate C1 using the expenditures approach and the income approach
c0 1efine -et 1omestic roduct .-10" -ational ,ncome .-,0" ersonal ,ncome
.,0" and 1isposable ,ncome .1,0
d0 1istinguish among C1" -1" -," ," and 1, and calculate one from another
given relevant data
e0 1emonstrate an understanding of the importance of C1 as a measure of a
countryHs economic prosperity
f0 ,dentify the challenges inherent in the calculation of C1" including data
collection and accuracy limitations
g0 1emonstrate an understanding of the price level and how it affects the measures
of domestic output and national income
h0 1efine Consumer rice ,ndex .C,0
i0 1ifferentiate between -ominal C1 and =eal C1
j0 1emonstrate an understanding of the index of leading economic indicators as a
forecast of C1
art ! B >ection A.:. &usiness cycles
The candidate should be able to)
a0 1efine the term business cycle
b0 1efine and identify on a graph the phases of the business cycle" including the
peak" recession" the trough" and recovery
c0 ,dentify and describe possible causes of business cycles
d0 1escribe the macroeconomic characteristics of the different phases of the business
cycle
e0 1etermine the impacts of business cycles on a firmHs prices and output
art ! B >ection A.;. 5iscal policy
The candidate should be able to)
a0 1efine fiscal policy and distinguish discretionary from non(discretionary fiscal
policy
b0 ,dentify the tools of fiscal policy
c0 ,nfer the macroeconomic consequences of both expansionary and contractionary
fiscal policies" including the effect on aggregate demand when the level of
government spending andGor taxes are changed
d0 ,nterpret the graphical representation of expansionary and contractionary actions
e0 +xplain the effects of changes in taxation policies" including the effect on the
distribution of income and the effect on resource allocation
f0 +xplain the effects of public expenditure on the economy" including the
redistribution of income and the impact on resource allocation
g0 1ifferentiate a budget deficit from a budget surplus
h0 ,dentify means of financing a budget deficit
i0 1efine and identify built(in stabili'ers
j0 1emonstrate an understanding of how a progressive tax system acts as a built(in
stabili'er
k0 Compare and contrast cyclical and structural deficits
l0 1efine recognition lag and the crowding(out effect
m0 1emonstrate an understanding of how inflation can arise from an expansionary
fiscal policy
n0 1efine supply(side fiscal policy
o0 1etermine the impact that fiscal policies have on a firm .supply" demand" prices"
and costs0
art ! B >ection A.!8. Money and monetary policy
The candidate should be able to)
a0 1efine the nature of money" including its functions as a medium of exchange" a
unit of account" and a store of value
b0 1emonstrate an understanding of the relationship between the interest rate and the
demand for money
c0 1efine and identify the components of M!" M#" and M$
d0 1efine the velocity of money
e0 ,dentify the role and functions of the 5ederal =eserve >ystem .the 5ed0" including
the &oard of Covernors and the 5ederal ?pen Market Committee" and
demonstrate an understanding of how the 5ed operates
f0 1emonstrate an understanding of the commercial banking system and the creation
of money
g0 1efine required reserves and excess reserves
h0 +xplain the monetary multiplier
i0 ,dentify the goal of monetary policy as achieving a full(employment"
noninflationary level of total output
j0 /ist the tools of monetary policy
k0 1efine money supply and be able to identify the graphical representation of the
supply of and demand for money
l0 1emonstrate an understanding of how open(market operations" a change in the
reserve requirements ratio" andGor a change in the discount rate affect the money
supply
m0 ,dentify both the strengths and weaknesses of monetary policy
n0 1etermine the impact of monetary policy on a firmHs availability and cost of
funds
Sectio ,. 1$o2a$ ,u%ie%% (+e*e$% A a& ,"
art ! B >ection &.!. Clobal trade
The candidate should be able to)
a0 1efine terms commonly associated with global trade" including net exports and
net imports
b0 1efine and demonstrate an understanding of the terms of trade .or exchange ratio0
c0 ,nterpret the production possibilities curves and determine the cost ratio for the
two products on the graph
d0 1etermine the gains from trade and the resulting trading possibilities curve
