The Chartered Global Management Accountant (CGMA) exam is a scenario-based test of management accounting competencies. The exam is a requirement for the CGMA designation among members of the Chartered Institute of Management Accountants (CIMA), and starting in 2015 it will be a requirement for AICPA members who intend to obtain the designation.
The competencies at issue have been adapted from conversations with employers around the world about what they expect from their finance staff. The competencies include, but are not limited to, traditional accounting and finance skills; they are designed to make certain that finance professionals also possess business, leadership, and people skills.
The exam tests the areas of strategic and risk management and financial strategy highlighted in the CIMA Professional Qualification Syllabus (available at tinyurl.com/oxx5nnh), which was updated earlier this year to reflect the changing role of today’s finance professional. The syllabus includes topics such as managing Big Data, narrative reporting, sustainability, and finance function transformation (see the sidebar, “Foundations for the Exam”). Here are questions and answers to provide further insight into the exam. More exam resources are available at cgma.org. By August, the resources will include sample tests and competency questions as well as an interactive demo.
Q. What makes this exam unique?
A. Case study examinations combine knowledge and learning across multiple subjects. The CGMA exam is a strategic case study that will ask candidates to provide strategic analysis of options leading to recommendations, an associated risk analysis, and formulation of a financial strategy. The format will test competencies in a way that takes advantage of improvements in technology and reflects changes in the workplace. The approach allows for testing of a wide range of knowledge, and skills including research and analysis, how to present information, and communication.
Q. How does it differ from the CPA exam?
A. The biggest difference between the two is that the CGMA exam is one integrated, overarching case, said Josh Stopek, senior technical manager–Research at the AICPA. The CPA exam has objectively scored item formats such as multiple choice questions and short cases called task-based simulations that more directly test topics such as understanding price elasticity or the candidate’s ability to calculate long-term growth based on an interest rate. The CGMA exam requires candidates to incorporate that knowledge into long-form, written answers. The CPA exam is composed of multiple parts, with hundreds of questions; the CGMA exam asks the candidate to analyze and respond to a handful of scenarios based on one comprehensive business case.
Q. What are the eligibility requirements?
A. Any regular AICPA member is eligible to take the exam, but the candidate must meet an experience requirement to become a CGMA designation holder. Members are likely to perform better on the exam with some experience, but they do not need to meet an experience requirement to take the exam.
Before the exam becomes a designation requirement, accounting professionals who meet the following minimum requirements qualify for the CGMA designation:
- Three years of financial (including internal audit) or management accounting experience in business, industry, or government; or
- Two years of financial or management accounting experience, plus one year in public accounting; or
- Three years of financial/management accounting experience on a consulting basis; or
- Three years in a management accounting role focused on the management and operation of an accounting firm; or
- Awarded a research-based doctorate degree in an accounting or related business field at an accredited academic institution and has taught at least four college semester or quarterly classes in an accounting or related business field at an accredited academic institution.
Starting in 2015, CGMA candidates must meet the experience criteria and pass the exam. More information is available at tinyurl.com/kq527y5.
Q. When can members take the exam?
A. AICPA members can take the exam starting in May 2015. The exam is to be given in four time windows per year, approximately three months apart.
Q. Is there a way to be exempt from the exam but still obtain the designation?
A. Yes. AICPA members with the relevant experience detailed above are exempt from the exam if they register for the CGMA designation by Dec. 31, 2014. Annual dues for the designation are $150 for AICPA members and $100 for AICPA members who are also members of their state society.
Q. Is the exam computer-based? Do you go to a testing site?
A. Upon registration, members will then choose an exam site. Candidates must take the computerized exam at the site. The exam is administered by Pearson VUE, which has more than 5,100 test centers, including more than 2,000 in the United States.
Q. What is the format of the exam?
A. The exam is based on real-world case studies, requiring users to answer open-ended questions using the competencies described above. Candidates are given a data set and industry information about a hypothetical organization several weeks in advance of the exam (example: a toy company with operations in the United States and four other countries). No outside materials, such as printed pages or notes, are allowed in the testing center. During the exam, participants will have computer access to the same data they received in advance. During the three-hour exam, candidates will be asked three to six questions regarding the business case. The questions may bring forth new information or change the scenario to which the exam taker must adapt his or her answer. Each question must be answered in the allotted time, which is shown on the screen.
Q. What constitutes a good answer? How does the test taker earn points?
A. This is subjective. A strong response demonstrates mastery of each of the four competencies: core accounting skills, business skills, leadership, and people skills. A successful candidate must demonstrate:
- Ability to effectively communicate to different groups of primary stakeholders.
