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CPA SMA Module 4 Parts E & F Webinar - YouTube
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here we look at the management
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accounting role in implementation and
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control so at each point in the project
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we're trying to either help analyze it
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to make a good choice that was the
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financial analysis or determine how to
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manage and schedule it so that was that
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pert and then we want to monitor and
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manage this brings us to earned value so
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take a moment to pause this quiz
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question and see if you can work this
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out without looking at your study guide
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if not have a look but which is the
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correct formula all right so here you
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can see we take our estimated percentage
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completion and we multiply it by a
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budgeted cost and the reason we need to
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have a tan in value formulas is because
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we have a budget but we need to know
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where we're supposed to be not just for
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a particular point in time because we
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might have done 30% more work than we
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thought and therefore the budget and the
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comparison to actual needs to be flexed
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in the same way that we flexed our
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budgets in module 3 for variance
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analysis if we don't work out where
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we're at and work out a percentage
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completion we can't get a clear picture
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of what's going on so we have two clips
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here that are going to help you guide
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through this so take the time to watch
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them and I'll only touch on this briefly
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so if we want to work out if we're over
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budget we do a spending variance and so
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the first thing we need is our earned
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value which we use that formula for and
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then we subtract the actual cost and
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this is based on the point in time we're
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up to are we over or under budget
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now the different question we want to
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ask is are we on time and this is our
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schedule variance if we look at module
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three it's a bit like how we calculate
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our volume or our efficiency variances
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so here we take our own value and
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subtract the budgeted cost and what
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we're doing is saying are we up to the
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point in time we thought we would be so
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if it's a twelve week project and work
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to week three have we completed that
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three weeks we thought are we a quarter
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of the way through or are we further or
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behind because if we're two weeks head
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well
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of course our expenditure should be up
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as well but that's okay and that's why
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we flex it using this own value because
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it tells us a proper comparison so
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another formula is the resource flow so
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we've got a resource flow variance which
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the following is the correct way of
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calculating that once again pause have a
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think see if you can work this out what
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I've done here is give you a whole bunch
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of calculations so the time barriers is
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scheduled time - actual the cost
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performance index and the schedule
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performance index are here but actual
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expenditure - budget expected which is
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not very helpful doesn't really tell us
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what's going on because it doesn't
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account to the percentage complete we if
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we're not at the right percentage
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complete this formula not that helpful
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so then we can do our in value method we
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can read a known value chart and we can
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compare our budget and actual and say
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are we on track are we behind and are we
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meeting our qualitative requirements are
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we up to spec with doing it right
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there's no point finishing the project
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and if you've been seeing the buildings
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in sitting all these impartment
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buildings where people are being
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evacuated because it's cracking and
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having been built right no point
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finishing a project on time and on
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budget if it fails the quality
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requirements so now we're moving to Part
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F the management accounting role in
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project completion and review so our
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final objective is module 6 in your from
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module 4 is objective 6 and as we go
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through this you'll notice that a lot of
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time and study go to spent on financial
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analysis quite a lot on projects
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scheduling like a pert and crashing the
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projects quite a bit on earn value so
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you need to be able to do all these
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calculations to perform well in your
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exam this one is briefly touched on so
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important
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probably not as important now earlier in
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module 4 we showed how to analyze the
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risks of a project by four different
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quadrants based on severity and
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likelihood of the risk taking place now
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we want to manage the risk we've
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identified it we've classified it but we
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need to do more
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we need to reduce the risk we want to
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reduce the probability or the likelihood
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of the risk taking place and if it is we
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want to mitigate which is just a fancy
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word for minimize reduce shrink the
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impact of that risk so it's not as
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catastrophic so we need to monitor known
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risks but here's something how do we
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monitor an unknown risk it's very very
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hard for people to properly forecast the
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risk that might come we're really not
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good at identifying all of the factors
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especially when four or five things go
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wrong separately which come together to
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cause the problem but being aware that
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there are unknown risks that we aren't
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aware of and that there are issues can
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help us reflect and think we can be
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reading exploring considering our what's
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happening in other organizations to
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control and mitigate our risk there are
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diagnostic approaches and interactive
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approaches we look at this in a little
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bit more detail where we get to module
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five and we look at performance measures
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and interactive is a little bit like
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informally watching and interacting and
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making changes as we go along
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diagnostically is a little bit more like
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how we do variance analysis we have a
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plan and we have an actual and we
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compare the two and we adjust for any
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changes but that will make more sense in
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module five to finish off a project what
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we've got is the checklist now often
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this doesn't happen we should be closing
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off the accounting books and separating
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it out we should be reviewing to say did
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we hit the quality criteria should we
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look at the stakeholders did we meet all
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of the needs of those different groups
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did we capture our learning because we
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would have learned some useful things
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why would we learn some useful things
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because a project is unique and novel
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and complicated we're going to pull all
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these resources together did we learn
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some new ideas so that we don't make the
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same mistakes next time in all honesty
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probably not virtually no time is spent
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at the knowledge management stage sadly
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because people move on to the next issue
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or they don't want to get involved in a
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blame situation finally did it actually
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align with us
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teaching priorities was it useful was it
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okay now if you've done the Sydney
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seafood bar you'll see was the upgrade
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was a renovation worthwhile maybe from a
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net present value perspective it was a
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failure but maybe it was necessary to
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match the strategic picture of where
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this organization is going and it just
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needed to be spent so that brings us to
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the end of this module I hope you find
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it useful now we only have one week to
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cover all this content and it's quite
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long so make sure you jump into it work
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through your financial mathematics
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practice because if you get technical
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questions you need to be quick at
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answering those in your CPA exam good
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luck
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