Study Help For Your Gateway Exam

Study help for your Gateway exam
This document contains:
• An introduction to the CIMA Gateway exams

• Study resource map linking to the CIMA website
• The CIMA management level syllabus
• November 2011 post exam guide
• Index of management level past paper questions relevant to the Gateway exam
• Index of articles relevant to section A of the Gateway exam
Gateway exam format
The CIMA gateway exam is a 3 hour paper, with an additional 20 minutes reading time. All questions are compulsory.
Syllabus
The CIMA gateway exam covers the syllabus for the E2, P2, and F2 papers. Section A focuses on the following
sections of each paper for three questions worth 25 marks each:
E2 – Enterprise Management syllabus topic B – project management

P2 – Performance Management syllabus topic B – cost planning and analysis for competitive advantage
F2 – Financial Management syllabus topic A – group financial statements
Section B covers the remainder of the syllabus from E2, P2 and F2 in short objective test questions totalling 25 marks.
Video introductions to the Gateway examinations
See introductions to the exam and the syllabus.
Past exam papers
Past exam papers and model answers can be downloaded from the ‘Student Information’ link in MyCIMA. All past
Gateway examinations follow the same format and syllabus.
We recommend that you sit the past Gateway papers as timed mock exams – but you can also get plenty of question
practice using relevant questions from past E2, F2 and P2 papers.
Don’t forget about section B, which makes up the final 25% of the exam! This is made up of short questions from all
other areas of the E2, F2 and P2 syllabus, so make sure you have a good knowledge of all the remaining syllabus
areas and get some practice on 2, 3 and 4-mark sub-questions from the management level papers.
Post exam guides
After each sitting of the Gateway examinations, the examiner writes a report on how students have performed. Post
exam guides are essential reading, and include general comments on student performance, common errors made, the
suggested approach to answers and marking guides.
Revision tips – follow our four step plan
1. Revise the three main syllabus topics one area at a time, then attempt the management level past paper questions.
2. Check your answers, highlighting areas you have scored poorly in. Re-revise these areas until you are confident.
3. Read through the post exam guides and articles for hints and tips as to how to tackle problem questions.
4. Now attempt the past Gateway papers as mock exams, to strict time – 1.8 minutes per mark.
Time management is crucial before and during exams - our date planner (PDF 363 KB) can help you manage your
study time. Make a plan and try to stick to it!
You can find more Gateway study tips on our study support blog.
Study support for your Gateway exam
Pre-study period (starting 3-4 months before exam)

General information for the Gateway examinations
Introductory presentations on the exam and the syllabus
The full management level syllabus (PDF 166KB) – examinable in Gateway exams
Exam paper and post exam guide - for the most recent exam sitting
Study period (starting 2-3 months before exam)
CIMA Learning Systems/Cimastudy.com

CIMA Quality Partner college or distance learning course
Technical articles for the E2, F2, and P2 papers - listed by syllabus area.
Study articles from Velocity magazine
Ask a Tutor events on CIMAsphere every April and October
CIMAsphere discussion boards
CIMAsphere ‘Get ready for May 2012’ study group
Study planner (PDF 894KB)
Revision period (starting 4-6 weeks before exam)

CIMA Quality Partner revision course
CIMA local and student events
Past papers and examiner’s answers – requires MyCIMA login
Questions by learning outcome for the E2, F2 and P2 papers
Post examination guides for past gateway exams
CIMA study support emails – check your inbox!
Exam period (starting 2-3 weeks before exam)

Exam techniques video
Exam articles from Velocity magazine
Post-exam
Exam paper – available shortly after exam day
Examiner’s answers – available shortly after results day via MyCIMA login
Marks breakdown by question – on exam results letter
Post exam guide – available shortly after results day
Examination
Results Statement
13 January 2011
Mr A Student 26 Chapter Street

999 LETSBE AVENUE London
LONDON SW1P 4NP
SW1 United Kingdom
Dear Mr Student
Examination Session: November 2010 Contact ID 1-5150X
Your result in the recent examination is as follows:
Candidate No Level Result Subject Mark

211-1-043 Management PASS Enterprise Management 75%
04 04
The full syllabus – management level

04 The full syllabus – management level
This section sets out the specific syllabus for each of the three Syllabus structure Assessment strategy
papers at the management level of the qualification. However,
it is implicit in each case, that material included in the syllabus There will be a written examination paper of three hours, plus
for any of the papers at the operational level may also be The syllabus comprises the following topics and study weightings: 20 minutes of pre-examination question paper reading time. The
relevant for the purposes of assessment. examination paper will have the following sections:
A Strategic Management 30%
and Assessing the
PAPER E2 B
Competitive Environment
A B
Section A – 50 marks
ENTERPRISE MANAGEMENT A A Five compulsory medium answer questions, each worth ten marks.
Short scenarios may be given, to which some or all questions relate.
B
C
Project Management 40%
B
Syllabus overview SectionC
E C Management of 30%
C
B – 50 marks
D One or two compulsory questions. Short scenarios may be given, to
Paper E2 moves away from the emphasis on functional
knowledge within Paper E1 Enterprise Operations, towards an
D
Relationships
which questions relate.
holistic, integrated view of management across the organisation.
Building on important concepts in strategic management, this
paper develops tools and techniques for identifying the key
types of competitive environment. The skills and tools of project
management are also addressed. Finally, the paper introduces the
skills and tools needed to work with, manage and develop teams.
This includes both the legal aspects of managing individuals, as well A B A B
as the softer elements of negotiation and leadership skills. B A C
C
D E E
D C D
E2 – A. STRATEGIC MANAGEMENT AND ASSESSING THE COMPETITIVE ENVIRONMENT (30%)
Learning outcomes Indicative syllabus content

On completion of their studies students should be able to:
Lead Component A B A A
B B
1. discuss different competitive (a) discuss the nature of competitive environments; • PEST analysis and its derivatives.
environments and key external D
(b) distinguish between different types of competitive environments. • The use of stakeholder mapping.
characteristics of these environments. C C C
•
•
Qualitative approaches to competitive analysis.
Competitor analysis and competitive strategies (both qualitative and quantitative tools of competitor analysis will be used).
• Sources, availability and quality of data for environmental analysis.
• Porter’s Five Forces model and its use for assessing the external environment.
• Porter’s Diamond and its use for assessing the competitive advantage of nations.
2. discuss developments in strategic (a) discuss concepts in established and emergent thinking in strategic management; • Perspectives on the strategic management of the firm (including transaction cost, resource-based view and ecological perspective).
management. (b) compare and contrast approaches to strategy formulation; • Approaches to strategy (e.g. rational, adaptive, emergent, evolutionary or system based views.
(c) explain the relationships between different levels of strategy in organisations. • Levels of strategy (e.g. Corporate, business-level, functional) (Note: candidates are not expected to identify or evaluate options).
32 For more information visit www.cimaglobal.com For more information visit www.cimaglobal.com 33
04 04

E2 – B. PROJECT MANAGEMENT (40%)

Lead Component
1. discuss tools and techniques of (a) identify a project, a programme and their attributes; • The definition of a programme, a project, project management, and the contrast with repetitive operations and line management.
project management. (b) apply suitable structures and frameworks to projects to identify • 4-D and 7-S models to provide an overview of the project process, and the nine key process areas (PMI) to show what
common project management issues; happens during each part of the process.
(c) construct an outline of the process of project management; • The benefits and limitations of having a single process for managing projects.
(d) identify the characteristics of each phase in the project process; • Key tools for project managers (e.g. Work Breakdown Structure, network diagrams (Critical Path Analysis), Gantt charts,
(e) apply key tools and techniques, including the evaluation of proposals; resource histograms, gates and milestones).
(f) produce a basic project plan incorporating strategies for dealing with • Earned Value Management.
uncertainty, in the context of a simple project; • Evaluation of plans for projects.
(g) identify structural and leadership issues that will be faced in managing a project team; • The key processes of PRINCE2 and their implications for project staff.
(h) compare and contrast project control systems; • Managing scope at the outset of a project and providing systems for configuration management/change control.
(i) discuss the value of post-completion audit; • The production of basic plans for time, cost and quality.
(j) apply a process of continuous improvement to projects. • Scenario planning and buffering to make provision for uncertainty in projects, as part of the risk and
opportunities management process.
• Organisational structures, including the role of the project and matrix organisations, and their impact on project achievement.
• Teamwork, including recognising the life-cycle of teams, team/group behaviour and selection.
• Control of time, cost and quality through performance and conformance management systems.
• Project completion, documentation, completion reports and system close-down.
• The use of post-completion audit and review activities and the justification of their costs.
2. evaluate the relationship of the (a) produce a strategy for a project; • Determining and managing trade-offs between key project objectives of time, cost and quality.
project manager to the (b) recommend strategies for the management of stakeholder • Stakeholders (both process and outcome), their power and interest, and their needs and expectations, marketing and
external environment. perceptions and expectations; communications to enhance perceptions.
(c) explain the roles of key players in a project organisation. • Roles of support structures, including project management offices, as well as project sponsors (SROs), boards, champions,
managers and clients.
04 04