- Ability to research and synthesize large amounts of data efficiently.
- Ability to make decisions and give recommendations at a strategic level.
- Ability to generate insight from business data, giving appropriate consideration to risks and financial aspects.
- Understanding of complex, global business situations.
Q. How is the exam scored?
A. It is peer-reviewed and scored anonymously by management accounting experts. Results are to be released to test takers within three weeks of taking the exam.
Q. What is a passing grade?
A. A specific passing grade has not yet been established.
Q. If candidates do not pass the exam, can they take it again?
A. Yes, but only once per testing window. If needed, candidates could take the test four times per year, once in each quarter.
Q. Are passing candidates retested?
A. Passing candidates don’t have to retake the exam. To maintain the designation, dues and continuing professional education required by the AICPA membership policy must be kept up to date.
Q. How do members register for the exam?
A. Starting in January, members can call the AICPA member service center at 888- 777-7077 to set up exam registration.
Q. In which languages will the exam be offered?
A. The exam is offered globally, but as of now it is in English only in the United States.
Q. Is the exam the same in each country?
Neil Amato is a JofA senior editor. To comment on this article or to suggest an idea for another article, contact him at email@example.com or 919-402-2187.
Foundations for the Exam
The CGMA exam is based on the CIMA Professional Qualification Syllabus. The purpose of the syllabus and exam is to produce competent management accounting professionals who can lead their organizations to sustainable business success. The CGMA exam covers the subjects of strategic management, risk management, and financial strategy, all of which fall under the strategic level of the syllabus.
The foundation for the syllabus is the CGMA Competency Framework. The framework, released in April, defines the skills and competencies that finance professionals need to drive business success. The framework was developed through a three-phase research process by CIMA and the AICPA that included face-to-face interviews, round-table meetings, and online surveys with middle- to upper-level staff at public and private companies around the world.
The organizations provided insight from their corporate competency frameworks, allowing the creation of a general framework for finance professionals. The framework is based on what the organizations expect from their finance staff: technical skills, business skills, people skills, and leadership skills.
The framework served as the foundation for the syllabus and exam and as a way for employers to benchmark finance competencies.
“It will not only help management accountants in their current and future roles, but also help employers as they craft a job description or help academics develop a curriculum,” said Nancy Marc-Thrasybule, CPA, CGMA, technical manager–Management Accounting at the AICPA.
The syllabus has three levels:
- Operational. Implementation of strategy and reporting on that implementation. The operational level has a short-term focus.
- Management. The focus here is translating high-level strategy and communicating it to lower levels for implementation. The management level monitors the implementation of strategy and ensures corrective action is taken when required. This level has a medium-term focus.
- Strategic. The focus of this level is on making strategic decisions and providing context for why those decisions would be implemented. The strategic level has a long-term focus.
The framework covers four levels of proficiency— foundational, intermediate, advanced, and expert—and four knowledge areas. Here is a breakdown of the knowledge areas and selected competencies:
- Technical skills. Collecting, storing, and processing information to be shared with other stakeholders. Task examples include financial accounting and reporting; cost accounting; treasury management; and tax strategy, planning, and compliance.
- Business skills. Using knowledge of the organization and the organization’s business environment to turn data into insight. Task examples include strategy, process and project management, and macroeconomic analysis.
- People skills. Used to influence decisions, actions, and behaviors of decision-makers and other stakeholders. Task examples include negotiating, decision-making, and collaborating or partnering.
- Leadership skills. These skills come in three types—peer, functional, and strategic. Task examples include team building, managing change, and driving performance.
As individuals advance in proficiency level, the weighting of each skill changes. For example, those on the foundational level are not expected to devote much time to leadership skills. Those on the advanced level have the most even mix of all four skills. At the expert level, leadership is the most heavily weighted skill, and less attention is placed on technical skills. Round-table participants said that the competencies should be integrated (see Exhibit 1) and also underpinned by ethics, integrity, and professionalism.
- Strategic Business Management: From Planning to Performance (#PCG1305P, paperback; and #PCG1208E, ebook)
- The Traits of Today’s CFO: A Handbook for Excelling in an Evolving Role (#PCG1303P, paperback; and #PCG1203E, ebook)
- Financial Planning & Analysis Conference, July 21–23, Orlando, Fla.
- Controllers Conference, Nov. 18–19, Las Vegas
For more information or to make a purchase, go to cpa2biz.com or call the Institute at 888-777-7077.