Transcription
CGMACompetencyFramework
ContentsAbout the CGMA Competency Framework2The development of the CGMA Competency Framework2Competencies for finance professionals5Technical skills8Business skills40People skills48Leadership skills54CGMA Competency Framework1
About the CGMA Competency FrameworkCGMA Competency FrameworkTechnicalskillsApand ply afin canThe development of the CGMACompetency Frameworkead l gaA n e orthThe CGMA Competency Framework wasdeveloped through three phases of research:face-to-face interviews, round tables and anonline survey. The participants ranged fromfinance and non-finance staff in mid- to seniorlevels, covering diverse industries from boththe private and public sectors. A total of 67organisations from Malaysia, South Africa,the United Kingdom and the United Statesparticipated in the face-to-face interviews. Theround tables were held in 13 countries from Asia,Europe, Africa and the Americas. The onlinesurvey was taken by nearly 3,400 CIMA members,student participants and academics. The findingsof the first and second phases were validated andextended in subsequent phases. This approachwas used to ensure the rigour of the research andthus enhance its credibility and relevance.ngnti illsuco e skcLeadershipskillsdn i w it hs a inti onIn ththe e cobusftoex snt nesiThe CGMA Competency Framework is thefoundation that will demonstrate the relevanceand capabilities of a CGMA as a trusted financeand business strategist.Businessskillsluop enle c eThe CGMA Competency Framework isdesigned to help management accountantsand their employers understand the knowledgerequirements and assess the skills needed forboth current and desired roles. The frameworkis underpinned by the need for objectivity,integrity and ethical behaviour, and includes acontinuous commitment to acquire new skillsand knowledge.fin eoT pPeopleskillsEthics, integrity and professionalismCGMA Competency Framework2
Lastly, the online survey was an example ofqualitative research that is appropriate where asignificant body of knowledge exists. It aimedto confirm the initial findings by using largersamples and suitable techniques.The framework is the underpinning of the CIMAsyllabus, which will be covered in the mandatoryCGMA strategic case study exam for CPAsthat will be implemented in 2015. While theframework highlights the range of skill sets ofCGMA professionals, it also will allow employersto define what is expected in various functionsand roles as well as educators to better preparestudents to become well-grounded managementaccountants. Competencies are the bridgebetween education and employment. Moreover,the framework supports the concept of lifelongprofessional learning and experience.The framework is composed of four knowledgeareas: technical, business, people and leadershipskills. Each knowledge area includes a series ofcompetencies that are defined at four proficiencylevels: foundational, intermediate, advanced andexpert. Each competency prescribes a seriesof skill sets to assist in the CGMA professionaldevelopment. The relative weight of eachknowledge area relates to the importance of thedefined skill sets at each proficiency level.The global round table participants used inthe research phase of the framework stressedthe need for the competencies to be seen asintegrated. The integrated perspective of thecompetencies has major implications for thedevelopment of the syllabus and assessment.Participants in all three phases of theresearch also affirmed the need for all thecompetencies to be underpinned by ethics,integrity and professionalism.CGMA Competency Framework outlineProficiency ndationalIntermediateAdvancedExpert(Staff/Entry Level)(Supervisor/manager)(Senior manager)(Executive/C-Suite) Financial accountingand reporting Cost accountingand management Business planning Management reportingand analysis Corporate finance andtreasury management Risk managementand internal control Accountinginformation systems Tax strategy, planningand %21%25%23%6%16%26%39% Strategy Market and regulatoryenvironment Process management Business relations Project management MacroeconomicanalysisPeopleskills Influence Negotiation anddecision-making Communication Collaboration andpartneringLeadershipskills Team building Coaching and mentoring Driving performance Motivating and inspiring Change managementEthics, integrity and professionalismCGMA Competency Framework3
