The Transformational Power of the CMA

The year 2004 was one that transformed my life.

Dr Chris D’Souza
COO & CFO, CMA Australia

My family had decided to make Australia our new home and relocate from Mumbai to Melbourne. I started a new phase in my working life as I took over as CFO of a growing Australian Professional services company (where I spent the next 8 years of my career). On a personal level my 101-year-old grandfather passed away and was laid to rest on my birthday.

All of these were major events but the biggest and most transformational change in my life that took place in 2004 was that I encountered the CMA Australia educational experience.

I really believe that one never stops learning and my life included nearly four decades of learning both formal and informal – from Chartered Accountancy arguably one of the toughest learning experiences to post graduate studies at Monash University. By 2004, I already had over two decades of high level professional experience as a Chartered Accountant. With all this high-level experience and education under my belt, I might be forgiven for thinking that besides tweaking and making incremental improvements in my knowledge of finance and accounting, there was nothing major left to learn.

But as the saying goes ‘when the student is ready the master appears’ – in 2004 CMA Australia and Prof Janek Ratnatunga came to India and transformed my professional vision and knowledge in seven intense days. Suddenly, I was transformed being a conformational accountant to a transformational value creating accountant – from an accountant with a conformance focus to an accountant with a performance focus – from a backward-looking accountant recording past transaction to a forward-looking accountant forecasting and influencing the future of business – in short, I was transformed from a Financial and Taxation Accountant to a Management Accountant.

Therefore, in 2004, I began my love affair with Management Accounting and CMA Australia – 12 years later it has grown stronger as I have applied my knowledge across multiple companies and industries. I have travelled round the world across continents and seen the difference our Management Accountants are making around the world.

Often, I am asked by important non-financial professionals like CEO’s or Vice Chancellors or universities – what is it that Management Accountants and CMA Australia bring to the table that makes them different from CPA’s and other pre-dominantly financial accountants. I start by explaining that while every type of Accountant plays an important role in the business world, the Management Accountant is one who provides maximum value to a business- who provides the business with maximum bang for the buck.  Take the example of a ship like the Titanic – the financial accountant would be at the back of the ship faithfully and studiously and accurately recording the journey that the ship has covered – the management accountant is standing with the Captain in the front of the ship with powerful binoculars and equipment enabling the ship to sail forward safely successfully navigating the stormy seas – spotting the iceberg well before the ship can hit it and sink. But then you might ask how did the Titanic sink – I am told that there were 14 financial accountants on the titanic but no management accountants!

In 1494, Luca Pacioli first described the system of double-entry bookkeeping used by Venetian merchants in his “Summa de Arithmetica, Geometria, Proportioni et Proportionalita.” Since that time the world has seen transformational progress in the fields of Medicine, surgery, engineering, technology and almost every other field that one can think of.

But if you look at Financial Accounting there has been very little progress most of which can best be described as tinkering around the edges. There has been little innovation if unless one can describe the change from the T-shaped financial statements to vertical financial statements as transformational. Financial Accountants are very conservative and rarely venture outside the box and their comfort zone.

All other areas of business have progressed with innovation and disruption whereas Financial Accounting has remained mired in inward looking myopia. Like the frog in the well who thinks that his well is the universe, Financial Accounting has remained inward looking and confined to its own world in its well. On the other hand, Management Accounting has kept pace with the changing world continuing to guide business through this period of innovation and disruption.

CMA Australia is at the forefront of research and development in the field of Management Accounting as well as in educating future generations of Management Accounting professionals. Let us take a brief look at what aspects of business that CMA Australia covers and how it plays a transformational role in business management.

The following is a brief synopsis of the intensive course that CMA Australia has developed (which transformed my career in 2004), which continues to transform the careers of Management Accountants who take the course. The course consists of two subjects namely Strategic Cost Management (SCM) and Strategic Business Analysis (SBA). The course is highly interactive and includes many case studies and real-life examples in every topic.

The first subject SCM starts by observing the important business challenges of our times in Quality, Cost, Time and Innovation (both product as well as process) and how the business world has responded to these challenges. Management accounting has identified the Quality, Cost, Time and Innovation drivers that are required to be understood and built into the Management Control systems that need to be designed to meet these challenges. We look at the value chain perspective of business functions and how management accounting promotes adopting a cross functional perspective which enables high leverage in promoting quality, cost, time and innovation initiatives.

We discuss in depth the formal and Informal Management control systems and frameworks that drive business organisations. Understanding the control framework which drives business organisation, starting with the different objectives involved in business management, going on to an analysis of alternative plans to achieve the objectives, leading to making a choice of a plan of action and the identifying the predictive model required for implementation of chosen plan followed by evaluation of the results. This evaluation leads to tweaking of the objectives and changing the course of action as required. A good understanding of these control systems lays the foundation for the course.

We then move on to Lean Manufacturing and Quality control looking at how manufacturing has evolved from the era of the industrial revolution with mass production and the high cost of customisation and deviating from standard products to today’s era of mass customisation with the advancement of technology. During this time, we break our students into groups and simulate an actual manufacturing activity which forms an important base for our learning experience. This simulation game teaches our students about flexible manufacturing systems and the importance of balancing quality and cost in running a business.