E2 – C. MANAGEMENT OF RELATIONSHIPS (30%)

Lead Component
1. discuss concepts associated with the (a) discuss the concepts of power, bureaucracy, authority, • The concepts of power, authority, bureaucracy, leadership, responsibility and delegation and their application to
effective operation of an organisation. responsibility, leadership and delegation; relationships within an organisation and outside it.
(b) demonstrate the importance of organisational culture; • Organisational culture: definition, classification, importance.
(c) identify the nature and causes of conflict; • The sources of conflict in organisations and the ways in which conflict can be managed to ensure that working
(d) discuss alternative approaches to the management of conflict. relationships are productive and effective.
2. discuss the activities associated (a) analyse the relationship between managers and their subordinates, • Disciplinary procedures and their operation, including the form and process of formal disciplinary action and dismissal
with managing people and their including legal aspects affecting work and employment; (e.g. industrial tribunals, arbitration and conciliation).
associated techniques. (b) discuss the roles of negotiation and communication in the management • The nature and effect of legal issues affecting work and employment, including the application of relevant employment law
(i.e. relating to health, safety, discrimination, fair treatment, childcare, contracts of employment and working time).
process, both within an organisation and with external bodies; • Communication skills (i.e. types of communication tools and their use, as well as the utility and conduct of meetings)
(c) discuss the effectiveness of relationships between the finance function and ways of managing communication problems.
and other parts of the organisation and with external stakeholders; • Negotiation skills.
(d) Identify tools for managing and controlling individuals, teams and • Managing the finance function to maximise its value to the organisation through lean operation (e.g. business process outsourcing,
networks, and for managing group conflict; shared service centres) and contribution to other functions (e.g. embedding finance personnel in business and strategic
decision processes).
(e) compare and contrast ways to deal effectively with discipline problems;
• Management of relationships with professional advisors (accounting, tax and legal), auditors and financial stakeholders
(f) explain the process and importance of mentoring junior colleagues; (investors and financiers) to meet organisational objectives.
(g) analyse issues of business ethics and corporate governance. • The principles of corporate governance and the CIMA Code of Ethics for Professional Accountants, and their relevance
to the role, obligations and expectations of a manager.
• How to lead and manage a team.
• The role of a mentor, and the process of mentoring.
• Motivating team members.
• The use of systems of control within the organisation (e.g. employment contracts, performance appraisal, reporting structures).
04 04

04 The full syllabus – management level continued
B A B
A A
C B C
E C D
D
PAPER P2 Syllabus structure Assessment strategy
PERFORMANCE MANAGEMENT There will be a written examination paper of three hours, plus
The syllabus comprises the following topics and study weightings: 20 minutes of pre-examination question paper reading time. The
Syllabus overview examination paper will have the following sections:
While Paper P2 continues the analytic theme of Paper P1 A Pricing and 30%
Product Decisions
Performance Operations (for example in terms of identifying
relevant costs), its main focus is on the application of information A B CostB Planning and Analysis 30% A BSection A – 50 marks
in the management processes of decision-making and control, so
for Competitive Advantage B A C may be given, to which some or all questions relate.
Five compulsory medium answer questions, each worth ten marks.
Short scenarios
as to optimise performance. The first two sections deal respectively
C
with the key contributors to operational performance – revenue
E C Budgeting and 20% D E Section B – 50 marks
(decisions of what to produce, at what price) and costs (how to
manage them to maximise profitability). The role of control in DManagement Control C D
One or two compulsory questions. Short scenarios may be given, to
monitoring and improving performance then comes to the fore in
the final two sections, dealing with principles and practices in the D Control and Performance 20%
use of responsibility centres and budgeting. Measurement of
Responsibility Centres
A B A A
B B
D
C C C
P2 – A. PRICING AND PRODUCT DECISIONS (30%)

Lead Component
1. discuss concepts of cost and (a) discuss the principles of decision-making including the identification of relevant cash • Relevant cash flows and their use in short-term decisions, typically concerning acceptance/rejection of contracts,
revenue relevant to pricing and flows and their use alongside non-quantifiable factors in making rounded judgements; pricing and cost/benefit comparisons.
product decisions. (b) discuss the possible conflicts between cost accounting for profit reporting and stock • The importance of strategic, intangible and non-financial judgements in decision-making.
valuation and information required for decision-making; • Relevant costs and revenues in decision-making and their relation to accounting concepts.
(c) discuss the particular issues that arise in pricing decisions and the conflict between • Marginal and full cost recovery as bases for pricing decisions in the short and long-term.
‘marginal cost’ principles and the need for full recovery of all costs incurred.
04 04

P2 – A. PRICING AND PRODUCT DECISIONS (30%) continued

Lead Component
2. analyse short-term pricing and (a) explain the usefulness of dividing costs into variable and fixed • Simple product mix analysis in situations where there are limitations on product/service demand and one other production constraint.
product decisions. components in the context of short-term decision making; • Multi-product break-even analysis, including break-even and profit/volume charts, contribution/sales ratio, margin of safety etc.
(b) interpret variable/fixed cost analysis in multiple product • Linear programming for more complex situations involving multiple constraints. Solution by graphical methods of two variable problems,
contexts to break-even analysis and product mix decision making, together with understanding of the mechanics of simplex solution, shadow prices etc. (Note: questions requiring the full application of the
including circumstances where there are multiple constraints and simplex algorithm will not be set although candidates should be able to formulate an initial tableau, interpret a final simplex tableau and
linear programming methods are needed to identify ‘optimal’ solutions; apply the information it contained in a final tableau).
(c) discuss the meaning of ‘optimal’ solutions and how linear • Sensitivity analysis of CVP-based decision models.
programming methods can be employed for profit maximising,
revenue maximising and satisfying objectives;
(d) analyse the impact of uncertainty and risk on decision models based on CVP analysis.
3. discuss pricing strategies and (a) apply an approach to pricing based on profit maximisation in imperfect markets; • Pricing decisions for profit maximising in imperfect markets. (Note: tabular methods of solution are acceptable).
their consequences. (b) discuss the financial consequences of alternative pricing strategies; • Pricing strategies and the financial consequences of market skimming, premium pricing, penetration pricing, loss leaders, product
(c) explain why joint costs must be allocated to final products for financial reporting bundling/optional extras and product differentiation to appeal to different market segments.
purposes, but why this is unhelpful when decisions concerning process • The allocation of joint costs and decisions concerning process and product viability based on relevant costs and revenues.
and product viability have to be taken.
P2 – B. COST PLANNING AND ANALYSIS FOR COMPETITIVE ADVANTAGE (30%)

