ICWAI  Syllabus : Final Stage III

Paper 13: Operations and Project Management & Control (One Paper: 3 hours: 100 marks)

Section I: Operations Management (50 marks)

1. 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).
2. 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.
3. 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)

1. 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.
2. 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 cost control.
3. 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 evaluation.

Paper 14: Advanced Financial Management and International Finance (One Paper: 3 hours: 100 marks)

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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 Finance Issues.

Paper 15: Strategic Management and Marketing (One Paper: 3 hours: 100 marks)

1. 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.
2. 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 and evaluation.
3. 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.
4. 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.
5. 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.
6. Evaluation of sales promotion and advertisement - Distribution cost analysis and control. Evaluation of marketing research and marketing planning.
   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.

Paper 16: Strategic Tax Management (One Paper: 3 hours: 100 marks)

1. 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.
2. 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.
3. 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.
4. Wealth tax planning - individual, companies, etc and tax planning.
5. 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.