The New Syllabus of CA Final marked the revamp of the erstwhile Advanced Management Accounting (AMA) syllabus, along with the question pattern. The SCMPE paper now involves a compulsory 20 marks question as a case study, while the rest of the questions also demand a good command of the theoretical aspects of the subject. As such, the general perception of the students towards this subject has changed drastically - from being the most scoring subject of Group 2 in CA Final, it is now the most dreadful or draconian subject of the entire course. This post is aimed at making studying SCMPE slightly easier for you by highlighting a few tips and strategies. Read on...
Why is it SCMPE & not Costing?
I am sure most of the students won't even know the full form of SCMPE, or even if they know the full form, they wouldn't know the answer to this question in the heading above. What made the ICAI change the name of the subject? It is definitely not just for the sake of it, right? Here lies the major reason why 99% of the students are not able to clear this paper in the exams.
The erstwhile AMA paper was a pure-play practical paper, with little or no effort required towards understanding the concepts or reading the theory portions of the subject. The reason is simple - the objective of the subject was to equip you with sufficient numerical capabilities for cost analysis and management accounting. But times have changed now. When you go out into the corporate world as qualified CAs, you are now expected to not just do the number-crunching, but also act as an advisor to the management of your client/organization and hand-hold them to do a lot of process corrections. A CA now is considered to be not just an outsider to the organization, but an advisor to the top management through his knowledge, expertise, and analytical skills. This is the very crux of why the name of the subject starts with the word "Strategic" and not "Cost"
In simple words, the paper will not just test your calculation skills, but also your analytical abilities. And this is well observed in the nature of the questions being asked in the exam. A question of 20 marks now hardly has more than 10 marks allotted for the calculations, with the remaining 10 marks asking you to "recommend" or "evaluate" or "advise" or "develop a strategy". The nature of questions also has changed from being numerical based, to more story and fact-filled case studies. Naturally, the length of the questions has increased, so has the discomfort among the students. This is where my previous post on conceptual learning will come in handy for you. If you haven't read it yet, please pause here, read it and then come back here.
How to approach studying SCMPE?
Since the major thrust of the course is more towards analysis and strategy, it definitely makes no sense to expect to pass this paper only on the basis of practical questions. The only way to clear this paper is to broaden your mind and sharpen your analytical skills. The approach to studying this paper should be as follows:
Start liking theory, and it will reward you. Most CA students have a natural liking for practical papers, and find it mentally boring and tiring to prepare theory subjects. But from experience, I can tell you innumerable instances when attempting the optional theory question in a 100-marks practical paper has helped me save time and boost my ultimate score in that paper. Particularly for SCMPE, given the sheer weightage of theoretical questions in every case study, it is advisable to take studying theory portions of the chapters seriously.
Start with understanding the concepts of each chapter. There can be no alternative to conceptual learning in SCMPE. Of course, there will be a lot of places where you may feel like mugging up the theory stuff. But remember that the questions are not going to be as straight-forward as they may be in theory subjects like Audit or Law. The case study questions will demand application of the concepts studied as theory. You should not only know what is JIT, but also how it can benefit the management, what the key conditions for the implementation of JIT successfully, and so on.
Start questioning each and every heading with a "why". For instance, ask yourself why budgetary control is important, or why TQM is important and how can it be implemented. Trust me, once you are able to answer all these why questions, you will be able to crack the case studies with confidence and ease.
Change your mental thought process. Don't study SCMPE as a student flipping through the pages just to score 40 marks in the exam. Study SCMPE with the mindset of being a consultant, a strategist, or an advisor to the top management. This shift in the mental thought process may take time, but will change your perspective towards the subject completely. When you can advise your younger siblings on so many personal problems in life, why can't you solve the problems of the management trying to run their business in the best manner they possibly can? Again, it is all in the head. Try this small piece of advice from me and you will start to like the subject that much more.
Finally, remove all negativities surrounding the subject from your mind. SCMPE can be a really rewarding subject if your approach is correct. People have scored marks in the 90s in this subject, just by following such small tweaks in the approach and thought process.
How to study SCMPE?
Now that you know the approach and the thinking process before starting preparation for SCMPE, let's understand how to actually execute that thought process. Let's divide the entire subject into 3 major components:
Theory
Practical
Case studies
Since this post is becoming really long, I will cover the first two components here, and the case study component in my next post. So don't forget to come back and read it next week!
