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ACCA Paper P5

Advanced Performance Management
Class Notes December 2012

© Interactive World Wide Ltd, December 2011 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of Interactive World Wide Ltd.

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Contents
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INTRODUCTION TO THE PAPER FORMULAE & TABLES PROVIDED IN THE EXAMINATION PAPER CHAPTER 1: CHAPTER 2: CHAPTER 3: CHAPTER 4: CHAPTER 5: CHAPTER 6: CHAPTER 7: CHAPTER 8: CHAPTER 9: STRATEGY STRATEGIC MANAGEMENT ACCOUNTING DIVISIONAL PERFORMANCE INDICATORS TRANSFER PRICING DESIGN OF PERFORMANCE MANAGEMENT SYSTEMS DECISION - MAKING NON-FINANCIAL PERFORMANCE INDICATORS BUDGETING MANAGEMENT INFORMATION SYSTEMS 5 9 13 29 43 59 71 83 101 123 135 151 161

CHAPTER 10: STRATEGIC OPTIONS APPENDIX – ANSWERS TO QUESTIONS & EXAMPLES

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Introduction to the paper

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IN T R O D U C T I O N T O T H E P A P E R

AIM OF THE PAPER
The aim of the paper is to apply relevant knowledge, skills, and exercise professional judgement in selecting and applying strategic management accounting techniques in different business contexts and to contribute to the evaluation of an organisation and its strategic development.

OUTLINE OF THE SYLLABUS
1. 2. 3. 4. 5. 6. Strategic planning and control Economic, fiscal, market and environmental factors Performance measurement systems and design Strategic performance measurement Performance evaluation and corporate failure Current developments and emerging issues in management accounting and performance management

FORMAT OF THE EXAM PAPER
The syllabus is assessed by a three-hour paper-based examination with an additional 15 minutes of reading and planning time The examination consists of: ● ● Section A – two compulsory questions totalling between 50 to 70 marks between them Section B – two out of three questions totalling 30 to 50 marks with each question attracting between 15 and 25 marks.

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IN T R O D U C T I O N T O T H E P A P E R

PAST PAPER ANALYSIS
The table below shows the elements of the syllabus examined in each diet. June 2008 Dec Jun Dec June 2008 2009 2009 2010 Strategic planning and control Dec 2010 June 2011 Dec 2011

Introduction to strategic management accounting Performance management and control of the organisation Business structure IT developments and other environmental and ethical issues External influences on organizational performance Changing business environment and external factors Performance measurement system and design Strategic performance measurement Performance hierarchy Strategic performance measures in the private sector Divisional performance and transfer pricing issues Strategic performance measures in the NFP organizations and NFPI Performance measurement: strategy, reward and behaviour Performance evaluation and corporate failure Alternative views of performance measurement and management

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IN T R O D U C T I O N T O T H E P A P E R

Strategic performance issues in complex business structures Predicting and preventing corporate failure Current development and emerging issues in the performance management Current developments, issues and trends in performance management

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Formulae & tables provided in the examination paper

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F O R M U L A E & T A B L E S P R O V ID E D IN T H E E X A M I N A T IO N P A P E R

Present value table
Present value of 1 i.e. (1 + r)-n Where r = discount rate n = number of periods until payment Discount rate (r) Periods (n) 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% ________________________________________________________________________________ 1 2 3 4 5 6 7 8 9 10...
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