Lead Component
1. evaluate techniques for analysing (a) compare and contrast value analysis and functional cost analysis; • Value analysis and quality function deployment.
and managing costs for (b) evaluate the impacts of just-in-time production, the theory of constraints • The benefits of just-in-time production, total quality management and theory of constraints and the implications of these
competitive advantage and total quality management on efficiency, inventory and cost; methods for decision-making in the ‘new manufacturing environment’.
(c) explain the concepts of continuous improvement and Kaizen costing that • Kaizen costing, continuous improvement and cost of quality reporting.
are central to total quality management; • Learning curves and their use in predicting product/service costs, including derivation of the learning rate and the learning index.
(d) prepare cost of quality reports; • Activity-based management in the analysis of overhead and its use in improving the efficiency of repetitive overhead activities.
(e) apply learning curves to estimate time and cost for new products and services; • Target costing.
(f) apply the techniques of activity-based management in identifying cost drivers/activities; • Life cycle costing and implications for marketing strategies.
(g) explain how process re-engineering can be used to eliminate non-value • The value chain and supply chain management, including the trend to outsource manufacturing operations to transition
adding activities and reduce activity costs; and developing economies.
(h) explain how target costs can be derived from target prices and the • Gain sharing arrangements in situations where, because of the size of the project, a limited number of contractors or security
relationship between target costs and standard costs; issues (e.g. in defence work), normal competitive pressures do not apply.
(i) discuss the concept of life cycle costing and how life cycle costs interact • The use of direct and activity-based cost methods in tracing costs to ‘cost objects’, such as customers or distribution channels,
with marketing strategies at each stage of the life cycle. and the comparison of such costs with appropriate revenues to establish ‘tiered’ contribution levels, as in the
(j) discuss the concept of the value chain and the management of activity-based cost hierarchy.
contribution/profit generated throughout the chain; • Pareto analysis.
(k) discuss gain sharing arrangements whereby contractors and customers
benefit if contract targets for cost, delivery etc. are beaten;
(l) analyse direct customer profitability and extend this analysis to distribution
channel profitability through the application of activity-based costing ideas;
(m) apply Pareto analysis as a convenient technique for identifying key elements of data and
in presenting the results of other analyses, such as activity-based profitability calculations.
04 04

P2 – C. BUDGETING AND MANAGEMENT CONTROL (20%)

Lead Component
1. explain the principles that underlie (a) explain the concepts of feedback and feed-forward control and • Control system concepts.
the use of budgets in control. their application in the use of budgets for planning and control; • The use of budgets in planning: ‘rolling budgets’ for adaptive planning.
(b) explain the concept of responsibility accounting and its importance in the • Responsibility accounting and the use of budgets for control: controllable costs and; treatment of uncontrollable costs;
construction of functional budgets that support the overall master budget; the conceptual link between standard costing and budget flexing.
(c) identify controllable and uncontrollable costs in the context of responsibility accounting
and why uncontrollable costs may or may not be allocated to responsibility centres.
2. evaluate performance using budgets, (a) evaluate projected performance using ratio analysis; • Assessing the financial consequences of projected performance through key metrics including profitability,
recognising alternative approaches (b) evaluate the consequences of “what if” scenarios and liquidity and asset turnover ratios.
and sensitivity to variable factors. their impact on the master budget; • What-if analysis based on alternate projections of volumes, prices and cost structures and the use of spreadsheets
(c) evaluate performance using fixed and flexible budget reports. in facilitating these analyses.
• The evaluation of out-turn performance using variances based on ‘fixed’ and ‘flexed’ budgets.
3. discuss the broader managerial (a) discuss the impact of budgetary control systems and setting of • Behavioural issues in budgeting: participation in budgeting and its possible beneficial consequences for ownership
issues arising from the use of standard costs on human behaviour; and motivation; participation in budgeting and its possible adverse consequences for ‘budget padding’ and manipulation; setting
budgets in control. (b) discuss the role of non-financial performance indicators; budget targets for motivation; implications of setting standard costs etc.
(c) compare and contrast traditional approaches to budgeting with • Non-financial performance indicators.
recommendations based on the ‘balanced scorecard’; • Criticisms of budgeting and the recommendations of the advocates of the balanced scorecard and ‘beyond budgeting’.
(d) discuss the criticisms of budgeting, particularly from the
advocates of ‘beyond budgeting’ techniques.
P2 – D. CONTROL AND PERFORMANCE MEASUREMENT OF RESPONSIBILITY CENTRES (20%)

Lead Component
1. discuss the use of responsibility (a) discuss the use of cost, revenue, profit and investment centres • Organisation structure and its implications for responsibility accounting.
centres in devising organisation in devising organisation structure and in management control.
structure and in management control.
2. discuss information suitable for (a) discuss cost information in appropriate formats for cost centre managers, taking due • Presentation of financial information representing performance and recognising issues of controllable/uncontrollable
management decision-making in account of controllable/uncontrollable costs and the importance of budget flexing; costs, variable/fixed costs and tracing revenues and costs to particular cost objects.
responsibility centres. (b) discuss revenue and cost information in appropriate formats for profit and investment • Return on investment and its deficiencies; the emergence of residual income and economic value added to address these.
centre managers, taking due account of cost variability, attributable costs, controllable
costs and identification of appropriate measures of profit centre ‘contribution’;
(c) discuss alternative measures of performance for responsibility centres.
3. discuss the broader managerial (a) discuss the likely behavioural consequences of the use of • The behavioural consequences of performance management and control.
issues arising from the division performance metrics in managing cost, profit and investment centres; • The theory of transfer pricing, including perfect, imperfect and no market for the intermediate good.
of the organisation into (b) discuss the typical consequences of a divisional structure for • Use of negotiated, market, cost-plus and variable cost based transfer prices. ‘Dual’ transfer prices and lump sum
responsibility centres. performance measurement as divisions compete or trade with each other; payments as means of addressing some of the issues that arise.
(c) discuss the likely consequences of different approaches to transfer pricing for divisional • The interaction of transfer pricing and tax liabilities in international operations and implications for currency
decision making, divisional and group profitability, the motivation of divisional management and possible distortion of internal company operations in order to comply with Tax Authority directives.
management and the autonomy of individual divisions;
(d) discuss in principle the potential tax and currency management
consequences of internal transfer pricing policy.
B A B
A A
04 C B C 04
E C D
D

04 The full syllabus – management level continued
A B A B
B A C
C
E D E
D C D
PAPER F2 Syllabus structure Assessment strategy
FINANCIAL MANAGEMENT There will be a written examination paper of three hours, plus
The syllabus comprises the following topics and study weightings: 20 minutes of pre-examination question paper reading time. The
Syllabus overview examination paper will have the following sections:
Paper F2 extends the scope of Paper F1 Financial Operations to A Group Financial 35%
Statements
more advanced topics in financial accounting (preparation of
A B A A
Section A – 50 marks
full consolidated financial statements and issues of principle in
accounting standards dealing with more complex areas) and to B Issues in Recognition 20%
B B
Five compulsory medium answer questions, each worth ten marks.
Short scenarios may be given, to which some or all questions relate.
developments in external reporting. With the advanced level of and Measurement
financial accounting and reporting achieved in this paper, the
C Analysis and Interpretation 35%
D Section B – 50 marks
analysis and interpretation of accounts becomes more meaningful
and this constitutes a substantial element. C of Financial Accounts C C
One or two compulsory questions. Short scenarios may be given, to
C Developments in 10%
External Reporting
F2 – A. GROUP FINANCIAL STATEMENTS (35%)

Lead Component
1. prepare the full consolidated (a) prepare a complete set of consolidated financial statements in a • Relationships between investors and investees, meaning of control and circumstances in which a subsidiary is excluded
statements of a single company and form suitable for publication for a group of companies; from consolidation.
the consolidated statements of (b) demonstrate the impact on group financial statements where: there is a minority • The preparation of consolidated financial statements (including the group cash flow statement and statement of changes in equity)
financial position and interest; the interest in a subsidiary or associate is acquired or disposed of part way involving one or more subsidiaries, sub-subsidiaries and associates (IAS 1(revised), 7 and 27, IFRS 3).
comprehensive income for a group through an accounting period (to include the effective date of acquisition and • The treatment in consolidated financial statements of minority interests, pre and post- acquisition reserves, goodwill
(in relatively complex circumstances). dividends out of pre-acquisition profits); shareholdings, or control, are acquired in (including its impairment), fair value adjustments, intra-group transactions and dividends, piece-meal and mid-year acquisitions,
stages; intra-group trading and other transactions occur; the value of goodwill is impaired; and disposals to include sub-subsidiaries and mixed groups.
(c) apply the concept of a joint venture and how various types are accounted for. • The accounting treatment of associates and joint ventures (IAS 28 and 31) using the equity method and proportional consolidation method.
2. explain the principles of accounting (a) explain the principles of accounting for a capital reconstruction scheme or a demerger; • Accounting for reorganisations and capital reconstruction schemes.
for capital schemes and foreign (b) explain foreign currency translation principles, including the difference between • Foreign currency translation (IAS 21), to include overseas transactions and investments in overseas subsidiaries.
exchange rate changes. the closing rate/net investment method and the historical rate method;
(c) explain the correct treatment for foreign loans financing foreign equity investments.
04 04

