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ICWAI Syllabus : Final Stage III
Paper 13: Operations and Project Management &
Control (One Paper: 3 hours: 100 marks)
Section I: Operations Management (50 marks)
Technology of production
techniques - meaning and implication of technology, different
concepts like relevant technology or appropriate technology, high-tech
versus low-tech, capital intensive versus labour-intensive, batch process.
Technology forecasting, shape of things to come in 21st century. Basic ideas
regarding manufacturing techniques including machine tools process
technology, productive facilities, productive utilities and manufacturing
policies, some broad ideas about the technological aspects involved in the
industries covered under the cost audit. World-class manufacturers flexible
manufacturing systems, JIT, MRPI, MRPII and advanced systems to come. Production planning, scheduling and monitoring system - the
concept of integrated production planning system, linkage between production
planning and sales forecasting, procurement planning and finished goods
inventory policy. Actual scheduling of jobs optimisation concept in terms of
productive facilities utilisation and cost minimisation through start up
change over, etc. Production monitoring system and Management Information
System for this purpose, regular review of production planning and
monitoring, Decision Support System (DSS).
Production Economics - analysis of
problems involving location, multishifts, product mix, material handling
facilities, utilisation of multipurpose plants, utilisation of preventive
maintenance, utilisation of capacity rectification of unbalanced capacity,
off loading of products, stages of production, product plant, process
planning, scheduled production stages, controlling quality level,
controlling of output costs, products usage and its obsolescence,
technological usage and its obsolescence, control of output costs on the
basis of its cost of factors of production and utilisation of capacities,
sealing of capacity with the help of rationalisation, modernisation,
revamping and renovation. Expansion and growth.
Productivity - meaning and
significance of productivity, productivity vis-à-vis absolute production,
measurement of productivity - both overall and separately for each factor
like man, machine, materials. Productivity and cost productivity,
improvement techniques, time study, work sampling and other techniques for
productivity monitoring, productivity bargaining, tools and techniques,
productivity and work methods as well as quality of work life, job
evaluation and merit rating and use of these in productivity of human
resources. Cost reduction and value analysis in the context of productivity.
Learning curve concepts in the context of productivity.
Cost implications of multi-shift operations, plant shutdown, plant
expansion, retracting of detectives, automation in productive system,
utilities management, replacement of machinery and financial impact of
technology up gradation and absorption.
Section II - Project Management (50 marks)
Project identification and formulation -
different types of needs leading to different types of projects under BMRED
(Balancing, Modernisation, Replacement, Expansion and Diversification)
considerations involved in decision under each of these types. Macro
parameters in project selection, different considerations for project under
private, public and joint sectors. Project formulation - preparation of
project profile, project report and detailed project report. Broad criteria
for pre-investment decisions. Project appraisal - different types of appraisal -
Technical, economic, organisational and managerial, commercial and financial
- financial techniques for project appraisal and feasibility, discounted
cash flow and non-discounted cash flow methods, social cost benefit analysis
and economic rate of return. Non-financial justification of projects. Project financing - pattern of financing, sources of
finance, impact of taxation, public loans, small savings surplus of public
enterprises, deficit financing, foreign aid. Public sector project
financing. Role of tax planning in project financing.
Project cost systems - project cost
accounting and monitoring, appointment of contractor and its problems,
labour and equipment costs, accounting, codification, development of cost
data, labour time, reporting, direct measurement of work quantities, labour
cost analysis, equipment accounting, activity - based cost accounting,
production rates for estimates, control of cost, computer application to
Project administration - progress
payments, expenditure planning, project scheduling and network planning, use
of Critical Path Method (CPM), schedule of payments and physical progress,
time-cost trade off, cash flow preparing, cash forecast and monitoring of
fund and other resources, control of groups of projects under one
administration and associated problems in sharing resources.
