External Reporting
15%of exam
Planning + Budgeting
20%of exam
Performance Management
20%of exam
Cost Management
15%of exam
Internal Controls
15%of exam
Technology + Analytics
15%of exam
Quick Facts
- Exam
- CMA Part 1
- Title
- Financial Planning Performance Analytics
- Format
- 100 MCQ + 2 essay/CBQ
- Time
- 4 hours
- Scoring
- MCQ 75%; second 25%
- Pass
- 360/500 scaled
- Gate
- 50% MCQ minimum
- Windows
- Jan-Feb May-Jun Sep-Oct
- Provider
- Prometric centers
- Blueprint
- Sep 1 2024
- Transition
- Sep 2026 CBQ standard
Accounting Equation
Assets equal claims.
AssetsLiabilitiesEquityA=L+E
GAAP vs IFRS
GAAP
- Rules-based
- LIFO allowed
- FASB codification
IFRS
- Principles-based
- No LIFO
- IASB standards
Rules vs principles
Reporting Picker
- Point-in-time position→Balance sheet(A=L+E)
- Period performance→Income statement
- Cash source/use→Cash flows(CFO/CFI/CFF)
- Unrealized AFS gain→OCI(Equity bypass)
- Multiple obligations→ASC 606(Allocate price)
- Lease over year→ROU model(ASC 842)
- Rising prices→FIFO/LIFO analysis(Income flips)
- Related entities→Consolidation(Control exists)
Statements
- Balance sheet
- A=L+E
- Income statement
- Period performance
- Cash flows
- CFO/CFI/CFF
- Equity statement
- Owner changes
- OCI
- Bypasses net income
- Consolidation
- Parent controls sub
- Integrated reporting
- Financial + sustainability
- Accrual
- Earned/incurred timing
Revenue Steps
Contract, obligations, price, allocate, recognize.
ContractObligationsPriceAllocateRecognize
Finance vs Operating Lease
Finance
- Front-loaded expense
- Interest amortization
- Control-like asset
Operating
- Straight-line expense
- Single lease cost
- Use-like asset
Ownership economics differ
Recognition + Valuation
- ASC 606
- Five revenue steps
- Contract asset
- Earned not billable
- Contract liability
- Paid before performance
- Variable consideration
- Estimate then constrain
- Finance lease
- Interest + amortization
- Operating lease
- Straight-line expense
- Impairment test
- Carrying not recoverable
- Goodwill
- Test impairment only
- IFRS inventory
- No LIFO
- NRV
- Selling price less costs
Ratios
- Current ratio
- CA/CL
- Quick ratio
- (Cash+AR)/CL
- Gross margin
- GP/Sales
- Operating margin
- OI/Sales
- ROA
- NI/Avg assets
- ROE
- NI/Avg equity
- Debt/equity
- Debt/Equity
- Interest cover
- EBIT/Interest
- EPS
- Available NI/WASO
- DSO
- AR/(Sales/365)
Budget Order
Sales drives production, purchases, cash.
SalesProductionDM/DL/OHCash
Static vs Flexible Budget
Static
- One activity level
- Planning baseline
- Volume variance mixed
Flexible
- Actual activity level
- Performance baseline
- Efficiency isolated
Plan vs performance
Budget Picker
- Need master start→Sales budget(Demand drives)
- Need production units→Production budget(Sales+EI-BI)
- Need liquidity→Cash budget(Collections/disbursements)
- Activity changed→Flexible budget(Variance base)
- Fresh justification→Zero-based budget(No baseline)
- Continuous horizon→Rolling budget(Add period)
- Trend relationship→Regression(Driver model)
- Uncertain outcomes→Expected value(Probability weighted)
Exam Logistics
- MCQ
- 100 questions
- Pilot MCQ
- Unscored possible
- Second section
- Essay/CBQ sets
- Time split
- 3 + 1 hours
- Passing score
- 360 scaled
- MCQ gate
- 50% minimum
- Testing windows
- Jan/May/Sep starts
- Retake
- Next window
- Results
- About six weeks
- Remote exam
- Not available
Budget vs Forecast
Forecast
- Expected future
- Updated often
- No authorization
Budget
- Approved plan
- Resource commitment
- Performance target
Prediction vs commitment
Budget Core
- Strategy
- Mission to tactics
- Master budget
- Operating + financial
- Sales budget
- Starts master budget
- Production budget
- Sales+EI-BI
- DM budget
- Production needs
- Cash budget
- Liquidity plan
- Pro forma
- Projected statements
- Rolling budget
- Adds next period
- Zero-based
- Justify from zero
- Flexible budget
- Actual activity level
Forecasting Tools
- Regression
- Y = a + bX
- R-squared
- Explained variation
- Moving average
- Smooths history
- Exponential smoothing
- Weights recent data
- Learning curve
- Labor time falls
- Expected value
- Probability-weighted outcome
- Scenario analysis
- Multiple possible futures
- Sensitivity
- One driver changed
- Top-down
- Leadership targets
- Bottom-up
- Unit-level input
Variance Signs
Actual minus standard drives cost variances.
