Advancing the Science of Management Accounting A New Credential: Advancing the Science of Management Accounting This is an exciting time for our profession. On May 23, 2011, the AICPA governing Council unanimously approved the creation of a new management accounting credential the Chartered Global Management Accountant (CGMA) through a join venture with the Chartered Institute of Management Accountants (CIMA). The new credential will offer a unique value proposition to our members serving businesses, industry and governments by: Recognizing their management accounting expertise; Helping them to elevate their competencies in this area; Providing them with access to a credential that is envisioned to be the premier designation for management accountants worldwide; and Advancing the U.S. CPA as a premier professional accounting credential worldwide.

CPA Profession & Public Interest Half of state society and AICPA members are management accountants Many start in public practice (less common for younger generation) CPAs in public and management accounting are partners on behalf of the public interest Business and industry members produce the financial information the markets depend upon Public practice members audit that information All CPAs share a commitment to the core values of integrity, objectivity and competence The CGMA credential meets the needs of our many business, industry and government members and serves the public interest as well. Our business, industry and government members make up roughly half of our state’s membership and many of these members are management accountants, who produce financial reports that demonstrate the status of an organization. They provide reports showing the organization’s financial position and the profitability of its operations. These reports enable stakeholders--users of accounting reports--including shareholders, potential investors, lenders, customers, suppliers, government departments, employees, and society at large make decisions about their relationship to the organization. CPAs in public practice audit these financial reports. Together, CPAs in business, industry and government and their colleagues in public practice are ensuring transparency and protecting the public interest. 2

Who Are Management Accountants? Management accountants are on front lines Develop strategy and serve as business partners Manage change and uncertainty Protect corporate assets Promote operational efficiency and effectiveness Minimize risk Manage relationships with stakeholders Key to success in a globally competitive and increasingly complex world Management accountants are professionals on the front lines of financial operations at organizations around the world. Day-to-day, management accountants are juggling multiple tasks to keep their organizations moving forward, including: • Developing strategy • Navigating change and uncertainty • Protecting corporate assets • Promoting operational efficiency and effectiveness • Evaluating risk • Managing relationships with stakeholders   3

Building on the CPA’s Commitment to the Public Interest Economy Sector Company Finance Team How does the CGMA build upon what CPAs are already doing in the public interest? It identifies and promotes management accountants whose ability, and responsibility, to make company-changing decisions directly affects the public interest: -The individual management accountant, on their own or as part of a finance team, affects the strategic direction and therefore the strength of their organization. -Healthy businesses mean healthy sectors. -Healthy sectors mean a strong economy. -Growing and protecting the economy in turn protects the public interest. Management Accountant Management Accounting Contribution 4

Management Accounting Value Progression Objective Financial Reports Strategic Business Partner Decision Enabler, Decision Maker Management accounting goes beyond financial reporting. -Management accountants provide business decision expertise and strategic perspective to identify critical information needed to effectively assist management and enhance the long-term value of their companies: -Burden – and opportunity – of being a trusted business partner within an organization. -But it doesn’t happen overnight – it happens over a career. -Because the depth and breadth of management accountants’ experience and expertise over time, the nature of the value they bring to organizations changes. -Each management accountant has the potential to affect strategy and direction. -Each one must enable C-level decisions and, ultimately, as CFO or Controller make those decisions. -That’s a lot of influence to wield, and has a cumulative effect on business and industry. 5

Chartered Global Management Accountant (CGMA) Here’s the CGMA logo—the mark of distinction. The CGMA demonstrates members’ expertise, in such areas as partnering strategically with management to make more informed decisions; helping organizations manage change, risk and uncertainty; protecting corporate assets; and promoting operational efficiency and effectiveness. Furthermore, the CGMA will recognize designees as objective financial experts, grasping both the intricacies of business and the ability to work as strategic partners with management as well as contributing to the success of businesses and protecting the public interest. Alongside the U.S. CPA designation, the CGMA credential will demonstrate expertise as objective financial professionals contributing to the success of businesses. 6

CGMA Value Proposition Let’s turn our attention to the value proposition for the CGMA holder. The value proposition starts with strong structure of management accounting. It starts with raising the awareness of management accounting and we will need to build our members’ awareness of that science. The value proposition also provides— Relevant and timely resources A way to improve competencies through an online learning environment Ways for the holder to promote the credential and Affinity relationships Just a few words about the relevant and timely resources. In today’s global economy, there are some very critical, complex issues at play. For example, Risks to the Global Supply Chain Managing wage inflation Embracing mobile technology Global economic outlook Importance of business intelligence The AICPA and CIMA will be working together to create content that helps the credential holders add value to their companies. That content would be distributed through an appropriate delivery channel—generally a digital delivery channel. In addition, there will be opportunities for the [state] CPA society to explore shared CPE and other content. The total value proposition creates an environment of awareness and professional competence. 7