F2 – B. ISSUES IN RECOGNITION AND MEASUREMENT (20%)

Lead Component
1. discuss accounting principles and (a) discuss the problems of profit measurement and alternative • The problems of profit measurement and the effect of alternative approaches to asset valuation; current cost and current
their relevance to accounting issues approaches to asset valuations; purchasing power bases and the real terms system; Financial Reporting in Hyperinflationary Economies (IAS 29).
of contemporary interest. (b) discuss measures to reduce distortion in financial statements when price levels change; • The principle of substance over form and its influence in dealing with transactions such as sale and repurchase agreements,
(c) discuss the principle of substance over form applied to a range of transactions; consignment stock, debt factoring, securitised assets, loan transfers and public and private sector financial collaboration.
(d) discuss the possible treatments of financial instruments in the issuer’s accounts • Financial instruments classified as liabilities or shareholders funds and the allocation of finance costs over the term of the
(i.e. liabilities versus equity, and the implications for finance costs); borrowing (IAS 32 and 39).
(e) discuss circumstances in which amortised cost, fair value and hedge accounting are • The measurement, including methods of determining fair value, and disclosure of financial instruments (IAS 32 and 39, IFRS 7).
appropriate for financial instruments, the principles of these accounting methods • Retirement benefits, including pension schemes – defined benefit schemes and defined contribution schemes, actuarial deficits
and considerations in the determination of fair value; and surpluses (IAS 19).
(f) discuss the recognition and valuation issues concerned with pension schemes • Share-based payments (IFRS 2): types of transactions, measurement bases and accounting; determination of fair value.
(including the treatment of actuarial deficits and surpluses) and share-based payments.
F2 – C. ANALYSIS AND INTERPRETATION OF FINANCIAL ACCOUNTS (35%)

Lead Component
1. produce a ratio analysis from (a) interpret a full range of accounting ratios; • Ratios in the areas of performance, profitability, financial adaptability, liquidity, activity, shareholder investment
financial statements and (b) discuss the limitations of accounting ratio analysis and and financing, and their interpretation.
supporting information. analysis based on financial statements. • Calculation of Earnings per Share under IAS 33, to include the effect of bonus issues, rights issues and convertible stock.
• The impact of financing structure, including use of leasing and short-term debt, on ratios, particularly gearing.
• Limitations of ratio analysis (e.g. comparability of businesses and accounting policies).
2. evaluate performance and position. (a) analyse financial statements in the context of information • Interpretation of financial statements via the analysis of the accounts and corporate reports.
provided in the accounts and corporate report; • The identification of information required to assess financial performance and the extent to which financial statements
(b) evaluate performance and position based on analysis of financial statements; fail to provide such information.
(c) discuss segmental analysis, with inter-firm and international • Interpretation of financial obligations included in financial accounts (e.g. redeemable debt, earn-out arrangements, contingent liabilities).
comparisons taking account of possible aggressive or unusual • Segment analysis: inter-firm and international comparison (IFRS 8).
accounting policies and pressures on ethical behaviour; • The need to be aware of aggressive or unusual accounting policies (“creative accounting”), e.g. in the areas of cost capitalisation
(d) discuss the results of an analysis of financial statements and its limitations. and revenue recognition, and threats to the ethics of accountants from pressure to report “good results”.
• Reporting the results of analysis.
04 04

F2 – D. DEVELOPMENTS IN EXTERNAL REPORTING (10%)

Lead Component
1. discuss contemporary (a) discuss pressures for extending the scope and quality of external reports to include • Increasing stakeholder demands for information that goes beyond historical financial information and frameworks for such
developments in financial and prospective and non-financial matters, and narrative reporting generally; reporting, including, as an example of national requirements and guidelines, the UK’s Business Review and the Accounting
non-financial reporting. (b) explain how information concerning the interaction of a business with society Standard Board’s best practice standard, RS1, and the Global Reporting Initiative.
and the natural environment can be communicated in the published accounts; • Environmental and social accounting issues, differentiating between externalities and costs internalised through, for example,
(c) discuss social and environmental issues which are likely capitalisation of environmental expenditure, recognition of future environmental costs by means of provisions, taxation and
to be most important to stakeholders in an organisation; the costs of emissions permit trading schemes.
(d) explain the process of measuring, recording and disclosing the effect of exchanges • Non-financial measures of social and environmental impact.
between a business and society – human resource accounting; • Human resource accounting.
(e) discuss major differences between IFRS and US GAAP, and the measures • Major differences between IFRS and US GAAP, and progress towards convergence.
designed to contribute towards their convergence.
CIMA Gateway Assessments
Post Exam Guide
November 2011
General Comments
The papers were reasonably well attempted overall, though performance was poorer than in May
2011.
CGA candidates performed the best overall though numbers in this category were relatively small.
Performance of CPGA candidates was poorest. CMGA candidates, the largest group, attained a
pass rate of 40%. The Gateway pass rate overall was 36%.
It appears from the results and feedback from markers that many candidates had not adequately
prepared for the examination and candidates are urged to use the CIMA study materials to prepare
for the examination. Candidates are unlikely to pass the examination without sufficient study and
preparation.
With regard to individual questions: Question 2, the project management question, was best
answered followed by Question 1, the least well answered being Question 3.
Well prepared candidates performed well with a number of candidates achieving marks over 70%.
SECTION A – 75 MARKS
ANSWER ALL THREE QUESTIONS
Question 1
(a) Calculate the total direct labour hours over the lifetime of the product.
(6 marks)
(b) Calculate the contribution that SDF will earn from the product over its lifetime.
(3 marks)
(c) Explain Target Costing, illustrating your answer using the scenario provided.
(4 marks)
(d) Explain how each of the following techniques may be used by SDF:
(i) Value Analysis
(ii) Functional Cost Analysis
(iii) Kaizen Costing
(12 marks)
(Total for Question One = 25 marks)
Rationale
This question examines several learning outcomes from Section B of the Performance Management
syllabus.
Part (a) examines learning outcome B1(e) 'apply learning curves to estimate time and cost for new
products and services'.
Part (b) examines learning outcome B1(i) 'discuss the concept of lifecycle costing and how lifecycle costs
interact with marketing strategies at each stage of the lifecycle'.
Part (c) examines learning outcome B1(h) 'explain how target costs can be derived from target prices and
the relationship between target costs and standard costs'.
Part (d) examines learning outcomes B1(a) 'compare and contrast value analysis and functional cost
analysis' and B1(c) explain the concepts of continuous improvement and Kaizen costing that are central to
total quality management'.
© The Chartered Institute of Management Accountants Page 1

Post Exam Guide
November 2011
Suggested Approach
This question is very straightforward being broken down into small sections. Candidates can steadily work
through the calculations and then explain target costing and the three techniques asked for in the question
sections (c) and (d).
Marking Guide Marks
(a)
Calculate the average time for 200 units 1
Calculate the total time for 200 units 1
Calculate the average time for 199 units 1
Calculate the total time for 199 units 1
th
Calculate the time for the 200 unit 1
Calculate the total direct labour hours 1
(max 6)
(b)
Sales revenue 0.5
Direct materials 0.5
Variable overhead 0.5
Direct labour 0.5
Contribution 1
(max 3)
(c)
Forced to accept market price 1
Setting a target return 1
Calculating a target cost 1
Deciding whether to proceed with the item 1
(max 4)
In each case 0.5 marks for the concept and 0.5 marks for illustrating it using SDF
(d)
Value Analysis 5
Functional Cost Analysis 5
Kaizen costing 5
(max 12)
In each case up to 3 marks for explaining the technique and up to a further 2 marks for
explaining how it may be used by SDF.
Maximum marks awarded 25
Lead Marker's Comments
Some candidates experienced difficulty with the numerical requirement in part (a) (the learning curve
calculation). Performance was stronger on the contribution calculation in part (b).
In the written sections part (c) which required an understanding of target costing was well attempted. In
part (d) some candidates were confused with regard to the differences between value analysis and
functional cost analysis. Clearer and more comprehensive answers were given with regard to Kaizen
costing. Poor answers tended to intermix the three techniques without clear differentiation.