e0 1efine and demonstrate an understanding of the principle of comparative
advantage
f0 ,dentify the advantages and disadvantages of free trade from the point of view of
a country and the point of view of an individual firm
g0 1efine protectionism and identify the barriers to free trade
h0 1efine and analy'e the effects of tariffs" import quotas" nontariff barriers"
voluntary export restrictions" trigger pricing and antidumping rules on a country"
an industry" and an individual firm
i0 Analy'e domestic policies to promote exports" including export subsidies
j0 ,dentify the function of the +xport(,mport &ank
k0 1iscuss the arguments used to support protectionism
l0 ,dentify the economic and social costs of protectionism
m0 +stimate the impact of protectionism on industries and firms
n0 Analy'e and demonstrate an understanding of the graphical representation of the
supply and demand of exports and imports
o0 1ifferentiate among a customs union" a common market" and an economic union
p0 ,dentify the key international agreements on trade including the +uropean Enion"
Ceneral Agreement on Tariffs and Trade .CATT0" -orth American 5ree Trade
Agreement .-A5TA0" and the 4orld Trade ?rgani'ation .4T?0
art ! B >ection &.#. 5oreign exchange
The candidate should be able to)
a0 1emonstrate an understanding of a nationHs balance of payments
b0 1efine and identify the components of the current account" the capital account"
and the official reserves account
c0 1efine trade deficits" identify their causes" and explain their implications
d0 Calculate the balance of payment deficit or surplus
e0 Compare and contrast a flexible or floating exchange(rate system and a fixed
exchange(rate system
f0 1etermine the exchange rate under a flexible exchange(rate system by analy'ing a
graphical representation of exchange rates
g0 Calculate whether a currency has depreciated or appreciated against another
currency over a period of time
h0 ,nfer the effect on the price of goods with a change in the exchange rate
i0 Calculate the effective interest rate on a foreign currency loan
j0 ,dentify the determinants of exchange rates under a flexible exchange(rate system
k0 /ist the advantages and disadvantages of a flexible exchange(rate system
l0 +xplain the methods used to maintain a fixed exchange rate system" including the
use of reserves" trade policies" exchange controls" exchange rationing" and
domestic macroeconomic adjustments
m0 1escribe managed floating exchange rates
n0 Analy'e the impact of changes in foreign exchange rates on a firm
o0 ,dentify mechanisms available to firms to mitigate the impact of changes in
exchange rates
art ! B >ection &.$. ?ther global topics
The candidate should be able to)
a0 >ummari'e the functions of the 4orld &ank and the ,nternational Monetary 5und
b0 1efine direct foreign investment and demonstrate an understanding of how it can
benefit a firm
c0 1efine an American 1epository =eceipt .A1=0
d0 ,dentify and explain the benefits of international diversification
e0 ,dentify the risks of direct foreign investment" including political risk and
exchange rate risk
f0 1emonstrate an understanding of the issues inherent in multinational capital
budgeting and financing
g0 Calculate the overall expected return and variance of a @portfolioA of projects
h0 ,dentify and explain methods of payment for international trade" including
prepayment" letters of credit" sight drafts" time drafts" consignment" and open
account
i0 ,dentify and explain common trade financing methods" including cross(border
factoring" letters of credit" bankerHs acceptances" forfaiting" and countertrade
j0 1emonstrate an understanding of how transfer pricing is used by multinational
firms to manage their effective worldwide tax rate
k0 ,dentify legal and ethical issues in conducting business worldwide
Sectio C. Itera$ Cotro$% (+e*e$ A"
art ! B >ection C.! =isk assessment and controls
The candidate should be able to)
a0 1emonstrate an understanding of internal control risk assessment and the
management of internal control risk
b0 +xplain how a companyHs organi'ational structure" policies" objectives" and goals"
as well as its management philosophy and style" influence the scope and
effectiveness of the control environment
c0 1emonstrate an understanding of how the organi'ational structure defines the key