Knowledge areasCompetenciesSkill sets’ weightsTechnical skills enable finance professionals tocollect, store, process and analyse informationto be shared with various stakeholders. Theseinclude the preparation and dissemination ofexternal and internal reports per the professionalaccounting standards.The competencies are functions that arerelevant to each knowledge area. For example,financial accounting and reporting is a pillarunder technical skills. Project management is animportant function under business skills.The skill set weighting indicates the relativeimportance of each knowledge area for a givenlevel. The research included the rating andanalysis of the competencies at any given levelusing a 100-points based system. The moreimportant competencies are rated with a highernumber of points. The results indicated thatthe importance of the technical skills is veryhigh at the foundational level but reduces asfinance professionals move up their career. Theimportance of the other skills increases up to theadvanced level and stays the same with businessskills and people skills but increases withleadership skills.Business skills enable finance professionalsto use their knowledge of the business and itsenvironment to transform data into insight thatenables organisations to evaluate their strategicpositioning, the alignment of their businessmodels to their strategies, their performance andopportunities for the future.People skills, particularly in communication,are used to influence the decisions, actionsand behaviours of decision-makers and othersthroughout the organisation and its stakeholders.Leadership skills take place at various levels.Three types of leadership can be identified aspeer, functional and strategic. Peer leadershipinvolves leading peers in and out of the financefunction on issues that require an understandingof the financial implications of events andissues in the organisation’s internal and externaloperating environments. Functional leadershiprefers to the leadership that ensures that thefinance function delivers its objectives to theorganisation. It takes place from the intermediatelevel onward, but mostly at the advanced level.Strategic leadership is exercised at the strategiclevel. Experts join with leaders in other functionalareas to define, formulate and oversee theimplementation of the organisation’s strategy.Proficiency levelsEach competency can be performed at fourlevels of proficiency. In some cases, theproficiency levels are linked to levels of theorganisation’s hierarchy.Foundational (Staff/Entry level) — This isresponsible for achieving results through ownactions rather than through others.Intermediate (Supervisor/manager) — This haslimited or informal responsibility for colleaguesand/or needs to consider broader approachesor consequences.Advanced (Senior manager) — This has formalresponsibility for colleagues and their actions;and that their decisions have a wider impact.Expert (Executive/C-Suite) — This has formalresponsibility for business areas and his/heractions and decisions have a high-levelstrategic impact.CGMA Competency Framework4
Competencies for finance professionalsRole of the finance functionFigure 1: Types of finance and accounting workFinance professionals are expected to:(a) apply accounting and finance skills(b) do it in the context of the business(c) influence the decisions, actions andbehaviours of others(d) lead the organisation at different levels.Finance and accounting work is the foundationof entry-level management accounting.Figure 1 shows the types of finance andaccounting work. Two basic types of accountingwork exist: systems of record and systems ofengagement. Using systems of record to processand record transactions and to provide basicreporting requires accounting and finance, IT andprocess management skills. Using systems ofengagement planning and control — preparingand communicating management information,external reporting and other services such asinternal audit, treasury, corporate finance and taxmanagement — to interact with and influence keystakeholders inside and outside the organisation.This requires technical accounting and finance,IT application, process improvement and peopleskills. Additionally, CFOs and other senior financeprofessionals require leadership skills to managethe finance function to enable it to contribute tothe success of the organisation.Finance outsidefinance functionBusiness analysts,statisticians andconsultants, etc.Managing the finance functionLeadershipPlanning& tservicesCost; risk; project;and performancemanagementand forecastingAnalysis and insightFinancial controls andstatutory reportingInternal audit; tax;treasury; and mergersand acquisitions, etcAccounting operationsTransaction processing, recording and basic reportingInformationsystemsData capture, integrityand accessSystems ofengagementSystems ofrecordIn some organisations, a percentage of the finance work is outsourced to other teams, requiringfinance professionals to hone their people skills, including working with diverse teams, managingconflict and communication.CGMA Competency Framework5
