Editor’s note: Many CPAs interested in the Chartered Global Management Accountant designation have questions about the CGMA exam that they must pass to earn the designation. To help answer some of those questions, we asked Kari Hipsak, CPA, CGMA, who helped test the exam, to offer her advice on how to prepare for it.
In March 2013, as a part of the group that pilot-tested the exam, I took a variation of the exam three times over a weekend. As a strong type-A personality, I find test-taking generally draining. I turn into a devil’s advocate for every option in multiple choice questions because there’s always a fear that I’m interpreting the question incorrectly. The CGMA exam is different from most standardized tests that elicit this type of fear. Instead, it offers a chance to start with a blank slate and show off your knowledge.
The CGMA exam tests the real-world application of knowledge in a situation involving a fictitious company. Candidates are placing themselves into a role as an adviser for a company and have to think through the ramifications of each decision on the entity. This exam represents the whole package: CGMA holders are required to be technically advanced, strategic, strong communicators and socially capable of providing insight on everything from technical application to ethics.
The exam process starts seven weeks prior to the testing date when pre-seen material, which describes a hypothetical company, is provided to test takers. This material is the basis for the exam. It’s an introduction to the “company” as well as an introduction to the industry in which the company operates. The candidate is responsible for learning about both the company and the industry. Although a candidate is not allowed to take any additional information into the exam, the pre-seen material will be provided again on site for reference. In addition to the pre-seen material, an update on the company’s most recent scenario will also be provided at the exam.
During the three-hour exam, three to five tasks will be presented for the candidate to address. Responses are entirely open-ended and are graded on the four knowledge areas of the CGMA Competency Framework: Technical, People, Leadership, and Business.
So what’s the best way to prepare for the exam? Here is what my extensive experience as an exam-tester taught me.
1. Know the pre-seen material as well as possible. Also, consider the exact opposite of the given situation and everything in between. A lot can change within a real company in a month—a hypothetical company that is being used to test your ability to provide solutions isn’t going to overlook this possibility. Know where your “company” is going and where it might end up based on the facts given. Although new data will be presented during the actual exam, the pre-seen material is your first opportunity to get to know the company.
2. Take the industry research seriously. The pre-seen material introduces you to the company’s specific situation, but conducting industry research in anticipation of the exam will allow you to apply real-world knowledge to help your “company” on test day. For example, if the pre-seen material is on an oil exploration company, your analysis may benefit from being able to discuss the impact of regulations that came about as a result of the Deepwater Horizon oil spill. There may be costs associated with implementing the regulations as well as ethical considerations if the president is open to cutting corners to avoid those costs. Providing industry examples proves your ability to logically apply and analyze global industry happenings as they relate to your company.
3. Practice, practice, practice. There are resources available to help: CGMA.org provides the current pre-seen material as well as suggested answers for previous exams. The site also provides various review courses, online study options, and a free practice exam. A Video Review Course on CGMA.org also provides three mock exams that are also graded if you prefer a simulated practice with real feedback.
4. Develop an outline. During the test, give yourself time at the beginning to build a basic structure to follow and identify the main points you want to hit in your analysis. Unlike many tests in which each question may test a different topic, the CGMA test is one cohesive response to management. If the responses seem too disjointed it can affect the final score. Taking a few minutes to identify the direction you want to go in will allow you the opportunity to notice any significant gaps and correct them early in the process.
5. Pace yourself. This is a timed test. It may be easy to get wrapped up in writing a choose-your-own-adventure story by running in 20 different directions with one topic. However, you should stay focused on a few good topics. Not only is time an issue, but it’s also better to have one well-developed plan than 27 recommendations to management with no logic to support them. The point of the exam is to test the application of logic, not idea accumulation.
Kari Hipsak is an auditor at Anchin, Block & Anchin in New York City. She has pilot-tested various AICPA CPE courses and is a graduate of the AICPA’s Leadership Academy.
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