areas of authority and responsibility
d0 ,dentify the &oard of 1irectorsH responsibilities with respect to ensuring that the
company is operated in the best interest of shareholders
e0 1escribe how internal controls are designed to provide reasonable assurance
regarding achievement of an entityHs objectives involving .i0 effectiveness and
efficiency of operations" .ii0 reliability of financial reporting" and .iii0 compliance
with applicable laws and regulations
f0 ,dentify reasons why personnel policies and procedures" particularly with the
employment and promotion of competent personnel" are integral to an efficient
control environment
g0 1efine and give examples of segregation of duties
h0 ,dentify and explain why the following four types of functional responsibilities
should be performed by different organi'ations or people) .i0 authority to execute
transactions" .ii0 recording transactions" .iii0 custody of assets involved in the
transactions" and .iv0 periodic reconciliations of the existing assets to recorded
amounts
i0 1emonstrate an understanding of the importance of independent checks and
verification
j0 ,dentify examples of safeguarding controls
k0 +xplain how the use of pre(numbered forms" as well as specific policies and
procedures detailing who is authori'ed to receive specific documents" is a means
of control
l0 1efine inherent risk" control risk" and detection risk
m0 1emonstrate an understanding that risk encompasses both the total dollar value of
assets that are exposed to loss" as well as the probability that such a loss will
occur
n0 >tate that controls designed to prevent fraud make perpetration of fraud more
difficult" but they are not complete insurance against fraud
o0 ,dentify the major internal control provisions of the 5oreign Corrupt ractices Act
p0 ,dentify the major internal control provisions of >arbanes(?xley
art ! B >ection C.# ,nternal auditing
The candidate should be able to)
a0 1efine the internal audit function and identify its functions
b0 1emonstrate an understanding of the scope of internal auditing
c0 ,dentify incidents that internal auditors should report to management or the &oard
of 1irectors
d0 1efine a compliance audit and identify its objectives
e0 1efine an operational audit and identify its objectives
art ! B >ection C.$ >ystems controls and security measures
The candidate should be able to)
a0 ,dentify threats to information systems" including input manipulation" program
alteration" direct file alteration" data theft" sabotage" viruses" Trojan horses" and
theft
b0 1emonstrate an understanding of how systems development controls are used to
enhance the accuracy" validity" safety" security" and adaptability of systems input"
processing" output" and storage functions
c0 ,dentify procedures to limit access to physical hardware
d0 ,dentify means by which management can protect programs and databases from
unauthori'ed use
e0 ,dentify input controls" processing controls" and output controls and describe why
each of these controls is necessary
f0 ,dentify the similarities and relationships between output controls and input
controls
g0 ,dentify and describe the types of storage controls and demonstrate an
understanding of when and why they are used
h0 ?utline the inherent risks of using the internet as compared to data transmissions
over secured transmission lines
i0 1efine data encryption and describe why there is a much greater need for data
encryption methods when using the internet
j0 ,dentify a firewall and its uses
k0 1emonstrate an understanding of how flowcharts of activities are used
l0 ?utline the reasons why all program and data files should be backed up regularly
and frequently and stored at a secure remote site
m0 1evelop an outline of a disaster recovery plan
n0 1efine the objective of a disaster recovery plan
Sectio 5. 4uatitati*e Metho&% (+e*e$% A a& ,"
art ! B >ection 1.!. 5orecasting analysis
The candidate should be able to)
a0 1emonstrate an understanding of a simple regression equation and the measures
associated with it
b0 1efine a multiple regression equation
c0 ,dentify the assumptions of simple and multiple regression analyses
d0 Calculate the result of a simple regression equation as applied to a specific
situation
e0 1emonstrate an understanding of learning curve analyses
f0 Calculate the results under a cumulative average(time learning model and under