The structure of the finance functionThe predominant structure of the financefunction is one in which all finance workis done in-house under one department/directorate. However, an emerging structureused increasingly by large organisations splitsthe finance function into shared services centres(SSCs) and retained finance. SSCs are mainlyresponsible for accounting operations. They canbe in-house, outsourced, off-shore or on-shore.Retained finance is responsible for aspects offinance relating to the systems of engagement.Irrespective of structure, there is an increasinguse of technology by the finance function.In some organisations, finance professionalshave become business partners. They areembedded in different areas of the organisation,engage with those outside of finance morefrequently and seek to influence decisions andactions more directly. This requires a deeperunderstanding of the organisation, its context,the remit of its various parts and the ability tocommunicate beyond the numbers.CGMA Competency Framework6
CGMA Competency Framework — Proficiency levelsFoundational: This requires a basic understanding of the business structures, operations and financial performance, and includes responsibility forimplementing and achieving results through own actions rather than through others.Intermediate: This requires a moderate understanding of overall business operations and measurements, including responsibility for monitoring theimplementation of strategy. This has limited or informal responsibility for colleagues and/or needs to consider broader approaches or consequences.Advanced: This requires strong understanding of the organisation’s environment, current strategic position and direction with strong analytical skills andthe ability to advise on strategic options for the business. This includes formal responsibility for colleagues and their actions; and that their decisions havea wider impact.Expert: This requires expert knowledge to develop strategic vision and provide unique insight to the overall direction and success of the organisation.This has formal responsibility for business areas and his/her actions and decisions have a high-level strategic impact.Technical skills8Business skills40People skills48Leadership skills54Technical skillsBusiness skillsPeople skillsLeadership skillsEthics, integrityand professionalismCGMA Competency Framework7
CGMA CompetencyFrameworkTechnical skillsCGMA Competency Framework8
Technical skillsFoundational: This requires a basic understanding of the business structures, operations and financial performance, and includes responsibility forimplementing and achieving results through own actions rather than through others.Intermediate: This requires a moderate understanding of overall business operations and measurements, including responsibility for monitoring theimplementation of strategy. This has limited or informal responsibility for colleagues and/or needs to consider broader approaches or consequences.Advanced: This requires strong understanding of the organisation’s environment, current strategic position and direction with strong analytical skills andthe ability to advise on strategic options for the business. This includes formal responsibility for colleagues and their actions; and that their decisions havea wider impact.Expert: This requires expert knowledge to develop strategic vision and provide unique insight to the overall direction and success of the organisation.This has formal responsibility for business areas and his/her actions and decisions have a high-level strategic impact.Financial accounting and reporting10Cost accounting and management13Business planning15Management reporting and analysis17Corporate finance and treasurymanagement22Risk management and internal control27Accounting information systems32Tax strategy, planning and compliance35Technical skillsBusiness skillsPeople skillsLeadership skillsEthics, integrityand professionalismCGMA Competency Framework Technical skills9
Financial accounting and reportingProfessional accounting standardsThis ensures that the organisation conducts operations and fulfils its statutory and regulatory obligations according to professional accounting standards(domestic and/or international as applicable per business model).FoundationalIntermediateAdvancedExpert D emonstrate awareness andknowledge of the professionalaccounting standards R eview the accuracy and legitimacyof recorded financial transactionsand related reports D emonstrate advanced levelunderstanding of accountingstandards O versee accounting standardsselected and implemented bythe organisation A pply those principles to accuratelyrecord financial transactions andmaintain appropriate supportingdocumentation A ssist in developing andimplementing new accounting andreporting pronouncements anddetermine the resulting impact D evelop, manage and executeplans for implementation of newor updated accounting andreporting pronouncements I dentify potential issues associatedwith proposed accounting andreporting rules R ecommend appropriateaccounting and reportingtreatment for certain transactions I dentify potential issues associatedwith unusual or complextransactions, review and approvethe appropriate treatmentCGMA Competency Framework Technical skills10