Post Exam Guide
November 2011
Question 2 (a)
Discuss how project management software can help the Finance Director and his team successfully carry
out the project.
(13 marks)
Rationale
This question tests candidates' appreciation of how project management software can help in the project
management process. It examines learning outcome B1(e) 'apply key tools and techniques, including the
evaluation of proposals'.
Suggested Approach
Candidates need to explain the aspects within a project where project management software could help,
and then go on to discuss in detail how the software will help the Finance Director and his team. Good
answers will be developed using the information in the scenario.
Marking Guide Marks
Examples of software packages 1
Help student village project which is complex and has sub-projects Up to 2
Budget and control features Up to 3
Project planning Up to 3
Contingency planning Up to 2
Resource planning Up to 2
Production of project management reports and associated documentation Up to 2
Lead Marker's comments
A large number of candidates defined project management software but did not go on to explain how
the software could be used to assist in the management of the project. Candidates need to read
carefully the requirements of the question set.
Many candidates also confused the idea of 'project management software' with that of 'project
methodology' and some simply described the stages in project management. Where candidates
merely described project management and the processes with little mention of the software, they
failed to gain a pass mark.

Post Exam Guide
November 2011
Question 2(b)
Using examples, explain why the Finance Director should consider the interests of the different
stakeholders in the student village project.
(12 marks)
Rationale
This question assesses candidates' appreciation of the interests of different stakeholders and why these
need to be considered in the project management process. It examines learning outcome B2(b)
'recommend strategies for the management of stakeholder perceptions and expectations'.
Suggested Approach
Answers could start by providing an explanation of what stakeholders are and how an understanding of
the different interests could help the Finance Director. Candidates should determine the different
stakeholders in the student village project and then go on to provide an explanation of why it is important
that the Finance Director should consider the interests of the different stakeholders. Good answers will
systematically work through the different stakeholder groups, referring to information in the scenario to
explain their interests and the implications for the project.
Marking Guide Marks
Explain concept of stakeholders in context of project management Up to 2
Stakeholders and their interests could include:

Project sponsor Up to 2
Project board Up to 2
Users Up to 2
Staff Up to 2
Regional authority Up to 2
Local residents Up to 2
To gain full marks for each stakeholder, answers must make reference to stakeholder
interests and why they need to be considered by the Finance Director - rather than simply
describe Mendelow's matrix.
There were some very reasonable answers to this part of the question.
A common weakness was a tendency to describe Mendelow's matrix but to make little or no use of it in the
explanation of why the Director should consider the interests of particular stakeholders. Again, candidates
need to read carefully the specific requirements of the question.

Post Exam Guide
November 2011
Question 3
(a) Explain how the fair value adjustments identified above will impact on both the calculation of
goodwill on the acquisition of XYZ and the consolidated financial statements of the ABC group for the year
ended 31 December 2010.
(7 marks)
(b) Prepare the consolidated statement of financial position as at 31 December 2010 for the ABC group.
(18 marks)
(Total for Question Three = 25 marks)
Rationale
This question tests the core aspects of consolidation and also includes fair value. It examines learning
outcome A1()
Suggested Approach
Annotating the question on the question paper would have highlighted to candidates the consolidation
adjustments that were required. A good approach would have been to set up a pro-forma SOFP inserting
the additional headings that would appear in the group accounts, e.g. goodwill and NCI and, in this case,
the intangible asset, and then work systematically through the headings providing detailed workings of
adjustments.
Marking Guide Marks
(a)
Impact on goodwill 2
Impact on closing group SOFP 5
(max 7)
(b)
FV and goodwill calculation 4
Group retained earnings including FV movement, PUP and impairment 5
Non-controlling interest 4
Group SOFP including group specific elements 5
(max 18)
Examiner's Comments
Candidates performed reasonably on the FV adjustment; both the narrative and the calculations and
adjustments, with the exception of incorporating the intangible asset and contingent liability on the final
group SOFP. Candidates showed a lack of understanding of basic principles e.g. proportionally
consolidating the subsidiary in the SOFP. Another common problem was following through the
adjustments to both NCI and group retained earnings.

Post Exam Guide
November 2011
SECTION B - 25 MARKS
ANSWER ALL QUESTIONS
Question 4.
4.1
M plc is a divisionalised company that has, for many years, used a number of computer models in its
budgetary planning and control process. Three of these models are outlined below.
Models:
(i) Divisionalised targets are set for each month-end cash balance. A spreadsheet model is then used to
forecast the net cash flow and the resulting monthly cash balances. Where necessary, control action is
taken by the division to achieve the desired month-end cash balances.
(ii) An exponential smoothing model is used by the divisions to prepare a forecast of sales volumes each
week. If these forecasts show the budgeted sales level will not be achieved, the division is required to take
the appropriate control action.
(iii) A control model is used to determine the minimum and maximum levels for each inventory item used
by the division. The model produces an exception report whenever the actual inventory level reaches the
minimum or maximum, so that control action can be taken if necessary.
Which of the above are feedforward control models?
A Models (i) and (ii) only
B Models (i) and (iii) only
C Models (ii) and (iii) only
D Models (i), (ii) and (iii)
(2 marks)
Models (i) and (ii) are feedforward models as they involve the forecasting of future outcomes and
comparison with desired outcomes, allowing control action to be taken by the division where necessary.
Model (iii) is a feedback control model as it provided information on what has already happened.
The answer is A
4.2
A Ltd is a manufacturing company that has no production resource limitations for the foreseeable future.
The Managing Director has asked the company managers to coordinate the preparation of their budgets
for the next financial year. In what order should the following budgets be prepared?
(i) Sales budget
(ii) Cash budget
(iii) Production budget
(iv) Purchases budget
(v) Finished goods inventory budget
A (ii), (iii), (iv), (v), (i)
B (i), (v), (iii), (iv), (ii)
C (i), (iv), (v), (iii), (ii)
D (iv), (v), (iii), (i), (ii)
(2 marks)
The sales budget and the stock budget are necessary before the preparation of the production budget.
After the production budget has been established, the purchases budget can be prepared. When the other
budgets are in place the information is available to prepare the cash budget.
The answer is B

Post Exam Guide
November 2011
4.3
B Ltd makes a single product which requires two components, X and Y. The forecast for next year is that
B requires 5,000 each of X and Y. Both components are made on the same type of machine of which B
has two, giving a total of 12,480 hours of available machine hours next year.
The variable cost of internal manufacture and the machine hours needed for X and Y are given below,
together with the prices quoted by an external contractor to supply the components.
Component Machine hours/unit Variable cost (€ unit) Supplier price (€ unit)
X 1 40 47
Y 3 30 48
What is the minimum cost for which B Ltd can acquire all the components it requires for next year?
A €392,750
B €395,126
C €398,428
D €400,120
(2 marks)
Component X Y
Supplier price 47 48
Variable cost to make 40 30
Cost of buying in 7 18
Machine hours saved by buying in 1 3
Extra cost of buying/machine hour saved 7 6
Therefore make X first as this will minimise the extra cost of buying/machine hour saved.
Hours used
Make X 5,000 (x 1hr) 5,000 (x €40) 200,000
Make Y 2,493 (x3hrs) 7,479 (x €30) 74,790

Buy in Y 2,507 12,479 (x €48) 120,236
Total cost 395,126

The answer is B

Post Exam Guide
November 2011
4.4
L plc has a divisional structure. In the last year L1 division recorded an operating profit of €3.9 million on
capital employed €17 million (comprising €16 million of non-current assets and €1 million of net current
assets).
L1 division is considering a project which is planned to increase annual operating profit by €250,000, but
which will require non-current assets to increase by €1.2 million and average inventory levels by
€300,000.
L plc imposes a 12% capital charge on all of its divisions and values all divisional assets at original cost for
evaluation purposes.
Given the information above, will using Return on Investment and/or Residual Income to evaluate the
performance of the management of L1 division encourage the management to accept the project?
Return on Residual
Investment Income
A Yes Yes
B No No
C Yes No
D No Yes
(2 marks)
Return on Investment Residual Income
Current €3.9m = 22.94% €3.9m - (€17 x 12%) = 1.86m

Position €17m
New €3.9m + €0.250m = 22.43% €4.15m - (€18.5m x 12%) = €1.93m

Position €17m + €1.5m
lower higher
The answer is D
4.5
Which ONE of the following of Fayol's functions of management is concerned with getting individuals and
groups working together to achieve organisational objectives?
A Controlling
B Planning
C Coordinating
D Commanding
(2 marks)
The answer is C

