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IMA Life: Expert Testimony and the CMA

By Richard B. Troxel, CMA, CPA
January 1, 2017
1 comments
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When earning my degree in finance from Ohio State in 1953, I came across the National Association of Cost Accountants Bulletin, which began my relationship with what is now IMA® (Institute of Management Accountants). In 1957, I joined The Pillsbury Company in Minneapolis, Minn., and obtained my MBA at night. Pillsbury was beginning to introduce a direct cost system in its plants, and I quickly became a convert.

 

In 1967, I was recruited for a management consultant role with the Chicago office of Peat, Marwick, Mitchell & Co. (KPMG today) and realized that I needed to become a CPA (Certified Public Accountant) in order for the audit partners to trust me to work independently with their clients. I later sat for and passed the CPA examination.

 

I then read about what would come to be called the CMA® (Certified Management Accountant) certification, and I immediately enrolled in the program. I was among those who, in December 1972, sat for the first CMA exam. I ended up obtaining the CMA and CPA in the same year, during which I was also elected to the partnership. While the CPA exam tested my memorization skills, I thought the CMA exam was a better test of my reasoning capability.

 

I later served two terms on the ICMA® Board of Regents. And as a two-term member president of the Consortium for Advanced Management International (CAM-I), I met a number of outstanding professionals who shared my enthusiasm for management accounting. Of special note for my career were Robin Cooper (then at Harvard) and, through Robin, Robert Kaplan. This led to Peat Marwick licensing their activity-based costing (ABC) model, which was successfully installed with a number of clients worldwide.

 

Together, all of my experience in cost measurement and the CMA and CPA credentials were invaluable in my eventually moving into the field of litigation support. Since retiring from Peat Marwick in 1990, I’ve practiced as a testifying expert, specializing in intellectual property damages. In 2006, an economist friend and I coauthored Calculating Intellectual Property Damages.

 

As a testifying expert, I needed the CPA designation to convince the lawyers, judges, and juries of my accounting competence, as that’s the set of initials that they recognize. But the truth is that my CMA skill set has been much more valuable than the CPA. I found that expert witnesses testifying for the defendant often tried to rely on GAAP’s fully absorbed costs (thereby showing lower realized profits and hence smaller damages) to calculate lost profits, so my testimony often has had to deal with why GAAP allocations aren’t appropriate for litigation purposes. In reflecting on my many years as a CMA (and CPA), I have found that all of the aspects of the CMA program have reflected directly on my work and have been involved in all the various twists and turns of my career.

 

Richard B. Troxel, CMA, CPA, is a retired expert damages witness and an IMA Member-at-Large. He can be reached at dicktroxel@icloud.com.
1 + Show Comments

1 comment.
    BabU i. Razack Cma January 27, 2017 AT 1:58 pm

    Very nice article sir. Your concern above cma is very trUe and encouraging cmAs. Wish you long life.

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