Financial accounting and reportingTransactional accounting and closing processesThis is the process of recording, adjusting and reconciling financial transactions and events according to professional accounting standards.FoundationalIntermediateAdvanced P erform all activities within thereceivables process; calculatenon-complex provisions usingappropriate methods; identify risksof bad debts O versee the receivables process;identify ways to mitigate debt-relatedrisks; calculate the impact of debtorson financial ratios; calculate nonroutine provisions R esolve exceptional situations inthe receivables process, calculatecomplex provisions; advise on debtorrisk mitigation methods P erform all activities within thepayables process O versee the payables process;calculate the impact of creditors onfinancial ratios P erform month end close activitiesand provide accurate and timelyfinancial submissions R econcile sub-ledgers to generalledger and perform other relatedaccount reconciliations; evaluateaccounts for legitimacy andbalance substantiation U nderstand the differentcomponents andinterdependencies of theorganisation’s chart of accounts O versee all month-end closeprocesses and activities R econcile complex accountsinvolving inconsistent data fromnon-integrated systems D efine new general ledger accountsand ensure proper maintenance ofthe organisation’s chart of accountsExpert M anage centralised, complexaccounts payable processes; adviseon implications of creditor profile onthe business performance as well asalternative processes relatedto payables S implify, improve and harmoniseexisting and complex processes andsystems for account reconciliationsand month-end closing D efine and design effectivecharts of accounts E nsure effective accountingprocesses and implement changesconsistent with best practices D esign receivables and payablesprocesses and relevant strategiesaccording to best practices P roduce guidelines and policyfor accounting operations;formulate risk mitigationstrategies for bad debts P rovide advice on processimprovement, governance andexceptional situations S trategically lead implementationof the design and function of theorganisation’s chart of accountsaccording to best practice D esign processes and relevantstrategies according to best practiceand produce corporate guidelineson provisionsCGMA Competency Framework Technical skills11
Financial accounting and reportingFinancial reporting and complianceThis is the process of creating internal and external financial reports for both individual entities or groups using appropriate accounting and/orregulatory requirements.Foundational U nderstand and describe the mainelements of financial statementsand reports U nderstand general compliancerequirements and provide accurateand timely financial submissionsIntermediateAdvancedExpert P repare financial statements andreports and ensure accuracy,completeness, and compliance withreporting requirements E nsure integrity, accuracyand completeness of financialstatements; discuss the need for andnature of appropriate disclosures I dentify potential complianceissues and recommend solutionsto upper management; ensuretimely completion of financialreporting requirements I mplement efficient processchanges consistent with bestpractices; create a corporateculture of compliance andshared accountability A dvise on the ethical selection andadaption of relevant accountingpolicies and estimates E nsure full organisationalcomplianceCGMA Competency Framework Technical skills12
Cost accounting and managementCost accountingThis is the process of recording costs with associated drivers in the production, analysis and use of information for decision-making in the t U nderstand and apply basicconcepts of cost accounting tosupport entities’ operational andfinancial requirements B reak down key business processes,allocate costs and income on anagreed standardised basis andidentify performance issues I mplement and apply advancedcosting techniques and discernwhether costing techniques used bythe organisation are appropriate D emonstrate knowledge toeffectively identify and updateproduct costs as necessary A pply various costing methodssuch as standard, marginal andabsorption methods and explaincorresponding advantagesand disadvantages A dvise on role and classification ofquality costing, including prevention,appraisal and internal/externalfailure costs I nterpret material, labour,variable/fixed overhead andassociated variances R ecommend on the creation of newand select products and serviceswith corresponding selling price withimpact on the business A dvise on the role of sustainabilityand environmental cost accountingand its contribution to improvedenvironmental, social and financialbusiness performance A pprove offering on new productsand services and advise onalternative pricing strategies withfinancial consequencesCGMA Competency Framework Technical skills13