We then move onto my favourite topic ‘Just in Time Philosophies’ in business management which centres around the concepts of waste elimination and value addition. How wasteful activities that do not add value are either minimised or eliminated while maintaining an emphasis on quality and continuous improvement. In the fast-moving business environment with fast advancing disruptive technology the adaptation of this philosophy at all levels will be the key to survival.

In order to survive in this environment, it is essential to have an in-depth knowledge of life cycle costing and target of a product which are the next topics our students learn. We learn how the traditional costing methods do not work in the modern business environment and how these new tools are essential for survival.

We then look at a very powerful tool of managing our business namely Benchmarking. At a time when the threats to our business can come from anywhere both from within and outside our own industry it is important to be as focused on the what is going on outside. Companies that are inward looking are vulnerable to threats which can be understood and mitigated by the proper use of benchmarking. This forms a perfect segue to the next three topics which form the basis for a modern Benchmarking Management Information Systems. This are Activity based Costing / Customer profitability analysis and Activity based Management. In the modern business environment where most of the costs are indirect the proper allocation of these costs is key to understanding the cause and effects of our cost structure. Without this understanding it is very difficult to manage a business.

We move on to Performance Management which is a very important part of the control framework which we started with. In this topic we discuss traditional performance measures like ROCE and the Du Pont ratio-tree; and then move on to more modern performance measures like the balanced scorecard, Value based strategic Management, strategic value creation etc.

We round off the first subject SCM with the last two topics of Environmental & Sustainability Accounting (i.e. Corporate Social Responsibility – CSR) and Strategic Governance and the Strategic Audit. CMA Australia takes these issues of Ethics, governance and CSR very seriously. It is important that our students understand their responsibilities in these matters.

The second subject, Strategic Business Analysis (SBA), starts by recapping the important business challenges of our times we discussed at the beginning of SCM.

We kick off SBA with an in-depth study of Strategic Thinking. We use the same control framework we discussed in SCM and apply it to strategic planning. We conduct an in-depth study of strategic business objectives – what they are and what they are not.

We then move on to Strategic Marketing Analysis and Budgeting. We look at the 4 P’s of Marketing. We look at the Financial aspects of marketing including budgeting for marketing activities. We study different models for evaluation of marketing decisions and case studies to help us clarify the concepts.

From marketing we move on to Financial Analysis of Product Portfolio Management including Product Life Cycle. We study the various phases of a product life cycle and learn the use of models and tools to be used in this process. Finally, we also look at the importance of packaging and after sales service.

Our next topic deals with pricing methods and strategies starting with the strategic importance of the pricing decision. We look at the various types of pricing methods, and the suitability of the type of pricing in different markets. We look at different pricing strategies and the financial implications of these strategies. Pricing is arguably the most important decision in business management and the management accountant needs to understand and play an important role in this decision.

In this age of globalisation, we realise the importance of international pricing and devote an entire topic to this aspect. An in-depth study of the factors and intricacies that go into international pricing. The political, cultural, logistical, currency variations and other risk factors that go into international trade and pricing decisions. Using models, examples and case studies we equip our students with the factors to consider in international trade.

The next topic we study is Sales promotion – the push strategy and human resource management. From setting of sales objectives and forecasting, to setting of targets and setting up the reward structure for the corporate sales force. The Management Accountant needs to work with the Marketing and Sales Managers to set up the best structure to optimise sales.

From Sales force management to Sales promotion – the pull strategy and development of integrated marketing communication system. We then take an in depth look at advertising – from budgeting to deciding on the optimum media mix to evaluating the results of advertising campaigns.

The next topic we tackle is the supply chain management and the distribution optimisation decisions. Getting the right product to the right place at the right time at the minimum cost. The Management Accountant has an important role to play in this analysis and costing.

We now move on to Strategic Financial Structures and the evaluation of performance of the business as whole. We look at reengineering financial statements to evaluate performance. We look at various Capital and equity measurement methods including Cost of equity and weighted average cost of capital. We then move to the area of Strategic Value Analysis (SVA) which is the combined use of strategic and financial analysis tools to assess the likely value of major investment decisions.

We then move on to Risk Management – the corporate radar and the early warning system. A study of corporate failure with techniques and models on how to detect symptoms of financial ill health so that corrective action can be taken to save the company. We end our study of Strategic Business Analysis with a look at what success looks like – strategic scorecards and KPI’s. and other measures of valuation.

I have attempted above to give you a bird’s eye view of the CMA course. The study Material covers over 1000 pages of study material which includes case studies, models etc. Many of our students who have done an MBA have described it as an MBA plus – it covers everything the MBA covers plus the accounting numbers. That is not surprising because Prof Janek Ratnatunga who designed and authored this material and course was the Head of Monash Business School which ran the prestigious Monash MBA. It is only the past studies and experience of the students that enables them to successfully complete this in seven intense 8 to 10-hour days.

As I mentioned earlier the CMA course is highly interactive course. The study material is exceptionally good but the experience of the teacher (mostly well experienced professionals) and the experience of the senior professionals who take the course all put together create a powerful learning experience. This is not only my experience but the experience of thousands of students who have participated in the course. CMA Australia firmly believes that the teacher and the student together create the teaching. The more actively the students participate in the game, the case studies, the interactive discussions the better will be the learning experience.

As I said at the start CMA Australia transformed my career, would you like it to transform yours?




Dr Chris D’Souza, FCMA, CGBA

COO/CFO, ICMA Australia



The opinions in this article reflect those of the author and not necessarily that of the organisation or its executive.