Post Exam Guide
November 2011
4.6
Which ONE of the following is a type of decision made at Strategic Business Unit level?
A Production schedule
B Approach to marketing a product
C Acquisitions
D Diversification
(2 marks)
The answer is B
4.7
Which ONE of the following is a feature of the Abilene paradox?
A Group pressure to agree with a decision
B Minimising conflict in the group
C Riskier decisions are taken by the group
D Team members do not want to disturb group consensus
(2 marks)
The answer is D
4.8
With reference to Porter's Five Forces model identify THREE factors that can create barriers to entry for a
new entrant.
(3 marks)
Any three from the following:
Economies of scale
Capital requirement
Cost advantage independent of scale
Government policy
Product differentiation
Access to distribution channels
Switching costs

Post Exam Guide
November 2011
4.9
GH granted share options to its 300 employees on 1 January 2009. Each employee will receive 1,000
share options provided they continue to work for GH for three years from the grant date. The fair value of
each option at the grant date was $1.22.
The actual and expected staff movement over the three years to 31 December 2011 is provided below:
2009 - 25 employees left and another 40 were expected to leave over the next two years.
2010 - A further 15 employees left and another 20 were expected to leave the following year.
The charge to GH's income statement for the year ended 31 December 2010 in respect of the share
option was:
A $97,600
B $99,633
C $195,200
D $292,800
(2 marks)
2009 - (300 - 25 - 40) x 1,000 x $1.22 = $286,700 over 3 yrs = $95,567 charge for 2009
2010 - (300 - 25 - 15 - 20) x 1,000 x $1.22 = $292,800 x 2/3 yrs = $195,200 recognisable to date
Less amount recognised in 2009 $(195,200 - 95,567) = $99,633 charge for 2010
The answer is B
4.10
JK operates a defined benefit pension plan. The fair value of the plan assets at 31 December 2010 was
$13.1 million. The present value of the plan liabilities at 31 December 2010 was $13.9 million. JK currently
adopts the corridor approach for the treatment of actuarial gains and losses. Unrecognised actuarial
losses as at 31 December 2010 totalled $0.5 million.
The net pension asset or liability that would be included in JK's statement of financial position as at 31
December 2010 is:
A $300,000 pension asset
B $300,000 pension liability
C $800,000 pension liability
D $1,300,000 pension liability
(2 marks)
Statement of financial position $m

PV plan liability 13.9
FV of plan assets (13.1)
0.8
Unrecognised actuarial losses (0.5)
Net pension liability 0.3
The answer is B

Post Exam Guide
November 2011
4.11
AD acquired 100,000 shares in BC on 25 October 2010 for $3 per share. The investment resulted in AD
holding 5%of the equity shares of BC. The related transaction costs were $12,000. BC's shares were
trading at $3.40 on 31 December 2010. The investment has been classified as held for trading.
The increase in value of the investment will result in
A a credit to retained earnings of $28,000
B a credit to retained earnings of $40,000
C a credit to profit or loss of $28,000
D a credit to profit or loss of $40,000
(2 marks)
Subsequent measurement
Dr Investment $40,000
Cr Income statement - gain $40,000
Being the uplift in value and the recording of the gain in the income statement
The answer is D
4.12
Statement of comprehensive income for the year ended 31 December for KL
2010
$m
Revenue 252
Cost of sales (203)
Gross profit 49
Distribution costs (18)
Administrative expenses (16)
Share of profit of associate 7
Finance costs (12)
Profit before tax 10
Income tax expense (3)
Profit for the year 7
The operating profit margin (to the nearest two decimal places) of KL for the year ending 31 December
2010 is
A 3.97%
B 5.95%
C 8.73%
D 19.44%
(2 marks)
Operating profit/revenue = $(49 - 18 - 16)m/$252m x 100 = 5.95%
The answer is B

Post Exam Guide
November 2011
Rationale
Question Four sub-questions 4.1 to 4.12 test candidates’ knowledge of a wide variety of topics within the
syllabus, which were not examined in questions one, two and three, through the use of objective test
questions (OTQs).
Suggested Approach/Marking Guide

Sub-questions 4.1 to 4.12. Except for 4.8 where 1 mark was awarded for each component
these sub-questions have been constructed on the basis that there is only one correct
0 or 2
answer. Marking is therefore on the basis of 2 marks for a correct answer and 0 marks for
an incorrect answer.
Performance was very disappointing in this section of objective test questions where candidates in general
(and in other CIMA papers containing OTQs) perform reasonably well. Performance varied with some
candidates gaining reasonable marks but others scoring very few marks. Performance varied across all
the questions in this section.

Management level exam questions relevant to section A of Gateway examinations
E2 - Enterprise Management Paper Question Marks
B - Project management (40%)
1. Discuss tools and techniques of project management.
(a) Identify a project, a programme and their attributes; E2 May 2011 Q6a 10 marks
(b) Apply suitable structures and frameworks to projects to identify common project management issues; E2 Sept 2011 Q6a 15 marks
(c) Construct an outline of the process of project management; E2 May 2010 Q6a 15 marks
(d) Identify the characteristics of each phase in the project process; E2 March 2011 Q7a 10 marks
(e) Apply key tools and techniques, including the evaluation of proposals; E2 May 2010 Q3a 4 marks
E2 November 2010 Q7a 12 marks

E2 March 2011 Q4 10 marks
E2 March 2011 Q7b 15 marks
E2 May 2011 Q2 10 marks
(f) Produce a basic project plan incorporating strategies for dealing with uncertainty, in the context of a simple project; E2 May 2010 Q3b 6 marks
(g) Identify structural and leadership issues that will be faced in managing a project team; E2 November 2010 Q2 10 marks
E2 September 2011 Q3 10 marks

E2 November 2011 Q7b 15 marks
(h) Compare and contrast project control systems; E2 November 2011 Q2 10 marks
(i) Discuss the value of post-completion audit;
( j) Apply a process of continuous improvement to projects.
2. Analyse how information systems can be implemented in support of the organisation's strategy.
(a) Produce a strategy for a project; E2 November 2010 Q7b 13 marks
(b) Recommend strategies for the management of stakeholder perceptions and expectations; E2 May 2010 Q6b 10 marks
E2 May 2011 Q6b 15 marks
E2 September 2011 Q6b 10 marks
(c) Explain the roles of key players in a project organisation.
F2 - Financial Management
A - Group financial statements (35%)
1. Prepare the full consolidated statements of a single company and the consolidated statements of financial position
and comprehensive income for a group.
(a) prepare a complete set of consolidated financial statements in a form suitable for publication for a group of companies; F2 May 2010 Q1 10 marks
F2 May 2010 Q4 10 marks
F2 November 2010 Q3 10 marks
F2 March 2011 Q1 10 marks
F2 September 2011 Q1 10 marks
F2 November 2011 Q1a 7 marks
F2 November 2011 Q1b 3 marks
(b) demonstrate the impact on group financial statements where: there is a minority interest; the interest in a subsidiary or F2 May 2010 Q1 10 marks
associate is acquired or disposed of part way through an accounting period (to include the effective date of acquisition and F2 May 2010 Q2 10 marks
dividends out of pre-acquisition profits); shareholdings, or control, are acquired in stages intra-group trading and other F2 May 2010 Q4 10 marks
transactions occur; the value of goodwill is impaired. F2 May 2010 Q6 25 marks
(c) apply the concept of a joint venture and how various types are accounted for. F2 November 2011 Q1a 7 marks
2. Explain the principles of accounting for capital schemes and foreign exchange rate changes
(a) explain the principles of accounting for a capital reconstruction scheme or a demerger;
(b) explain foreign currency translation principles, including the difference between the closing rate/net investment F2 May 2011 Q6 25 marks
method and the historical rate method;
(c) explain the correct treatment for foreign loans financing foreign equity investments. F2 November 2011 Q6b 7 marks
P2 - Performance Management
B - Cost planning and analysis for competitive advantage (30%)
1. evaluate techniques for analysing and managing costs for competitive advantage.
(a) compare and contrast value analysis and functional cost analysis; P2 September 2011 Q6d 5 marks
P2 November 2012 Q3 10 marks
(b) evaluate the impacts of just-in-time production, the theory of constraints and total quality management on efficiency, P2 November 2010 Q3 10 marks
inventory and cost; P2 March 2011 Q2 10 marks
(c) explain the concepts of continuous improvement and Kaizen costing that are central to total quality management; P2 September 2010 Q2 10 marks
P2 May 2011 Q3 10 marks
P2 September 2011 Q3 10 marks
P2 November 2012 Q2a 4 marks
(d) prepare cost of quality reports;
(e) apply learning curves to estimate time and cost for new products and services; P2 May 2010 Q1 10 marks
P2 March 2011 Q1 10 marks
P2 November 2011 Q1a 2 marks
P2 November 2011 Q1b 3 marks
(f) apply the techniques of activity-based management in identifying cost drivers/activities;
(g) explain how process re-engineering can be used to eliminate non-value adding activities and reduce activity costs; P2 November 2011 Q3 10 marks
(h) explain how target costs can be derived from target prices and the relationship between target costs and standard P2 September 2010 Q5 10 marks
costs;
(i) discuss the concept of life cycle costing and how life cycle costs interact with marketing strategies at each stage of the P2 May 2010 Q2 10 marks
life cycle.
(j) discuss the concept of the value chain and the management of contribution/profit generated throughout the chain;
(k) discuss gain sharing arrangements whereby contractors and customers benefit if contract targets for cost, delivery etc.
are beaten;
(l) analyse direct customer profitability and extend this analysis to distribution channel profitability through the application P2 September 2010 Q3 10 marks
of activity-based costing ideas;

