While reviewing travel & expense reports, Maya spots red flags:
Exam Point: Fraud triangle – Pressure (plant bonus tied to cost reduction), Opportunity (no purchasing oversight), Rationalization (“Everyone does it”). Types: asset misappropriation (fake vendors), corruption (kickbacks), fraudulent statements (inflating inventory).
Maya reports to the audit committee via the confidential channel. Leo pressures her to wait until after the quarter-end. cma part 1 volume 2 sections d e
Before diving into content, it is critical to understand how the Institute of Management Accountants (IMA) weights these sections. CMA Part 1: Financial Planning, Performance, and Analytics allocates approximately 15% to Section D (Risk Management) and 15% to Section E (Internal Controls). Combined, Sections D and E represent 30% of your total Part 1 score—making them the second most heavily weighted area after external financial reporting.
Crucially, these two sections are not isolated. On the exam, you will frequently encounter integrated essay questions where a failure in risk management (Section D) leads directly to a breakdown in internal controls (Section E). You must learn to walk the bridge between identifying a risk and designing the control to mitigate it. While reviewing travel & expense reports, Maya spots
The IMA expects you to classify risks into four buckets:
Common Exam Question: A company faces a potential strike by union workers. Which risk category is this? (Answer: Operational risk, because it disrupts internal processes – though some may argue strategic, the CMA key is operational). Exam Point: Fraud triangle – Pressure (plant bonus
Overview: Section E shifts focus from calculations to governance, risk mitigation, and auditing. It is more conceptual and rule-based, requiring knowledge of frameworks like COSO and legal regulations.
| Section | Key High-Yield Topics | Common MCQ Traps | |---------|----------------------|------------------| | D | Overhead variances, ABC vs. traditional, CVP multi-product | Confusing fixed overhead volume & budget variances | | E | COSO components, SOX 404, segregation of duties | Detective vs. preventive controls |
The first thing you must memorize: Risk is measurable; uncertainty is not.
The CMA exam will test your ability to recommend a risk management approach for each scenario. For measurable risk, use quantitative tools (expected value, sensitivity analysis). For uncertainty, rely on scenario planning and qualitative assessments.