Paper 16 (S3): Advanced Management Accounting

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About Course

The Professional courses are administered at Foundation, Intermediate and Advanced Levels. Each level requires an average of one year, though candidates are advised to provide for an additional one year to meet requirements for internship/ practical experience.

A student must book for a minimum of three papers in a level in any order unless is exempted or has credits.

Prior to certification, candidates will be required to:

  • Attend workshops on ethics, soft skills and emerging issues organised by kasneb and ICPAK and earn IPD hours.
  • Obtain 1-Year practical experience, or alternatively attend workshops on work based simulation organised by kasneb and ICPAK.

This course is aimed at persons who wish to qualify and work or practice as professional accountants, auditors, finance managers, tax managers and consultants in related areas in both public and private sectors.

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Course Content


  • Draft Lesson

1. Strategic management accounting information
1.1 Sources of strategic management accounting information 1.2 Role of strategic management accounting in strategic planning and control 1.3 Governance and control of strategic management accounting information 1.4 Scope and limitations of management accounting 1.5 Ethical standards for management accountants

2. Cost estimation and interpretation
2.1 Ordinary least square (OLS) method. Single and multiple predictors; tests of significance (goodness of fit, ANOVA/P-Value, economic plausibility tests, significance of independent variable/t-test) 2.2 Specifications/assumptions of OLS (implications of serial correlation, multi- colinearity) 2.3 Computer output and technical versus managerial interpretation of OLS results 2.4 Learning curve models and their application

3. Planning and decision making techniques
3.1 Cost volume profit analysis (CVP) for single and multiple products under conditions of uncertainty 3.2 Decision making under environments of uncertainty and risk, using conditional payoff tables and decision trees. 3.3 Expected value of perfect information 3.4 Relevant cost analysis 3.5 Application of marginal costing (Non-routine decisions): Limiting factor analysis, 3.6 Throughput accounting, make or buy decision, continue or discontinue/drop decisions, special order decisions and other short term decisions.

4. Pricing decisions
4.1 External pricing methods 4.2 Transfer pricing in divisionalised companies: Domestic and international transfer pricing 4.3 Product life cycle costing, Target costing and Kaizen costing

5. Strategic performance measurement
5.1 Functional and divisionalised organisational structures 5.2 Responsibility accounting, responsibility centers and segmental reporting 5.3 Divisional performance measures such as profit margin, asset turnover, return on investment(ROI), return on capital employed(ROCE), residual income(RI), accounting rate of return(ARR) and economic value added(EVA) 5.4 Non-financial performance indicators 5.5 Alternative performance measures such as balanced scorecard, performance pyramid, Fitzgerald and Moon’s building block model.

6. Inventory control decisions
6.1 Applications of certainty inventory models (EOQ and EBQ) in decision making 6.2 Stochastic inventory models with and without stock out cost 6.3 Marginal analysis for perishable stock items 6.4 Application of simulation models in inventory control (with and without backorders) 6.5 Application of strategic management decisions in inventory control: Just-in-time purchasing (JIT), ABC analysis and material requirement planning(MRP)

7. Budgetary control techniques
7.1 Applications of budgetary control systems: Top-down, bottom-up, rolling, zero- based(ZBB), activity-based (ABB), incremental, feedback and feed-forward controls. 7.2 Use of operational variances in reconciling original budget with actual performance 7.3 Advanced variance analysis, planning and operational analysis (Ex-post) 7.4 Application of learning curve model and ABC in variance analysis 7.5 Investigation models for variances.

8. Environmental management accounting
8.1 Role of accountants in managing and accounting for environmental cost 8.2 Use of management accounting techniques in identification and allocation of environmental costs (Inflow/Outflow analysis, Flow cost accounting, Environmental lifecycle costing and Environmental Activity Based Costing).

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