Price/rateQuantity/efficiencySpendingVolume
Price vs Quantity
Price/rate
- Input price
- Purchasing influence
Quantity/efficiency
- Input usage
- Production influence
Rate vs usage
Variance Picker
- Material price issue→DM price(Purchasing)
- Material usage issue→DM quantity(Production)
- Wage rate issue→Labor rate(HR/market)
- Hours efficiency issue→Labor efficiency(Operations)
- Variable OH cost→VOH spending(Rate control)
- Capacity not used→FOH volume(Denominator)
- Product mix changed→Sales mix(Portfolio)
- Total activity changed→Sales volume(Demand)
Variances
- Static variance
- Actual vs static
- Flexible variance
- Actual vs flex
- Sales volume
- Units volume impact
- Sales mix
- Product proportion impact
- DM price
- (AP-SP) x AQ
- DM quantity
- (AQ-SQ) x SP
- Labor rate
- (AR-SR) x AH
- Labor efficiency
- (AH-SH) x SR
- VOH spending
- Actual minus allowed
- FOH volume
- Capacity utilization effect
ROI vs RI
ROI
- Percentage return
- Can reject good projects
- Ratio focus
RI
- Dollar surplus
- Encourages value projects
- Capital charge
Percent vs dollars
Responsibility Centers
- Cost center
- Controls costs
- Revenue center
- Controls sales
- Profit center
- Sales and costs
- Investment center
- Assets too
- Controllability
- Judge manager's authority
- Transfer price
- Internal selling price
- ROI
- Income/investment
- RI
- Income - capital charge
- EVA
- NOPAT - capital charge
- Balanced scorecard
- Four perspectives
- Benchmarking
- Compare best practice
- KPI
- Strategic metric
Contribution Margin
Sales minus variable equals contribution.
SalesVariable costsCMFixed costsProfit
Job vs Process Costing
Job order
- Unique batches
- Trace per job
- Custom output
Process
- Homogeneous units
- Average costs
- Equivalent units
Custom vs flow
Costing Picker
- Unique customer jobs→Job order(Trace job)
- Homogeneous mass output→Process costing(Equivalent units)
- Overhead distortion→ABC(Activity drivers)
- Volume-profit question→CVP(CM first)
- Limited resource→Constraint CM(Per bottleneck)
- Past cost appears→Ignore sunk(Not relevant)
- Outsource decision→Make-or-buy(Avoidable costs)
- Idle capacity order→Special order(Incremental)
Cost Behavior
- Variable cost
- Total changes
- Fixed cost
- Total stable
- Mixed cost
- Fixed + variable
- Relevant range
- Assumptions hold
- Product cost
- Inventoried manufacturing
- Period cost
- Expensed immediately
- Direct cost
- Traceable
- Indirect cost
- Allocated
- Opportunity cost
- Benefit forgone
- Sunk cost
- Ignore past cost
Absorption vs Variable
Absorption
- Fixed OH inventory
- GAAP external
- Profit follows production
Variable
- Fixed OH expense
- Internal analysis
- Profit follows sales
Inventory vs period
Costing Systems
- Job order
- Custom jobs
- Process costing
- Homogeneous flow
- Equivalent units
- Partly complete output
- ABC
- Activities drive overhead
- Cost pool
- Activity cost bucket
- Cost driver
- Cause of activity
- Normal costing
- Actual DM/DL; applied OH
- Absorption
- Fixed OH inventoried
- Variable costing
- Fixed OH expensed
- Joint costing
- Splitoff allocation
CVP + Relevant Costs
- CM
- Sales - variable costs
- CM ratio
- CM/Sales
- Break-even units
- Fixed costs/Unit CM
- Target profit
- FC+profit over CM
- MOS
- Sales above break-even
- Operating leverage
- Fixed-cost sensitivity
- Special order
- Incremental margin
- Make-or-buy
- Avoidable vs purchase
- Constraint
- CM per bottleneck
- Drop segment
- Avoidable margin lost
COSO Components
Environment, risk, activities, information, monitoring.