an incremental unit(time learning model
g0 1emonstrate an understanding of exponential smoothing and calculate a forecast
using this method
h0 1emonstrate an understanding of time series analyses" including objectives and
patterns" i.e." trend" cyclical" seasonal" and irregular
i0 /ist the benefits and shortcomings of regression analysis" learning curve analysis"
and time series analysis
art ! ( >ection 1.#. /inear programming
The candidate should be able to)
a0 1emonstrate an understanding of the objectives of linear programming
b0 1efine and identify the objective function
c0 1emonstrate an understanding of the mathematical formulation of a constraint
d0 Calculate the optimal solution of linear programming problem using the algebraic
method
e0 Analy'e solutions to linear programming problems using the graphical method
f0 ,dentify the benefits and shortcomings of linear programming
art ! B >ection 1.$. -etwork analysis
The candidate should be able to)
a0 1efine +=T and explain how it is used for scheduling projects
b0 1evelop a project network analysis
c0 ,dentify the critical path after a network is developed
d0 Calculate the critical path through a network and all the related start" finish" and
slack times
e0 1emonstrate an understanding of what makes critical activities different from
other activities
f0 1emonstrate an understanding of the cost impact of shortening a critical path
g0 ,dentify the benefits and shortcomings of network analysis
art ! B >ection 1.%. robability concepts
The candidate should be able to)
a0 1emonstrate an understanding as to why probabilities for all values of a random
variable must equal one
b0 1evelop and interpret a probability distribution table
c0 Calculate the expected value of random variables
d0 ,dentify the benefits and shortcomings of probability concepts and expected value
techniques
art ! B >ection 1.3. 1ecision tree analysis
The candidate should be able to)
a0 1emonstrate an understanding of decision tree analysis" analy'e decisions" and
infer results based on the decision tree
b0 1efine and identify the assumptions of the decision tree analysis technique
c0 +xplain the relationship between decision trees and investment decisions
d0 1escribe the process used to estimate the cash flow and probability values used in
decision tree analysis
e0 ,dentify the benefits and shortcomings of a decision tree analysis
art ! B >ection 1.6. ?ther quantitative techniques
The candidate should be able to)
a0 ,dentify the uses of sensitivity analysis
b0 ,dentify situations when sensitivity analysis is useful
c0 erform a sensitivity analysis with different values for the probabilities of the
states of nature andGor the payoffs
d0 ,dentify the benefits and shortcomings of sensitivity analysis
e0 1emonstrate an understanding of the uses of simulation models" including the
Monte Carlo technique
f0 1efine controllable inputs and probabilistic inputs
g0 1emonstrate an understanding of the simulation approach called what(if analysis
h0 1emonstrate an understanding of how simulations can be used to model and learn
about the behavior of complex systems
i0 ,dentify the benefits and shortcomings of simulation models
j0 1efine and identify applications of queuing theory and Markov analysis
Sectio E. Fiacia$ Statemet Aa$)%i% (+e*e$% A a& ,"
art ! B >ection +.!. 1evelopment of accounting standards
The candidate should be able to)
a0 1emonstrate an understanding of the development of E.>. accounting standards
b0 1escribe the organi'ational structure of the 5inancial Accounting >tandards
&oard .5A>&0
c0 ,dentify the due process steps of developing E.>. accounting standards
d0 ,dentify the qualitative characteristics of accounting information
e0 1istinguish between the primary qualities of relevance and reliability and the
secondary qualities of comparability and consistency
f0 ,dentify the ingredients of each of the primary qualities
g0 ,dentify the user groups that influence accounting standards" including the
investing public and financial community" business entities and industrial
associations" the ,nstitute of Management Accountants .,MA0" the American
,nstitute of Certified ublic Accountants .A,CA0" CA firms" government
agencies" the American Accounting Association .AAA0" the 5inancial +xecutive
,nstitute .5+,0" and other professional accounting and finance organi'ations