(m) apply Pareto analysis as a convenient technique for identifying key elements of data and in presenting the results of
other analyses, such as activity-based profitability calculations.
Management level exam questions relevant to section B of Gateway examinations
E2 - Enterprise Management Paper Question Marks
A - Strategic management and assessing the competitive environment (30%)
1. Discuss different competitive environments and key external characteristics of these environments.
(a) Discuss the nature of competitive environments; E2 May 2010 Q1 10 marks
(b) Distinguish between different types of competitive environments. E2 November 2010 Q6a 15 marks
2. Discuss developments in strategic management.
(a) Discuss concepts in established and emergent thinking in strategic management; E2 March 2011 Q1 10 marks
E2 November 2012 Q3 10 marks
(b) Compare and contrast approaches to strategy formulation; E2 November 2010 Q4 10 marks
(c) Explain the relationships between different levels of strategy in organisations. E2 November 2010 Q5 10 marks
C - Management of relationships (30%)
1. discuss concepts associated with the effective operation of an organisation.
(a) Discuss the concepts of power, bureaucracy, authority, responsibility, leadership and delegation; E2 May 2011 Q3 10 marks
(b) Demonstrate the importance of organisational culture; E2 May 2010 Q2 10 marks
(c) Identify the nature and causes of conflict; E2 September 2011 Q7a 13 marks
(d) Discuss alternative approaches to the management of conflict. E2 November 2010 Q5 10 marks
E2 March 2011 Q6a 13 marks
2. Discuss the activities associated with managing people and their associated techniques.
(a) Analyse the relationship between managers and their subordinates, including legal aspects affecting work and E2 November 2010 Q1 10 marks
(b) Discuss the roles of negotiation and communication in the management process, both within an organisation E2 May 2010 Q7b 13 marks
and with external bodies; E2 March 2011 Q6b 12 marks
E2 September 2011 Q7b 12 marks
(c) Discuss the effectiveness of relationships between the finance function and other parts of the organisation and E2 May 2010 Q7a 12 marks
with external stakeholders; E2 May 2011 Q7a 15 marks
(d) Identify tools for managing and controlling individuals, teams and networks, and for managing group conflict; E2 May 2011 Q7b 10 marks
(e) Compare and contrast ways to deal effectively with discipline problems; E2 November 2010 Q1 10 marks
(f) Explain the process and importance of mentoring junior colleagues; E2 November 2010 Q3 10 marks
(g) Analyse issues of business ethics and corporate governance. E2 May 2010 Q4 10 marks
F2 - Financial Management
B - Issues in recognition and measurement (20%)
1. Discuss accounting principles and their relevance to accounting issues of contemporary interest.
(a) discuss the problems of profit measurement and alternative approaches to asset valuations;
(b) discuss measures to reduce distortion in financial statements when price levels change; F2 May 2010 Q4b 4 marks
(c) discuss the principle of substance over form applied to a range of transactions; F2 May 2010 Q2 10 marks
F2 September 2011 Q4a 6 marks
(d) discuss the possible treatments of financial instruments in the issuer’s accounts (i.e. liabilities versus equity, Q6 25 marks
(e) discuss circumstances in which amortised cost, fair value and hedge accounting are appropriate for financial F2 November 2010 Q4 10 marks
instruments, the principles of these accounting methods and considerations in the determination of fair value; F2 March 2011 Q4 10 marks
F2 September 2011 Q2a 6 marks
(f) discuss the recognition and valuation issues concerned with pension schemes (including the treatment of F2 November 2010 Q1 10 marks
actuarial deficits and surpluses) and share-based payments. F2 March 2011 Q3 10 marks
F2 September 2011 Q2b 4 marks
C - Analysis and interpretation of financial accounts (35%)
1. Produce a ratio analysis from financial statements and supporting information.
(a) interpret a full range of accounting ratios; F2 May 2010 Q2 10 marks
(b) discuss the limitations of accounting ratio analysis and analysis based on financial statements. F2 May 2010 Q7 25 marks
F2 November 2011 Q3c 2 marks
2. Evaluate performance and position.
(a) analyse financial statements in the context of information provided in the accounts and corporate report; F2 November 2010 Q7 25 marks
(b) evaluate performance and position based on analysis of financial statements; F2 November 2010 Q7 25 marks
(c) discuss segmental analysis, with inter-firm and international comparisons taking account of possible aggressive F2 May 2011 Q3 10 marks
or unusual accounting policies and pressures on ethical behaviour;
(d) discuss the results of an analysis of financial statements and its limitations. F2 November 2010 Q7 25 marks
D - Developments in external reporting (10%)
1. Discuss contemporary developments in financial and non-financial reporting.
(a) discuss pressures for extending the scope and quality of external reports to include prospective and non- F2 March 2011 Q2a 5 marks
financial matters, and narrative reporting generally; F2 May 2011 Q5 10 marks
(b) explain how information concerning the interaction of a business with society and the natural environment can
be communicated in the published accounts;
(c) discuss social and environmental issues which are likely to be most important to stakeholders in an
organisation;
(d) explain the process of measuring, recording and disclosing the effect of exchanges between a business and F2 November 2010 Q2 10 marks
society – human resource accounting; F2 March 2011 Q2b 5 marks
(e) discuss major differences between IFRS and US GAAP, and the measures designed to contribute towards their F2 May 2010 Q5 10 marks
convergence. F2 November 2011 Q5a 6 marks
P2 - Performance Management
A - Pricing and product decisions (30%)
1. Discuss concepts of cost and revenue relevant to pricing and product decisions.
(a) discuss the principles of decision-making including the identification of relevant cash flows and their use P2 November 2011 Q6b 5 marks
alongside non-quantifiable factors in making rounded judgements;
flows and their use alongside non-quantifiable factors in making rounded judgements;
(b) discuss the possible conflicts between cost accounting for profit reporting and stock valuation and information P2 November 2011 Q6a 13 marks
required for decision-making;
(c) discuss the particular issues that arise in pricing decisions and the conflict between ‘marginal cost’ principles P2 November 2011 Q6a 5 marks
and the need for full recovery of all costs incurred.
2. analyse short-term pricing and product decisions.
(a) explain the usefulness of dividing costs into variable and fixed components in the context of short-term decision
making;
(b) interpret variable/fixed cost analysis in multiple product contexts to break-even analysis and product mix P2 May 2010 Q6 25 marks
decision making, including circumstances where there are multiple constraints and linear programming methods P2 September 2010 Q1 10 marks
are needed to identify ‘optimal’ solutions; P2 September 2010 Q6 25 marks
P2 September 2011 Q6a,b,c 20 marks
(c) discuss the meaning of ‘optimal’ solutions and how linear programming methods can be employed for profit P2 March 2011 Q6 25 marks
maximising, revenue maximising and satisfying objectives;
(d) analyse the impact of uncertainty and risk on decision models based on CVP analysis. P2 March 2011 Q6 25 marks
3. discuss pricing strategies and their consequences.
(a) apply an approach to pricing based on profit maximisation in imperfect markets; P2 May 2011 Q1 10 marks
(b) discuss the financial consequences of alternative pricing strategies;
(c) explain why joint costs must be allocated to final products for financial reporting purposes, but why this is P2 September 2011 Q1 10 marks
unhelpful when decisions concerning process and product viability have to be taken.
C - Budgeting and management control (20%)
1. explain the principles that underlie the use of budgets in control.
(a) explain the concepts of feedback and feed-forward control and their application in the use of budgets for P2 November 2011 Q4 10 marks
planning and control;
(b) explain the concept of responsibility accounting and its importance in the construction of functional budgets P2 November 2010 Q4 10 marks
that support the overall master budget;
(c) identify controllable and uncontrollable costs in the context of responsibility accounting and why uncontrollable P2 May 2011 Q5 10 marks
costs may or may not be allocated to responsibility centres.
2. evaluate performance using budgets, recognising alternative approaches and sensitivity to variable factors.
(a) evaluate projected performance using ratio analysis;