EnvironmentRisk assessmentControl activitiesInformationMonitoring
Preventive vs Detective
Preventive
- Before error
- Approvals
- Access limits
Detective
- After error
- Reconciliations
- Exception reports
Stop vs find
Control Picker
- Set ethics tone→Environment(Foundation)
- Identify exposures→Risk assessment(Impact/likelihood)
- Stop before error→Preventive control(Approvals)
- Find after error→Detective control(Reconciliations)
- Separate duties→SoD(Authorize/custody/record)
- Independent assurance→Internal audit(Audit committee)
- System access risk→ITGC(Logical access)
Control Framework
- COSO control
- Five components
- Environment
- Tone at top
- Risk assessment
- Identify/analyze risks
- Control activities
- Policies and procedures
- Info/communication
- Relevant data flow
- Monitoring
- Ongoing evaluation
- ERM
- Risk plus strategy
- Risk appetite
- Willing risk level
- Risk tolerance
- Acceptable variation
- SoD
- Authorize custody record
Inherent vs Residual Risk
Inherent
- Before controls
- Raw exposure
Residual
- After controls
- Remaining exposure
Before vs after
Audit + Fraud Controls
- Internal audit
- Independent assurance
- Functional report
- Audit committee
- Preventive
- Stops errors
- Detective
- Finds errors
- Corrective
- Fixes errors
- Fraud triangle
- Pressure opportunity rationalization
- Override
- High fraud risk
- Access control
- Authorized users only
- BCP
- Recover operations
- Backup
- Restore data
Analytics Ladder
Describe, diagnose, predict, prescribe.
DescriptiveDiagnosticPredictivePrescriptive
Descriptive vs Predictive
Descriptive
- Historical summary
- What happened
Predictive
- Future estimate
- What may happen
Past vs future
Tech Picker
- One data source→MDM(Master data)
- Executive dashboard→BI(KPI view)
- Unknown patterns→Data mining(Discovery)
- Future values→Predictive analytics(Forecast)
- Recommended action→Prescriptive analytics(Optimize)
- Rules repetitive→RPA(Bots)
- Tamper-resistant log→Blockchain(Immutable)
- Chart comparison→Bar chart(Start zero)
Technology + Analytics
- AIS
- Accounting data system
- ERP
- Integrated enterprise data
- EPM
- Plan monitor perform
- Data governance
- Rules for data
- MDM
- Single source truth
- BI
- Reports dashboards OLAP
- Data mining
- Pattern discovery
- Descriptive
- What happened
- Diagnostic
- Why happened
- Predictive
- What may happen
- Prescriptive
- What to do
- RPA
- Rule-based bots
- Blockchain
- Immutable distributed ledger
- Cloud
- Scalable hosted services
- Visualization
- Charts tell story
BI vs Data Mining
BI
- Known questions
- Reports dashboards
- OLAP views
Data mining
- Unknown patterns
- Algorithms
- Discovery
Monitor vs discover
Common Traps
Scaled Score
360 scaled pass ≠ Not 72% raw
MCQ Gate
50% unlocks second section ≠ Below 50% stops
Essay to CBQ
May-Jun choice ≠ Sep-Oct CBQ standard
Budget vs Forecast
Budget authorizes resources ≠ Forecast updates expectations
Static vs Flexible
Static ignores actual volume ≠ Flexible resets activity
Price vs Efficiency
Price uses actual quantity ≠ Efficiency uses standard rate
ROI vs RI
ROI can reject value ≠ RI favors dollar surplus
Sunk Cost
Past costs irrelevant ≠ Future differences matter
Fixed Cost Per Unit
Total fixed stays stable ≠ Unit fixed changes
Contribution vs Gross Margin
CM subtracts variable ≠ Gross margin subtracts COGS
Preventive vs Detective
Preventive stops errors ≠ Detective finds errors
Data Chart Trap
Bars start zero ≠ Pie needs few slices
Last Minute
- 1.Domain weights: 15-20-20-15-15-15
- 2.Part 1 is Level C
- 3.360/500 scaled passes
- 4.50% MCQ unlocks second section
- 5.Sep 2026 CBQ standard
- 6.Sales budget starts master budget
- 7.Flexible budget isolates efficiency
- 8.CM = sales - variable
- 9.Sunk costs never relevant
- 10.ROI percentage; RI dollars
- 11.COSO has five components
- 12.SoD separates authority custody records
- 13.Descriptive past; predictive future
- 14.BI dashboards; mining discovers
- 15.GAAP allows LIFO; IFRS not
- 16.Bar charts start zero
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