h0 1emonstrate an understanding of the 5A>&Hs relationship with the >ecurities and
+xchange Commission .>+C0 and the >+CHs role in standard setting
i0 ,dentify the different types of statements that constitute E.>. Cenerally Accepted
Accounting rinciples .CAA0 and identify which is most authoritative
j0 1escribe in general terms the structure and work products of the ,nternational
Accounting >tandards &oard .,A>&0 and its relationship with the 5A>&
art ! B >ection +.#. 5inancial statement assurance
The candidate should be able to)
a0 1emonstrate an understanding of the distinct responsibilities of management and
of independent auditors for the financial statements
b0 ,dentify the type of audit report that would be issued given a specific set of facts
c0 ,dentify related provisions of the >arbanes(?xley Act of #88# and the related
rulings of the ublic Company Accounting ?versight &oard .CA?&0
art ! B >ection +.$. >hort(term liquidity
The candidate should be able to)
a0 1efine and calculate current assets" current liabilities" and working capital
b0 Analy'e working capital by calculating the current ratio" the quick .acid test0
ratio" the cash ratio" the cash flow ratio" and the cash to current liabilities ratio
c0 Calculate and interpret accounts receivable turnover and inventory turnover and
demonstrate an understanding of the effects on these ratios of changes in one or
more elements in the financial statement
d0 Calculate and interpret days sales outstanding in receivables" days sales in
inventory" and days purchases in accounts payable
e0 1efine the operating cycle of a firm
f0 1emonstrate an understanding of the liquidity of current liabilities
g0 ,dentify the liquidity index as a measure of short(term liquidity
art ! B >ection +.%. Capital structure and solvency
The candidate should be able to)
a0 1efine capital structure
b0 1efine solvency
c0 1istinguish debt from equity and demonstrate an understanding of the effect on
the capital structure and solvency of a company with a change in the composition
of debt vs. equity
d0 1efine operating leverage and financial leverage
e0 Calculate and interpret the financial leverage ratio and identify the effects on this
ratio with changes in capital structure
f0 Calculate and interpret the following ratios) total debt to total capital" total debt to
equity capital" equity capital to total debt" long(term debt to equity capital .debt to
equity ratio0" and debt to total assets
g0 1emonstrate an understanding of the effect on these capital structure ratios with a
change in one or more elements of the financial statement
h0 1efine" calculate" and interpret common(si'e statements
i0 1efine asset coverage
j0 Calculate and interpret the following ratios) fixed assets to equity capital" net
tangible assets to long(term debt" and total liabilities to net tangible assets
k0 Calculate and interpret the following ratios) earnings to fixed charges" times
interest earned" and cash flow to fixed charges
l0 1iscuss how capital structure decisions affect the risk profile of a firm
art ! B >ection +.3. =eturn on invested capital
The candidate should be able to)
a0 ,dentify and define the components of return on invested capital .=?,0
b0 ,dentify uses for =?,
c0 1emonstrate an understanding of the factors that contribute to inconsistent
definitions of @invested capitalA and @returnA when using =?, to measure
performance
d0 ,dentify and calculate adjustments that should be made to capital and income
e0 Calculate and interpret the return on total assets ratio and return on common
equity ratio
f0 Analy'e return on assets and return on equity using the 1uont model
g0 Calculate and interpret profit margin on sales and total asset turnover and
demonstrate an understanding of the relationship between these two ratios
h0 ,nfer the effect on return on total assets of a change in one or more elements of
the financial statements
i0 1isaggregate return on common equity into profit margin on sales" total asset
turnover" and equity multiplier .leverage0 and be able to calculate these ratios
given financial statement data
j0 Calculate and interpret sustainable equity growth" dividend yield and the dividend
payout ratio
k0 Calculate and interpret return on common equity
art ! B >ection +.6. rofitability analysis
The candidate should be able to)