(b) evaluate the consequences of “what if” scenarios and their impact on the master budget;
(c) evaluate performance using fixed and flexible budget reports. P2 March 2011 Q4 10 marks
P2 November 2011 Q2b 6 marks
3. discuss the broader managerial issues arising from the use of budgets in control.
(a) discuss the impact of budgetary control systems and setting of standard costs on human behaviour; P2 May 2010 Q4 10 marks
(b) discuss the role of non-financial performance indicators; P2 May 2010 Q4 10 marks
(c) compare and contrast traditional approaches to budgeting with recommendations based on the ‘balanced P2 September 2011 Q5 10 marks
scorecard’; P2 November 2011 Q5 10 marks
(d) discuss the criticisms of budgeting, particularly from the advocates of ‘beyond budgeting’ techniques.
D - Control and performance measurement of responsibility centres (20%)
1. discuss the use of responsibility centres in devising organisation structure and in management control.
(a) discuss the use of cost, revenue, profit and investment centres in devising organisation structure and in P2 November 2011 Q7ai), ii) 11 marks
management control.
2. discuss information suitable for management decision-making in responsibility centres.
(a) discuss cost information in appropriate formats for cost centre managers, taking due account of
controllable/uncontrollable costs and the importance of budget flexing;
(b) discuss revenue and cost information in appropriate formats for profit and investment centre managers, taking P2 May 2010 Q7 25 marks
due account of cost variability, attributable costs, controllable costs and identification of appropriate measures of P2 May 2011 Q7 25 marks
profit centre ‘contribution’;
(c) discuss alternative measures of performance for responsibility centres. P2 November 2010 Q7 25 marks
P2 September 2011 Q7a,b 15 marks
P2 November 2011 Q7aiii) 4 marks
3. discuss the broader managerial issues arising from the division of the organisation into responsibility centres.
(a) discuss the likely behavioural consequences of the use of performance metrics in managing cost, profit and P2 September 2010 Q4 10 marks
investment centres;
(b) discuss the typical consequences of a divisional structure for performance measurement as divisions compete P2 May 2010 Q5 10 marks
or trade with each other; P2 September 2010 Q7 25 marks
(c) discuss the likely consequences of different approaches to transfer pricing for divisional decision making, P2 May 2010 Q7 25 marks
divisional and group profitability, the motivation of divisional management and the autonomy of individual P2 March 2011 Q7 25 marks
divisions; P2 May 2011 Q7 25 marks
P2 September 2011 Q7c 10 marks
P2 November 2011 Q6c 7 marks
(d) discuss in principle the potential tax and currency management consequences of internal transfer pricing policy.
Useful articles for the CIMA Gateway examinations
The following articles were written for CIMA’s management level exams, but cover areas relevant to the
three main syllabus areas of the Gateway exams.
P2 syllabus topic B – cost planning and analysis for competitive advantage (25 marks)
E2 syllabus topic B – project management (25 marks)
F2 syllabus topic A – group financial statements (25 marks)
PAPER ARTICLE PUBLISHED
P2 FM Study Notes January-

Grahame Steven on activity-based costing
February 2010
Grahame Steven Q&A on activity-based costing Velocity - February 2010
FM Study Notes - March

Ian Janes on opportunity costs/limiting factors
2010
Ian Janes Q&A on opportunity costs/limiting factors Velocity - April 2010
The P2 examiner and Tim Thompson on key issues in P2 Website
FM Study Notes -
Aaron Toogood on the learning curve
December 2010
Variance analysis - although not in the P2 syllabus candidates should always FM Study Notes -
be prepared to apply techniques they have learnt when studying for previous December 2010
papers
FM Study Notes - May

E2 Alan Marsden on the challenges facing the finance function
2010
Alan Marsden Q&A on the challenges facing the finance function Velocity - June 2010
FM Study Notes -
The examiner’s Introduction to E2
September 2010
Alan Marsden on competitiveness between nations Velocity - October 2010
Alan Marsden Q&A on competitiveness between nations Velocity - October 2010
FM Study Notes -
David Rochford on Project Management (1 of 2)
December 2010
Dave Rochford on critical path analysis (2 of 2) FM - March 2011
F2 The examiner’s introduction to the F2 paper Velocity - April 2010
Sally Baker Q&A on changes to group structure Velocity - February 2010
FM Study Notes - April

Sally Baker on changes to group structure (2 of 3)
2010
FM Study Notes - June

Sally Baker on accounting for complex groups (3 of 3)
2010
Sally Baker Q&A on accounting for complex groups Velocity - June 2010

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Study help for your Gateway exam

This document contains:

• An introduction to the CIMA Gateway exams

Gateway exam format

E2 – Enterprise Management syllabus topic B – project management

Video introductions to the Gateway examinations

See introductions to the exam and the syllabus.

Past exam papers

Post exam guides

Revision tips – follow our four step plan

Pre-study period (starting 3-4 months before exam)

Study period (starting 2-3 months before exam)

CIMA Learning Systems/Cimastudy.com

Revision period (starting 4-6 weeks before exam)

Exam period (starting 2-3 weeks before exam)

Mr A Student 26 Chapter Street

Examination Session: November 2010 Contact ID 1-5150X

Your result in the recent examination is as follows:

Candidate No Level Result Subject Mark

The full syllabus – management level

Learning outcomes Indicative syllabus content

The full syllabus – management level

Learning outcomes Indicative syllabus content

The full syllabus – management level

Learning outcomes Indicative syllabus content

The full syllabus – management level

Learning outcomes Indicative syllabus content

The full syllabus – management level

Learning outcomes Indicative syllabus content

P2 – B. COST PLANNING AND ANALYSIS FOR COMPETITIVE ADVANTAGE (30%)

Learning outcomes Indicative syllabus content

The full syllabus – management level

Learning outcomes Indicative syllabus content

P2 – D. CONTROL AND PERFORMANCE MEASUREMENT OF RESPONSIBILITY CENTRES (20%)

Learning outcomes Indicative syllabus content

The full syllabus – management level

F2 – A. GROUP FINANCIAL STATEMENTS (35%)

Learning outcomes Indicative syllabus content

The full syllabus – management level

Learning outcomes Indicative syllabus content

F2 – C. ANALYSIS AND INTERPRETATION OF FINANCIAL ACCOUNTS (35%)

Learning outcomes Indicative syllabus content

The full syllabus – management level

Learning outcomes Indicative syllabus content

© The Chartered Institute of Management Accountants Page 1

Marking Guide Marks

Maximum marks awarded 25

Lead Marker's Comments

© The Chartered Institute of Management Accountants Page 2

Marking Guide Marks

Examples of software packages 1

Help student village project which is complex and has sub-projects Up to 2

Budget and control features Up to 3

Production of project management reports and associated documentation Up to 2

Maximum marks awarded 13

Lead Marker's comments

© The Chartered Institute of Management Accountants Page 3

Marking Guide Marks

Explain concept of stakeholders in context of project management Up to 2

Stakeholders and their interests could include:

Maximum marks awarded 12

Lead Marker's Comments

© The Chartered Institute of Management Accountants Page 4