Theory
While I have already written so much about how to study theoretical subjects, the following are the pointers specifically for SCMPE:
The first and foremost thing is - be mentally prepared to give extra time and effort towards preparing for SCMPE. This is not a paper which you would start studying during your study leave. You will have to keep studying the subject on a regular basis, and grasp everything page by page and chapter by chapter
Understanding the concepts is an absolute necessity. Don't move forward in any particular chapter until and unless you are absolutely clear with the whys and hows of whatever you have just read
Know how to apply what you are reading in practical situations. For eg., if you are reading about JIT, know everything about it which you feel would be relevant to convince the management of any organization to adopt it. This would include the concept, uses, benefits, conditions, disadvantages, special scenarios when it may be beneficial or not beneficial, etc. How do you get so much clarity? Open the study material of the ICAI, everything is nicely covered there. Plus, a little Google search or Youtube search would keep all bases covered
Don't solely focus on the practical questions in chapters like Decision Making, Transfer Pricing or Standard Costing. You need to know the meaning and relevance of each and every concept in these chapters as well. For eg., in Standard Costing, you should know the relevance of each and every variance for managerial decision-making - both adverse and favourable. The recent Nov'19 exams had a simple question on calculating 3 variances for 3 marks, and interpreting the results for 7 marks. In an otherwise simple question, many students ended up getting 4 or 5 out of total 10 marks just because they did not know what to write as interpretation of the variances for those 7 marks.
Be mentally prepared to mug up certain stuff here, just like you do for Law, Tax or Audit. There are some theories or propositions which you cannot obviously write in your own words. The expectation here would be slightly like EIS in CA Inter or the erstwhile ISCA in CA Final. The headings, with a simple one-liner crisp explanation is what the examiner would expect from you.
Lastly, DO NOT LEAVE ANY CHAPTER. You never know which chapter could generate a 20 marks case study in the exam. So please ensure full coverage of the syllabus to maximize your chances of clearing the paper in the first attempt. Remember that today's pain of a little more effort and hard work will save you multiple irritating attempts at trying to get those two letters prefixed to your name.
Practical
There is not much for me to say here. Any CA student right from Day 1 loves to solve practical questions and puts in all the efforts to solve multiple questions from a particular chapter. Still, for the sake of ensuring you all don't commit some avoidable blunders, I am listing down a few pointers:
Try to establish conceptual clarity of a particular topic before jumping on to the practical questions. Given the question pattern, it makes no sense to be a master of numerical questions only. So if you are solving a cash budget question, you should first be thorough with all the associated concepts as well.
Write and practice. A lot of students fail to attempt more than 70 marks of the paper in the exam hall. Obviously, the questions are lengthy to read, but to increase the probability of passing the paper, you will need to increase the number of marks attempted and your accuracy levels. There is not going to be enough time to read a particular question twice or thrice. So underlining key facts and issues in the first reading itself will help save time. All these time management skills can be sharpened only if you have enough written practice in exam conditions under your belt through solving every question in writing from the books, mock test papers, revision test papers and past papers.
Start with the simpler and unassociated chapters. Module 2 is a good starting point, since it hardly has any linkage with Module 1. Do all chapters of Module 1 as a set. You will find a lot of inter-linkages, specially in Decision-making questions. Your ability to apply the concepts of Chapter 1 in Chapter 6 will be in full test in solving questions from Module 1.
Please ensure 100% coverage of all the questions from the Study Material. Many students complain that there are not enough questions for practice, etc., etc. I personally feel getting the thought process is the key to succeed in SCMPE. Whether you solve 20 questions from a chapter or 500, the ultimate aim is to get the thought process right.
Conclusion
SCMPE will a require proper approach, with great focus and effort. It is definitely not a subject to be afraid of. It is an analytical paper, requiring students to resort to conceptual learning instead of brute force of rote learning. Getting good marks in SCMPE is not impossible. And with proper strategy and preparation in place, there has been enough precedence of students like Vaibhav Hariharan scoring 90+ marks in SCMPE.
I know this has been a little long post, but given the importance of the topic, I felt it was necessary to explain everything in detail.
Please feel free to get in touch for any queries, feedback or suggestions. Don't forget to share this post with your friends and colleagues. And please come back here next week if you want to know how to solve case studies in SCMPE.
Thanks for reading :)
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