a0 ,dentify factors to be considered in measuring income" including estimates"
accounting methods" disclosure incentives" and the different needs of users
b0 +xplain the importance of the source" stability" and trend of sales and revenue
c0 1emonstrate an understanding of the relationship between revenue and
receivables and revenue and inventory
d0 ,nfer the effect on revenue with changes in revenue recognition and measurement
methods
e0 Analy'e company cost of sales by calculating and interpreting the gross profit
margin
f0 ,nterpret changes in gross profit
g0 Analy'e company expenses using common(si'e income statements
h0 ,dentify and define the major expense categories for a company" including selling
expenses" depreciation expense" maintenance" amorti'ation" general and
administrative expenses" financing expenses" and income taxes
i0 ,nfer reasons for increases over time in any of these expenses as a percent of
revenue
j0 1istinguish between gross profit margin" operating profit margin and net profit
margin and analy'e the effects of changes in the components of each
k0 Calculate and interpret book value per share
art ! B >ection +.7. +arnings(based analysis
The candidate should be able to)
a0 ,dentify the determinants and indicators of earnings quality
b0 1efine earnings persistence and identify its determinants recast earnings to show
persistent earnings for a company" excluding erratic" unusual" and nonrecurring
items
c0 1emonstrate an understanding of the relationship between accounting data and
stock prices
d0 Calculate and interpret the fundamental valuation multiples of the marketGbook
ratio and the priceGearnings ratio
e0 Calculate and interpret basic and diluted earnings per share
f0 1efine the concept of earnings power
g0 Calculate and interpret earnings yield" dividend yield" and dividend payout
art ! B >ection +.:. ?ther analytical issues
The candidate should be able to)
a0 Analy'e common(si'e financial statements
b) ,dentify other factors in financial statement analysis" including international
considerations" inflation" and non financial considerations
c0 1emonstrate the impact of inflation and foreign exchange fluctuations on
financial ratios
d0 ,dentify limitations of ratio analysis
e0 1istinguish between accounting profit and economic profit
f0 1istinguish between book value and market value
S611ESTE5 REA5IN1 +IST
,u%ie%% Ecoomic%
/ipsey" =ichard C." Courant" aul -." and =agan" Christopher T.>." Economics" !#
th
edition" Addison 4esley /ongman" &oston" MA" !;;;"
?=
McConnell" Campbell =." and &rue" >tanley /." Economics: Principles, Problems and
Policies" !6
th
edition" ,rwinGMcCraw(Iill" -ew Jork" -J" #88%.
&usiness +conomics (K..M. >undharam and +.-. >undharam 5ourth =evised +dition
ublished by >ultan Chand L >ons
1$o2a$ ,u%ie%%
Madura" Meff" International Financial Management (with Xtra, World Map and Info
Trac)" :
th
edition" >outh(4estern ublishing Co." &oston" MA" #886.
1aniels" Mohn 1." =adebaugh" /ee I." and >ullivan" 1aniel ." International !siness:
En"ironment and #perations" !8
th
edition" rentice(Iall ,nc." Epper >addle =iver" -M"
#88$.
Itera$ Cotro$%
>awyer" /awrence &." 1ittenhofer" Mortimer A." >cheiner" I. Mames I." Craham" Anne"
Makosg" aul" $aw%er&s Internal '!diting" 3
th
edition" The ,nstitute of ,nternal Auditors"
Altamonte >prings" 5/" #88$.
Contemporary Auditing Kamal Cupta 6
th
+dition Tata Mc Craw Iill
4uatitati*e Metho&%
2uantitative Techniques .Applied &usiness >tatistics L ?perations =esearch0
.=.Fittal Margham ublications $
rd
+dition
&locher" +dward" M." Chen" Kung" I." Cokins" Cary" and /in" Thomas 4." (ost
Management: ' $trategic Emphasis" $
rd
edition" ,rwinGMcCraw Iill" -ew Jork" -J
#883"
?=
Iorngren" Charles T." 5oster" Ceorge M." and 1atar" >rikant" (ost 'cco!nting" !#
th
edition" rentice(Iall ,nc." Epper >addle =iver" -M" #886.
Anderson" 1avid =." >weeney" 1ennis M." and 4illiams" Thomas A." )!antitati"e
Methods for !siness" !8
th
edition" >outh(4estern ublishing Company" Cincinnati" ?I"
#886.
Fiacia$ Statemet Aa$)%i%
&ernstein" /eopold A." >ubramanyam" K.=." and 4ild" Mohn M." Financial $tatement
'nal%sis, Theor%, 'pplication, and Interpretation" 7
th
edition" McCraw(Iill &ook Co."
-ew Jork" -J" #88!"
?=

4hite" Cerald ,." >ondhi" Ashwinpaul C." 5ried" 1ov" The 'nal%sis and *se of Financial
$tatements" $
rd
edition" 4iley Textbooks" Ioboken" -M" #88#.