Concepts and uses of Project Evaluation and Review
Techniques (PERT), cost as a function of time, project evaluation and reviews
techniques/cost mechanisms. Accountant's role in project evaluation and review
techniques/cost budgeting. Determination of least cost duration. Post project
Paper 14: Advanced Financial Management and
International Finance (One Paper: 3 hours: 100 marks)
Planning environment -
financial objectives, policies on financing, investments and dividends.
Financial forecasting, planning and uncertainties, interest rates,
inflation, capital gains and losses, exchange control regulation, government
credit policies and incentives, statistics on production, price indices,
labour, capital market based on published statistical data.
Sources of finance (national) -
Medium and long term; venture capital, seed capital, equity preference,
convertible and cumulative preference shares, debentures, convertible
debentures, hire purchase, leasing, public deposits and institutional
finance Life Insurance Corporation, Unit Trust of India, Industrial Finance
Corporation of India, Industrial Credit and Investment Corporation of India,
National Industrial Development Corporation, Industrial Development Bank of
India, Small Scale Industrial Development Bank of India (SIDBI), State
Finance Corporation (SFC), Industrial Rehabilitation Bank of India (IRBI).
Internal sources, retained earnings, provisions etc. Issues in raising
finance, legal form of organisation, provisions of the Companies Act,
control of capital issues. Short term sources: Trade credit, factoring, Bill
of exchange, Bank Loan, Cash credit, overdraft, public deposit, SEBI
regulations, Primary and Secondary markets. Sources of Finance (International) - raising funds in
foreign markets and investments in foreign projects, exchange rate - risk
agencies involved and procedures followed in international financial
operations - concepts of balance of trade and balance of payment.
Analysis of operating and financial
leverages - concept and nature of leverages operating risk and
financial risk, operating leverages, financial leverage and combined
leverage - concepts, measures and their interpretations. Operating leverage
and Cost volume Profit analysis - Earning Before Interest and Tax (EBIT) and
Earning Per Share (EPS), indifference point. Capital structure theories and planning - concept of
capital structure and its perimeters, financial structure and capital
structure - simple and complex; theories of capital structure- net income
approach, net operating income approach, traditional and Miller and
Modigliani approaches and their criticism. Factors for capital structure
planning; capital structure trend in private and public sectors in India. Cost of capital - its nature and meaning, relevance of cost
of capital in financial decisions, computation of specific cost, selection
of weight, overall cost and marginal cost of capital, corporate tax and its
impact on cost of capital.
Capital budgeting and impact of time lag in analysis of
capital utilisation and viability - pay back period, present value and
internal rate of return including sensitivity analysis, limitations on
capital budgeting. Determination of the Cost of capital - risk of
uncertainty, risk and return in a ports contexts capital Asset pricing model
(CAPM), inflation, leasing versus buying, income taxes, benefits of
accelerated cost recovery system (higher rate of depreciation), investment
credits. Working capital management - operating cycle concept,
forecasting, working capital requirement, strategies of financing current
assets; working capital and term loans, official regulations; monitoring
advance management of different components; working capital management under
inflation, new projects working capital management. Financial services - Money market, Capital market,
Functions of bank-lending etc., Merchant banking, leasing, hire purchase,
cash purchase and factoring.
Advanced financial analysis and planning
- financial statements, financial ratio analysis, fund flow and
cash flow analysis, leverages, Cost-Volume-Profit analysis, financial
forecasting, inter firm comparison, financial analysis and aspects
inflation. Dividend and retention policies - formulating dividend
policy: factors for consideration, dividend theories - Walter's model,
Gordon's model, residual theory of dividend, Miller and Modigliani
hypothesis. Indian position in private and public sector in general. Financial management in public sector - Management of
accounts receivable and inventories in public sector: units, source of fund
of public sector units - cost of loans, cost of equity, cost of retained
earning and debt equity ratio; evaluation and control of capital expenditure
- determination of cash flows and cost-benefit analysis; pricing policy of
public enterprises, project formulation and implementation, social cost
benefit analysis. Contemporary developments - WTO, GATT; Corporate Governance
- UK’s Cadbury, Greenbary and Hampel Committee recommendations, Anti dumping
laws, TRIPS, TRIMS, Copyright and patent laws and current developments
including SEBI regulations as amended form time to time.
