Preparing for Final CA Paper on Strategic Cost Management & Performance Evaluation (Paper 5)

Tips and Tricks for cracking CA Final Paper on Strategic Cost Management & Performance Evaluation.

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Key Learnings from the Blog:
  1. Break the syllabus into logical compartments & approach each compartment with the requisite mindset.
  2. Numerical Questions & Case Study Based Questions have almost equal weightage in the final paper (based on experience). Hence do not over focus on numbers & leave theory to the end.
  3. Go through questions from all the available ICAI Content including Module, Past Papers, RTP, MTP & Case Study Booklet issued by ICAI recently. Build your own repository by filtering out.
  4. Remember the key skills tested in practical questions is: Reading, Interpreting, Crunching Numbers, Analysis, Thinking out of the Box.
  5. Build your detailed log of small & big theory concepts in your module as well as a detailed list of numerical questions (Learnings from each question) which you can refer to for a glance one day before the exam.

1) Understanding your Syllabus

Firstly, you must be prepared for a very different syllabus in CA Final v/s CA Inter. The CA Inter paper is Cost & Management Accounting, which is majorly a number driven paper. Whereas the paper you study in CA Final is Strategic Cost Management & Performance Evaluation. There are concepts from Costing & Business Management & hence the paper looks like a perfect combination of numbers & applied theory which go hand in hand.
If you take birds eye view of your syllabus, it can be typically divided in 4 compartments.

Set A

Modern Day Costing Concepts (30 – 40 Marks)
Introduction to Strategic Cost Management
Modern Business Environment
Lean Systems & Innovation
Cost Management Techniques
Performance Measurement & Evaluation

Set B

Decision Making & Pricing Decisions (30 – 40 Marks)
Decision Making
Divisional Transfer Pricing

Set C

(5 – 10 Marks)
Strategic Analysis of Operation Income
Advanced Questions / Cases on Activity Based Costing, ABC Cost Management etc.

Set D

(20 – 25 Marks)
Standard Costing
Budgetary Cost Control
** The Marks allocation is based on an average of the last 5 attempt papers & is very tentative in nature. This may change any time in the future exams.

2) Is this a practical paper or a theory paper & what must be the focus area?

This paper is a perfect combination of crunching numbers, evaluation & analysis & presenting your conclusions for a business case. There are many business models which you will need to understand & give reference to, while you are evaluating a case.
Hence you will see a fair mix of number driven as well as theory-based questions throughout the paper. From past paper experience, it is only fair to assume that there is almost equal weightage to number driven & theory driven questions & hence that must also be your focus area while preparing this paper.
A common mistake students make is that they focus more so on numerical questions and leave theory to the end. However, this is surely a recipe for disaster since more than half your paper is applied theory.
Hence you need to keep a balance while you study, give equal importance to both style of questions depending on the topic you are studying & prepare accordingly for the exam.

3) What knowledge / skills is the examiner trying to test?

a) Ability to work with numbers and evaluate a business decision or a business performance.
If you look at topics such as Decision Making, Pricing, Standard Costing, Budgeting – the focus is on your ability to crunch numbers, analyze the numbers & present your conclusion on a business scenario. The ICAI is slowly shifting focus from crunching numbers to analyzing the numbers.
b) Application of modern-day management concepts to real life business scenarios.
The entire syllabus has many small & big contemporary strategic management concepts, models & industry led best practices which can be applied as framework of thinking to a business case.
The examiner is trying to check

    1. Knowledge of those concepts
    2. Your ability to read a business case & apply the right concept
    3. Your comprehension skills
    4. Articulation Skills: How well can you present your thought process on the given case using the right references.

4) What’s the ideal approach to studying this subject?

There is a lot of content published by the ICAI. If we must sum it up, you will find the following sources. So, there is ICAI Module, RTP, MTP, Past Exam Question Papers, Case Study Digest.
This is one such paper where you may do a 1000 questions/ cases and always find the 1001st one in your exam. Your ability to keep a cool where you see the unknown & apply on the spot is really what this paper tries to test. That is not just knowledge but a skill & it only can be sharpened with time.

