CMA Final Paper 20A common mistakes
CMA Final Paper 20A · Understand the traps and how to avoid them.
Presenting the throughput or relevant-cost analysis without first stripping out sunk and allocated fixed costs, so the recommendation is driven by numbers the decision cannot change.
Candidates memorize 'relevant cost' as a definition but under time pressure default to the full absorption cost card, and allocated overhead looks like a real per-unit cost in the trial balance.
What to do instead
Before computing, write two columns: 'differs between alternatives' and 'does not differ'. Move every committed fixed cost, depreciation on existing assets, and apportioned overhead to the second column and exclude it. Then test the recommendation by asking whether the decision would change if that item were zero; if not, it was never relevant.
Choosing the sales-mix or limiting-factor plan by highest unit contribution margin rather than by contribution per unit of the scarce resource.
Unit contribution is the figure most visible on the standard cost card, and candidates carry the ranking habit from simple CVP questions where only one product exists.
What to do instead
Identify the binding constraint explicitly, compute contribution per unit of that constraint (per machine hour, per kg, per labour hour), and rank on that basis. State the constraint in the answer and show the ranking table; examiners award method marks for the ranking even where arithmetic slips.
Treating a risk register as a list of risks only, omitting owners, likelihood and impact ratings, existing controls, and residual exposure, then concluding 'risk is managed'.
Candidates conflate risk identification with risk management and reproduce the COSO components as headings without linking them to a control activity.
What to do instead
Structure every risk answer as: risk event, cause, consequence, inherent rating, existing control, residual rating, owner, further action. Use the risk-appetite language of the entity to justify whether residual exposure is acceptable, and distinguish preventive from detective controls with a concrete example of each.
Describing the auditor's report or the assertion level of a misstatement in general terms without naming the specific assertion affected and the direction of the effect.
Candidates learn the five assertions as a list but never practise mapping a transaction cycle to them, so under exam pressure they write 'misstated' without saying completeness, valuation, or rights and obligations.
What to do instead
For each scenario, name the assertion, the direction (overstatement or understatement), and the financial statement line affected. Practise by taking one cycle, such as revenue or inventory, and writing out the assertion-by-assertion risk table until it is automatic.
Computing NPV or IRR from incremental accounting profit instead of incremental free cash flow, including sunk costs and ignoring working capital and tax timing.
Candidates carry over the accrual mindset from financial reporting questions and forget that depreciation is added back while capital expenditure and working capital changes are cash items.
What to do instead
Build a standard layout: initial outlay, operating cash flow as (contribution less cash fixed costs) times (1 minus tax) plus depreciation tax shield, working capital investment and release, terminal disposal after tax. Discount at the project-specific rate and state the treatment of inflation consistently, either nominal cash flows with a nominal rate or real with real.
Mixing up the treatment of the capital gains or exempt threshold on a disposal, or applying the wrong holding-period rule, so the tax charge is computed on the full proceeds rather than the gain.
Candidates revise the rates but not the mechanics of the base cost, and indexation or exemption rules are easy to half-remember.
What to do instead
For every disposal, write the computation as proceeds less base cost (adjusted where the rules require) equals gain, then apply the exemption or rollover before applying the rate. Memorize the base-cost adjustment rules for the specific jurisdiction and check whether the asset is a depreciable business asset, since that changes the recapture treatment.
Answering an ethics scenario by naming the relevant principle but not identifying the threatened fundamental principle, the parties affected, and the escalation route.
Candidates treat ethics as a recall question and stop at 'this is a conflict of interest' rather than working through the conceptual framework's threat-and-safeguard logic.
What to do instead
Use a fixed four-step structure: identify the facts and the ethical issue, name the specific threat (self-interest, self-review, advocacy, familiarity, intimidation) and the principle threatened (integrity, objectivity, confidentiality, competence, professional behaviour), evaluate safeguards, then state the escalation path including internal reporting and, where required, the professional body.
Writing sustainability or integrated-reporting answers as a list of the six capitals or the SDGs without connecting them to strategy, risk, and the measurement of performance.
Candidates memorize frameworks as vocabulary and have not practised applying them to a business model, so the answer stays descriptive.
What to do instead
Frame every answer around value creation over time: which capitals are increased or depleted by the strategy, which material issues affect enterprise value, how the metric is measured and assured, and how it feeds remuneration or capital allocation. Cite the specific framework concept (materiality, connectivity of financial and non-financial information) rather than reciting headings.
Ignoring the time value of money and risk adjustment when comparing financing or investment alternatives, and quoting the cheapest nominal rate without the effective annual cost.
Candidates compare headline coupon rates and forget arrangement fees, tax deductibility of interest, and the compounding convention.
What to do instead
Convert every alternative to an effective annual after-tax cost, include fees and the tax shield, and compare on the same basis. State the discount rate used and why, and show a sensitivity check on the key assumption so the recommendation is robust rather than a single-point answer.
Spending disproportionate time on the first computational question and leaving narrative or discussion marks unattempted, or writing bullet lists with no application to the scenario.
Candidates allocate time by question order rather than by marks per minute, and computational questions feel safer than judgement questions.
What to do instead
Before starting, convert total marks into minutes and write the allocation on the script. Answer in mark-earning units: one applied point per mark, each tied to a figure or fact from the scenario. If a computation stalls, write the method and move on, since method marks are usually available without the final figure.