International finance and risk management
- Minimisation of political risk, risk of fraud (i.e. fraud policy
statements), effective recruitment policies and good internal controls
especially over procurement and cash; diversifying risk; management of
interest rate risk including the use of interest rate swaps. Forward rate
agreements and interest rate guarantees. Interpretation of interest options
using simple graphs to show caps, floors and collars. Transaction,
translation and economic risk, Interest rate parity, purchasing power parity
and the Fisher effects. Foreign Direct Investment.
Forward contracts and money market hedges. Currency features and options.
Currency swaps and internal hedging techniques. Other current International
Paper 15: Strategic Management and Marketing (One
Paper: 3 hours: 100 marks)
Planning environment economics
- forecast trend and changes - social, political, legal and
technological impacts. Distribution channels and competitive forces.
Government policies, economic growth and government expenditure. Public and
private sector investments. International trade prices and government
policies for capacity expansion, new industries, subsidiaries and
substitutes, Government role in controlling inflation.
Strategies - meaning and
implications of corporate planning, long range planning, business policy
planning, strategic planning and strategic management, processes of
developing strategic plan – definition of mission, corporate objectives -
(Profit gap, sales gap, risk gap) and other strategies, SWOT (Strength,
Weakness, Opportunities & Threats) analysis, target selling strategy
formulation and implementation, monitoring mechanism, strategies for
stagnation versus growth, strategies for growth through expansion versus
diversification, Acquisition and merger strategy, strategy of joint venture
both in India and abroad. Marketing strategy as a part of corporate
strategy, growth under inflation and protection of shareholder, real
capital. Financial objectives, non-financial objectives, resources analysis
Model Building and models -
strategies in the development of models, Delphi Model, econometric,
mathematical programming, budgetary and heuristic rnodel. Sensitivity
analysis and the characteristics of this model. Limitations in model
building vis-à-vis simulation techniques. Life cycles, Porters generic
strategic, Ausojs model, BCG matrix and other models.
Basic concepts of marketing -
production orientation versus market orientation, marketing objectivities,
framework and management of marketing mix.
Linkage between strategic planning and marketing strategy - both forward and
backward. Research and intelligence - sources for the techniques for
acquiring information necessary for marketing decision-making market shares.
Control or application of management
accounting in marketing - analysis of marketing costs and
profitability, pricing policies and strategies, budgetary control in
marketing, evaluation and control of sales activities.
Evaluation of sales promotion and advertisement -
Distribution cost analysis and control. Evaluation of marketing research and
Contribution analysis and product-line profitability analysis, product
rationalisation including product revamping, product range extension,
product elimination, new product introduction. Evaluation of research
information - perfect, imperfect and Bayes' Theorem.
Direct Tax planning - tax planning v.
tax evasion, tax management, tax implications in planning, the legal status
of business unit, firm, private limited company and public limited company.
Tax planning in respect of different heads of income. Tax implications in
International Joint Venture
Tax aspects of mergers and amalgamations.
New Industrial establishment and tax planning.
Tax considerations arising with regard to specific
management decisions such as - (1) make or buy; (2) own or lease, (3) retain
or replace; (4) repair of scrap or return; (5) export versus local sale; (6)
shut down or continue; (7) expand or contract (8) merger and acquisition (9)
new capital investment; tax exemptions; various deductions under chapter VI.
Tax incentives and export promotions.
Tax aspects of investments.
Tax implications in developing capitalisation structure and
(a) short term loans; (b) deposits from public;
(c) term loans; (d) bonus issues;
(e) dividend policy.
Wealth tax planning - individual, companies, etc and
Indirect taxes planning - Different aspects of tax
planning and tax management in relation to.
(a) Central Excise Act;
(b) Customs Act;
(c) Sales Tax Act.