ACCA P5

Topics: Strategic management, Management accounting, Management Pages: 249 (22606 words) Published: November 26, 2013
ACCA Paper P5

Advanced
Performance
Management
Class Notes
June 2011

© The Accountancy College Ltd, January 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 The Accountancy College Ltd.

2

Contents
PAGE
INTRODUCTION TO THE PAPER

5

FORMULAE & TABLES PROVIDED IN THE EXAMINATION PAPER

9

CHAPTER 1:

STRATEGY

13

CHAPTER 2:

STRATEGIC MANAGEMENT ACCOUNTING

27

CHAPTER 3:

DIVISIONAL PERFORMANCE INDICATORS

39

CHAPTER 4:

TRANSFER PRICING

51

CHAPTER 5:

DESIGN OF PERFORMANCE MANAGEMENT SYSTEMS

59

CHAPTER 6:

DECISION - MAKING

71

CHAPTER 7:

NON-FINANCIAL PERFORMANCE INDICATORS

81

CHAPTER 8:

BUDGETING

93

CHAPTER 9:

MANAGEMENT INFORMATION SYSTEMS

103

CHAPTER 10: STRATEGIC OPTIONS

115

APPENDIX – ANSWERS TO QUESTIONS & EXAMPLES

123

3

4

Introduction to the
paper

5

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.

Strategic planning and control

2.

Economic, fiscal, market and environmental factors

3.

Performance measurement systems and design

4.

Strategic performance measurement

5.

Performance evaluation and corporate failure

6.

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. The examination consists of:


Section A – two compulsory questions totalling 60 marks between them



Section B – two out of three questions (one of which is entirely discursive)

FAQS
How do I get the most from my course?


Try and be seated and pick up your handout by the start of the lecture. This will ensure we have the maximum lecture time. Your course notes will be in divided into chapters, please make sure you bring the relevant chapters with you to class.



Manage your time effectively. If you have a busy work schedule use your study planner to catch up. Do not allow yourself to fall behind.



If you have any difficulties or questions please do not hesitate to contact me either before the lecture or during the break as most students are in a desperate hurry to leave at the end of the lecture. Alternatively, you can always email me or phone me through our helpline.



In the event of an emergency you can come for the same lecture on a corresponding part-time course as all the courses run parallel to each other. It is crucially important that you attend the full course of lectures.



Try to read the business section of a decent newspaper at least once a week to get an idea of what is going on in the business world and the difficulties faced by organisations.

6

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



Make sure you read and understand the supplementary material at the end of the chapters. The Examiner often asks theoretical questions on these areas

My email is dlaws@lsbf.org.uk
If you email, please give me a couple of days to respond.

7

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

8

Formulae & tables
provided in the
examination paper

W W W . S T U D Y IN T E R A C T I V E . O R G

9

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%...
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