CGMA Value Proposition Improving Competencies Improving competencies Webcasts on international issues Risks to the Global Supply Chain Managing wage inflation Embracing mobile technology Global economic outlook Importance of business intelligence Online learning The content of the CGMA website will include in-depth discussions of the topics relevant to management accounting. 8

CGMA Value Proposition Relevant and Timely Resources Relevant and Timely Resources Website Online social network of management accountants worldwide Thought Leadership papers Webcasts Frequent communication on current issues Digital international magazine for management accountants The interactivity of the website allows for interchange among CGMAs, networking, information sharing and idea exchange. The richness of the AICPA/CIMA-created content allows for meaningful online discussions that help CGMAs learn more from one another. 9

CGMA Value Proposition Personal Marketing Personal Marketing Use of the credential How to tell others about my CGMA Networking The CGMA demonstrates breadth of skills, experience and competencies. Credential holders will be able to distinguish themselves from others in management accounting and have access to a host of benefits that enable networking and personal marketing. 10

Pathway

CPA Pathway: First Quarter 2012 CPAs have an accelerated pathway: Must be AICPA voting member, and Have 3 years of experience working in a financial/ management accounting capacity in business industry or government, OR 2 such years plus one 1 year of public accounting experience, OR 3 years of experience working in a financial/ management accounting role on a consulting basis, OR 3 years of management accounting experience gained by a U.S. CPA whose primary responsibilities are focused on the management and operation of a CPA firm. Qualifying AICPA voting members will have the most favored pathway for getting the new credential. When the CGMA credential launches in the first quarter of 2012, upon indicating three (3) years of experience, as described in these bullets, AICPA voting members will be automatically eligible for the CGMA credential. For those who work in public accounting, working in management in a firm qualifies as well. 12

CPA Pathway: After January 2015 PATHWAY TO MEMBERSHIP To obtain a CGMA in the United States, you must be a regular voting AICPA member EXPERIENCE REQUIREMENT Three years of management accounting experience are required Between launch and January 1, 2015 there will not be an exam requirement. Starting in January 2015, qualifying members will take a computer-based assessment test to earn the CGMA credential. EXAM REQUIREMENT Computer-based assessment starts in January 2015 13

Value for State Society Members Dual state society and AICPA membership qualifies individuals for a discounted annual fee New resources for management accountants White papers, global community, online learning and more The AICPA and state CPA societies have a long and unique history of cooperation on behalf of the profession. A discount on the CGMA annual fee will be offered to members with dual AICPA/state society memberships. In addition, the [state] CPA society will explore opportunities for shared CPE and other content. 14

Course of Study for CIMA Members I would like to take a minute to share a little bit about the syllabus and management accounting. Management accounting can be a very broad term. CIMA has explored and provided structure to the science of management accounting. The structure is compromised of three pillars: Enterprise Management Performance Financial Another way to look at this is the 2/3, 1/3 that the BIEC recognized, where AICPA members in B&I indicated that 2/3 of the work they do includes non-core responsibilities such as: Strategic planning Sustainability Budgeting Financial operations management Risk management & internal controls Internal audit Governance HR & benefits IT, legal, purchasing Where as 1/3 of the work they do is traditional accounting (core responsibilities): Financial accounting Financial Reporting Audit Tax Going from the bottom to the top is the recognition that individuals operate at different levels within the pillars. First, is the operational level Second, is management Third, is strategic So, CIMA’s curriculum acknowledges, promotes and encourages the 2/3 non-core experience of the AICPA membership, making candidates that much more prepared for the work they will do as management accountants.

Learning Environment

Supported Learning Environment Behavioral and Skills Assessment Individual Development Plan Customized by Job Title and Career path This credential will be supported by a learning environment to help management accountants: Assess skills and capabilities regularly Obtain behavioral (soft skills) 360-degree feedback on an individual and team level in order to gain an accurate understanding of skills and abilities Create a customized and effective learning and development program for an individual and/or for a team 17

Online Self-Assessment Learning Platform Learning model based on a number of characteristic financial positions / role profiles Ability to assess credential holder strengths and opportunities for improvement across 3 areas Practical Skills Behavioral Traits Cognitive Abilities Value to credential holders and the marketplace Career Pathway (Individual) Continuous Improvement (Individual) Organizational Development (Employer) The AICPA and CIMA will create a holistic professional development delivery and self-assessment platform. The new platform will have a competency self-assessment focus, which helps participants understand the skill sets they need to remain relevant and valued in a rapidly changing business world.   This platform will support management accountants in remaining current while also focusing on future trends impacting the organizations to which they contribute their expertise. It will provide value to CGMA credential holders and the marketplace in the following ways, including: Career Pathway – Regardless of career level and changing aspirations over time, the competency self-assessment tool will be a key resource to help credential holders target, refine and implement the course of action best suited to meet their objectives. Continuous Improvement – The self-assessment tool and associated resources will be a driving, dynamic catalyst for continuous improvement throughout an individual’s career, providing them a mechanism to enhance their skills and position themselves for promotion opportunities. Organizational Development – Employers looking for ways to define and build internal capabilities to support financial/managerial roles within their organizations may turn to the CGMA professional development platform for a customizable program. This will serve to enhance the positioning of CGMAs while also supporting CPAs and their employers with continuous development and improvement activities. 18