Cost accounting and managementCost managementThis is the process of analysing, planning and managing costs (including product pricing and supply chain analysis) to support implementation oforganisational strategies.Foundational D emonstrate basic understandingof techniques used to analyse andmanage costsIntermediate A pply various techniques such astarget costing, value analysis, lifecycle and discuss implications P repare analysis and reports thatenable the business managementto effectively challenge costs andinform decision-making P articipate in waste eliminationefforts with the business tounderstand key drivers and costreduction opportunitiesAdvancedExpert M anage cost challenge processesand work closely with the businessto ensure key performanceindicators are measuring theright metrics D iscuss and recommend transferpricing systems and evaluate effectof transfer prices A dvise on strategic costtransformation including cuttingwaste while maintaining orenhancing value creation L ead business on strategy, designand implementation of work P rovide leadership and coaching toteam members on cost control andreporting issuesCGMA Competency Framework Technical skills14
Business planningPlanning, forecasting and budgetingThis is the process of evaluating and quantifying a strategically aligned plan, for a defined period of time, which may include planned sales volumes andrevenues, resource quantities, costs and expenses, assets, liabilities and cash flows as well as non-financial metrics.Foundational C ontribute to business planning,budgeting and expenditureforecasting processes A pply basic modelling, forecastingand planning techniques to developcost forecasts with cost driversidentified and explainedIntermediate L ead planning processes, includingsetting targets, communicatingassumptions, coordinatingbudget preparation, challengingsubmissions and seeking synergiesupon consolidation P rovide the business withrelevant financial support toenable effective planning whileapplying moderate budgeting andforecasting techniques P rovide reasoned advice onmodelling, planning and forecastingwith reference to cost, time andquality which might include anunderstanding of some aspects ofthe organisation strategic directionAdvancedExpert T ranslate business strategyinto financial targets and tacticalplans and support executionin a controlled risk and rewardbased manner I nterpret and make effectivemanagement decisionsusing benchmarking, trends,and other planning andforecasting methods; developand implement improvementsto the planning processes E stablish and ensure effectiveand consistent modelling, planningand forecasting processes acrossbusiness unit(s) and identify andimplement best practices inthese processes P rovide critical inputs to thebusiness planning and expenditureforecasting processes; innovate toenhance the business impact oftarget setting, planningand budgeting S et and define the frameworkfor organisation goals andobjectives; lead organisation-widestrategy, planning, design andimplementation work P rovide unique insight andstrategic advice on trends, industry,market factors, customer behaviourand other cost drivers affectingthe organisationCGMA Competency Framework Technical skills15
Business planningCapital expenditure and investment evaluationThis is the process of assessing investments based on alignment with strategy, affordability, acceptable returns and prioritisation of options.Foundational Apply investment appraisaltechniques to investment appraisals Perform post-investment reviewsIntermediate Communicate and apply investmentdecision making criteriaAdvancedExpert Evaluate and appraise largeand complex investments, capitalexpenditures and financing projects Review investment appraisalsand provide guidanceand recommendations Approve investment proposals Anticipate future needs ofthe organisation includingportfolio actionsCGMA Competency Framework Technical skills16
Management reporting and analysisFinancial analysisThis is the process of analysing the financial statements and data to provide insights about the financial performance and position of the organisation overtime and in comparison with others.Foundational Use financial ratio analysis toevaluate the organisation’sperformance, its financial state, theeffectiveness of its use of workingcapital and its creditworthiness Apply discounted cash flow (DCF)techniques to evaluate commercialand financial decisions; determineand challenge the assumptions thatdrive commercial decisions Prepare profit and loss, economicvalue added and cash flow analysisto enable decision-making; evaluatechanges in account balances andidentify items requiring escalationIntermediate Apply common quantitativetechniques such as discountedcash flow (DCF) and value at risk(VAR) to model the economic, fiscaland accounting impact of typicalcommercial activities or standardfinancial structures and instruments Provide analysis to support decisionmaking, including presentingeconomic outcomes, identifyingthe key value