The best methodology to approach this paper is:

    1. Study related topics in a set together. Split the index up a bit (explained in point no. 1).
    2. For every topic dive as detailed as you can with understanding the concept. In your first reading take up all the questions / case studies on that topic across all the available sources. See the module, last 3 – 5 attempt RTP, MTP, Past Papers & the Case Study Booklet issued by ICAI.
    3. In your first reading, try to solve a handful of questions in writing as practice & also write a few case study answers in defined time to practice your writing skills. The ideal ratio is 50% writing and 50% reading.

It would be ideal if your coaching provider does this groundwork for you so that it is done in the class itself, even before you start studying by yourself.
While you solve these, there will be lot of repetitive questions which may not be worth a look in your next set of readings. Mark for yourself that you would like to see / revise in your next reading & build a log of these questions.
In your 2nd, 3rd reading, now go selected on what you would like to see. Now you may even decrease the mix of solving to reading (40% writing – 60% reading – 2nd reading) (30% writing – 70 % reading – 3rd reading) & so on.
Another piece of advice is that you must build a detailed log for yourself of all the small & big concepts in the syllabus. The list of concepts will come very handy when you want to do a quick tour of your syllabus on the morning of your exam.

5) How must you approach studying the theoretical aspects of your syllabus?

The focus is on the right terms & terminologies. Hence learning the right vocabulary used in the Module is extremely important, while the words around these terms will flow automatically. Learning to be crisp without beating around the bush and yet detailed enough for the marks is very important. That is the balance you need to prepare for.
The way you present your key points should be very examiner friendly. The examiner should be able to navigate your paper very smoothly. The more you make it easy for the examiner, the more marks you will score.

6) How important is it to solve mock exams?

Cracking any CA Final Exam is like a Chess Board. You must plan the right moves. Strategizing well in your reading time which questions to pick, in which order & how to approach your paper is only a skill you can master if you do Mock papers. Your ability to keep controlled of time so that you complete the paper in time, keep control over your anxieties so that you do not blank out specially seeing new questions in the paper is very important. Give yourself at least 2 – 3 mock exams before the Final Exam so that all the trial and error happen at home & not in the exam hall.

7) There is too much content. Where do you stop?

Yes, there is a lot of content. You must be able to take a 360-degree tour of all that is issued by ICAI at least once & then filter it and build your own repository of what you want to see another time depending on relevant, difficulty & variety. The key is to keep filtering content from time to time.

8) Students often find the SCM paper too lengthy to complete it. Why is that so?

The 2 main reasons for this are:

    1. The number driven questions are sometimes new. Reading them and thinking takes most of the time.
    2. The Case Study based questions are sometimes very long. Once again comprehension takes a long time.

So, if you go to see, a lot of time is spent on reading & thinking (almost 50%) while the balance time is spent in writing. Hence students do not land up finishing the paper.
Hence very important skills you have to learn if you want to finish the paper are:

    1. Reading Swiftly
    2. Your ability to think on the spur of the moment and apply. For number driven questions, it will come only if your concepts & out of box thinking process is very well groomed. For case studies, you will be able to act fast if your reading of all the small & big concepts from the module is thorough. Your index should flash in the mind so beautifully that in no time you can go to that corner of your textbook from where the concept has been picked up.

This skill will only come with the right learning approach & self-practice.

9) One day before the exam, how must you collect yourself?

It is advisable not to solve any questions. You must go through every single concept in the textbook & glance through the sums only to go through the learnings from the sum (and not to work the numbers and solve it) & be thorough with your index so you can flash it in your mind as many times as the paper requires.
This means you need to have 3 preparations for the Exam Eve.

    1. Key Learnings /Mistakes scribbled for each question in your repository.
    2. A Detailed Index
    3. A log of all concepts

Rehearsal of how you can do this in 1.5 days before the paper is absolutely necessary.

Good luck & Happy Studying!

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