My Individual Development Plan CPA2Biz, Inc.-Proprietary and Confidential Information The interface of the learning plan helps CGMAs hone in on their strengths and address weaknesses, all in a useful and easy-to-see dashboard. CPA219Biz,

Joint Venture

Promote a new joint designation as the international standard for management accounting Leverage the power of more than 550,000 collective members Advance CPA as a premier professional accounting credential across the globe The AICPA/CIMA joint venture is called the Association of International Certified Professional Accountants. The joint venture further advances, promotes and supports the science of management accounting worldwide, while promoting the U.S. CPA as a premier accounting credential. Together, the two organizations create a highly influential alliance that will increase advocacy on behalf of the profession and in the public interest, and create a more powerful voice for all accountants in the global marketplace. Over the years, the AICPA and CIMA have partnered on valuable research and thought leadership papers. The joint venture creates further opportunities to gather the collective global business perspectives of AICPA and CIMA members and present those insights in the form of white papers, case studies, webinars, conferences, tools and publications, and thus help broaden member knowledge. This joint venture, which is not a membership body, is responsible for managing a joint venture brand; creating and supporting the CGMA credential; advocating on behalf of the public and management accountancy on a global scale; and managing the execution of joint operations, where appropriate. 21

Complementary Global Presence Together the AICPA and CIMA accelerate awareness and visibility of the U.S. CPA credential in the international marketplace and support the U.S. CPA as the worldwide standard of professional excellence in accounting while advancing the science of management accounting. The AICPA and CIMA will work together to promote both the credential and the U.S. CPA designation. The U.S. CPA will be promoted alongside the credential through existing and future CIMA distribution channels and offices worldwide 22

About CIMA –Chartered Institute of Management Accountants

CIMA Presence Details Headquartered in London, England CIMA offices spanning the globe including Europe, Asia, Africa, N. America, Australia 400 employees (70% in UK) Major Markets - UK, Ireland, S. Africa, SE Asia, Australia, Europe Members and students in 165 countries 79% of members in UK and Ireland 53% of students in UK Started in 1919, the Chartered Institute of Management Accountants is the largest and one of the most respected international management accounting professional associations, representing more than 183,000 members and students in 168 countries. CIMA’s curriculum prepares students and professionals in the business, industry, government and not-for-profit arenas for two accounting credential programs: the Associate of the CIMA (ACMA), for those who have completed a period of qualifying practice of at least three years, passed rigorous qualifying examinations and been recommended by colleagues for CIMA membership; and Fellow (FCMA), for professionals who have further gained appropriate experience in a senior role. CIMA’s credential holders will receive the new CGMA credential.   CIMA has created strong relationships with employers, universities and high-school level academies and maintains strong visibility in countries such as the United Kingdom, Ireland, India, China, South Africa and Australia. With its international reach, strong commitment to upholding the highest ethical and professional standards and to ensuring public confidence in management accounting, CIMA is the AICPA’s ideal partner for the CGMA. 24

CIMA Code of Ethics – Principles Integrity Being straightforward, honest and truthful Do not be associated with any information that you believe contains a materially false or misleading statement Objectivity Not allowing bias, conflict of interest or the influence of other people to override your professional judgment Professional Competence and Due Care Ongoing commitment to level of professional knowledge / skill, based on current developments in practice, legislation and techniques Ensure appropriate training and supervision for those working under your authority CIMA shares a commitment to ethics and integrity, in a model much like the AICPA’s. Confidentiality Do not disclose professional information unless you have specific permission or a legal or professional duty to do so Professional Behavior Comply with relevant laws and regulations Avoid any action that could negatively affect the reputation of the profession 25

Conclusion

Opportunity for CPAs Complement your CPA with a professional credential for management accounting Access new resources focused on management accounting: website, self-directed education, white papers, webcasts Join an online social network of management accounting professionals Enhance the science of management accounting worldwide, advancing business objectives and serving the public interest Increase the voice of U.S. CPAs for advocacy efforts The CGMA credential presents many opportunities and benefits for CPAs. [Go through list on slide.] In addition to the opportunities listed here, the CGMA credential will showcase a skill set and depth of experience that will set members a part from others in the profession and open doors to career advancement and opportunity. 27

Opportunity for the Profession Highlight and promote CPAs as financial leaders world-wide Highlight the work that members in business, industry and government do on behalf of businesses and in the public interest Grow and promote the CPA designation around the world Increase the competencies and skillsets of designees so that they may continue to serve businesses with expertise and integrity The CGMA credential offers many opportunities and benefits for the profession as well. [Go through list on slide.] I hope you’ll agree that the introduction of the CGMA presents an exciting time for our members and for the CPA profession. I’m happy to take your questions now. 28