drivers, benefits,sensitivities and risks, accountingand fiscal implications Prepare and analyse problemsusing sensitivity analysis andother techniques; reviewvariance analyses and accountreconciliations, and identifysignificant items requiringthe attention of higher-levelmanagementAdvancedExpert Review outputs of financial andcash flow analyses to develop viewsand guide management; resolvesignificant reporting variances orrecommend corrective actionswhere needed Interpret and translate financialstatements to drive strategic andsuccessful business decisions andgrowth; provide guidance to thebusiness using best practice in cashflow analysis Approve and present financialstatements and analysis toexecutive management and providerecommendations for improvements Communicate financial results tochief executive officer, board ofdirectors and external stakeholders Design reporting and monitoringregimes to track performanceagainst corporate objectives Apply sophisticated quantitativeanalysis to identify the business,commercial and financial impacton the organisation of differentcourses of action; advise onactions or options to improve themodelled outcome Assess cutting-edgedevelopments in quantitativeanalysis and incorporate relevantdevelopments into theorganisation’s methodologies Set standards for businessanalysis to support strategicdirection and comparison; developand implement finance solutionsto complex and high valuecommercial decisions includingall aspects of non-technical riskand business deliveryCGMA Competency Framework Technical skills17
Management reporting and analysisManagement reportingThis is the process of delivering, discussing and reporting on the organisation’s operations and financial conditions (including quality and sustainabilityreporting, customer profitability).FoundationalIntermediate Extract and deliver straightforwardmanagement information reports Deliver quality managementinformation Prepare and provide accurateand timely financial data, whereappropriate, for inclusion in thefinancial control process Develop business unit reportingsystems for management, projector performance reporting andimplement processes to delivermanagement information accordingto the reporting cycleAdvancedExpert Assess, generate and implementideas to optimise identification anddelivery of management informationto multi-functional teams Lead the development of functionalreporting systems, for management,project or performance reporting Challenge and make fundamentalchanges to address root causesof management information andreporting quality/correctness issues Develop new strategies, processesand systems that provide topquartile management informationto businesses in terms of qualityinformation and low cost/highvalue solutions Set the standard for corporatemanagement reporting andspecified information systems tosupport their implementation Identify and implement best practicemanagement reporting across theorganisation and wider industry;provide strategic insight on thecontent of reportsCGMA Competency Framework Technical skills18
Management reporting and analysisPerformance managementThis is the process of measuring and monitoring performance to ensure organisational and personal goals are consistently met.FoundationalIntermediate Interpret and provide basic analysisof management information andlink to business unit strategy andoperational performance Create proposals for newtransactions or ways of doingbusiness based upon a soundbusiness understanding Analyse business results, identifylearning points and help tocommunicate them throughthe organisation Set-up, prepare and leadappraisals that enable effectivemonitoring as well as improvementof business performance Distinguish between internal andexternal factors that have an impacton performance and analyse marketand competitor behaviour Assist line management in preparingaction plans for identified areasof improvement; own and drivethe use of key performanceindicators and accurate,timely and forward-lookingmanagement informationAdvancedExpert Own, select and use financial andnon-financial key performanceindicators in business appraisal;interpret trends from financialreports, extrapolate and evaluate riskin complex scenarios Interpret and analyse managementinformation, in the context ofthe external environment andbusiness objectives, to advisedecision-makers Identify and manage non-technicalrisk arising during the delivery ofproducts or services in the pursuit ofbusiness opportunities Develop, establish and continuouslyimprove the performancemanagement framework andappraisal methodology Advise the business atexecutive level on effectiveperformance management Advise on the optimal use o
samples and suitable techniques. The framework is the underpinning of the CIMA syllabus, which will be covered in the mandatory CGMA strategic case study exam for CPAs that will be implemented in 2015. While the framework highlights the range of skill
