The Certified Management Accountant (CMA) USA curriculum, administered by the Institute of Management Accountants (IMA), includes coverage of U.S. Generally Accepted Accounting Principles (U.S. GAAP) to the extent relevant for management accounting and financial decision-making.
However, it does not cover U.S. GAAP comprehensively, as the CMA focuses on management accounting, financial analysis, strategic planning, and related skills rather than the full scope of financial accounting standards required for roles like Certified Public Accountants (CPAs).
Below is an overview of how much U.S. GAAP is taught in the CMA USA curriculum, based on its syllabus and objectives:
CMA USA Curriculum Overview
The CMA exam is divided into two parts:
- Part 1: Financial Planning, Performance, and Analytics
- Part 2: Strategic Financial Management
Each part includes topics that touch on U.S. GAAP, particularly where financial reporting and analysis intersect with management accounting. The IMA’s Learning Outcome Statements (LOS) outline the specific competencies tested, including those related to U.S. GAAP.
Extent of U.S. GAAP Coverage
U.S. GAAP is primarily addressed in Part 1, under the section “External Financial Reporting Decisions “(15% of Part 1), and to a lesser extent in Part 2, under “Financial Statement Analysis” (20% of Part 2). Here’s a breakdown:
Part 1: External Financial Reporting Decisions (15%)
This section focuses on financial reporting requirements and includes:
- Financial Statements: Understanding the preparation, recognition, measurement, valuation, and disclosure of financial statements under U.S. GAAP.
- Key U.S. GAAP Concepts:
- Revenue recognition: Principles for recognizing revenue under ASC 606.
- Expense recognition: Rules for share-based payments, employee benefits, and other expenses.
- Asset valuation: Accounting for inventories (e.g., costing methods, valuation, write-downs, but not LIFO, as it’s not permitted under IFRS), long-lived assets (e.g., depreciation, impairment, capitalization of borrowing costs), and intangible assets (e.g., development costs).
- Leases: Distinguishing between operating and finance leases under ASC 842.
- Liabilities and equity: Recognition and measurement of financial instruments and capital transactions.
- Comparison with IFRS: Candidates are expected to identify major differences between U.S. GAAP and International Financial Reporting Standards (IFRS) in areas like expense recognition, intangible assets, inventories, leases, and impairment. This is not exhaustive but covers high-level differences relevant to financial analysis.
- Practical Application: The focus is on applying U.S. GAAP to prepare and analyze financial statements for internal decision-making, not on the detailed compliance or auditing aspects.
The coverage here is limited to what a management accountant needs to understand for reporting and decision support, rather than the full breadth of U.S. GAAP standards (e.g., complex areas like derivatives, consolidations, or specialized industry accounting are not emphasized).
Part 2: Financial Statement Analysis (20%)
This section builds on Part 1 by focusing on analyzing financial statements, often prepared under U.S. GAAP, to support strategic decisions. U.S. GAAP-related topics include:
- Financial Ratios and Analysis: Using U.S. GAAP-based financial statements to calculate and interpret ratios (e.g., profitability, liquidity, solvency).
- Impact of Accounting Standards: Understanding how U.S. GAAP affects reported financial results (e.g., revenue recognition, lease accounting, or impairment) and its implications for analysis.
- Special Issues: Topics like earnings quality, inflation, and foreign currency translation, where U.S. GAAP rules (e.g., ASC 830 for foreign currency) are relevant.
While U.S. GAAP informs the financial statements used in this section, the emphasis is on analysis and interpretation, not on mastering the standards themselves.
Depth and Scope of U.S. GAAP in CMA
- Depth: The CMA curriculum covers U.S. GAAP at a conceptual and applied level, focusing on standards that impact financial reporting and management decisions. It does not delve into the granular details or complexities of U.S. GAAP (e.g., ASC 815 for derivatives, ASC 740 for income taxes, or industry-specific guidance), which are more relevant for CPAs or financial accountants.
- Scope: U.S. GAAP is a subset of the curriculum, primarily within the 15% of Part 1 dedicated to External Financial Reporting Decisions and parts of the 20% of Part 2 on Financial Statement Analysis. Overall, U.S. GAAP constitutes roughly 10-15% of the total CMA syllabus, with the rest focusing on cost management, budgeting, performance management, analytics, corporate finance, ethics, and strategic planning.
- Comparison with IFRS: The CMA emphasizes understanding differences between U.S. GAAP and IFRS to prepare candidates for global roles, but this is not a deep dive into either standard. For example, candidates learn that U.S. GAAP allows revaluation of intangible assets only in specific cases, unlike IFRS, or that LIFO is permitted under U.S. GAAP but not IFRS.
- Practical Focus: The CMA prioritizes how U.S. GAAP impacts financial statements used by management accountants for planning, budgeting, and decision-making, rather than compliance or external auditing.
Comparison with Other Certifications
- CPA (Certified Public Accountant): The CPA exam (particularly the Financial Accounting and Reporting [FAR] section) covers U.S. GAAP comprehensively, including detailed standards, disclosures, and auditing requirements. The CMA’s U.S. GAAP coverage is far less extensive, focusing only on what’s relevant for management accounting.
- CFA (Chartered Financial Analyst): The CFA curriculum touches on U.S. GAAP in its financial reporting and analysis section but emphasizes analysis over standards. The CMA’s U.S. GAAP coverage is similar in depth but tailored to management accounting.
- ACCA or CA: These qualifications cover IFRS more extensively and may include U.S. GAAP only in specific contexts. The CMA’s focus on U.S. GAAP is more pronounced due to its U.S.-based origin but less comprehensive than ACCA’s IFRS coverage.
Conclusion
The CMA USA curriculum includes U.S. GAAP to the extent necessary for management accountants to understand and apply financial reporting principles in decision-making, constituting approximately 10-15% of the syllabus. It covers key areas like financial statement preparation, revenue and expense recognition, asset valuation, leases, and IFRS comparisons, primarily in Part 1 (External Financial Reporting Decisions) and Part 2 (Financial Statement Analysis).
However, The CMA does not cover U.S. GAAP in the same depth as the CPA exam, focusing instead on practical applications for management accounting. For a comprehensive understanding of U.S. GAAP, candidates would need additional study or a CPA qualification.
If you need specific details on certain U.S. GAAP topics in the CMA or go through the full US GAAP Syllabus , let us know at info@upliftprofessionals.in