ACCA P5 - Advanced Performance Management …

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Study Text

Paper P5 Advanced Performance Management Study Text for exams from 1 September 2015 to 31 August 2016

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S T U D Y

PAPER P5

T E

ADVANCED PERFORMANCE MANAGEMENT

X T

BPP Learning Media is an ACCA Approved Content Provider. This means we work closely with ACCA to ensure this Study Text contains the information you need to pass your exam. In this ACCA examination-team reviewed Study Text we: Highlight the most important elements in the syllabus and the key skills you need Signpost how each chapter links to the syllabus and the study guide Provide lots of exam focus points demonstrating what is expected of you in the exam Emphasise key points in regular fast forward summaries Test your knowledge in quick quizzes Examine your understanding in our practice question bank Reference all the important topics in our full index

BPP's Practice & Revision Kit also supports this paper.

FOR EXAMS FROM 1 SEPTEMBER 2015 TO 31 AUGUST 2016

First edition 2007 Eighth edition April 2015 ISBN 9781 4727 2683 4 Previous ISBN 9781 4727 1089 5 eISBN 9781 4727 2761 9

British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library

Published by BPP Learning Media Ltd BPP House, Aldine Place London W12 8AA

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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 BPP Learning Media Ltd.

We are grateful to the Association of Chartered Certified Accountants for permission to reproduce past examination questions. The suggested solutions in the practice answer bank have been prepared by BPP Learning Media Ltd, unless otherwise stated.

Your learning materials, published by BPP Learning Media Ltd, are printed on paper obtained from traceable sustainable sources.

? BPP Learning Media Ltd 2015

ii

Contents

Page

Introduction

Helping you to pass

v

Studying P5

vii

The exam paper

xii

Syllabus and study guide

xiii

Part A Strategic planning and control

1 Introduction to strategic management accounting ................................................................................................... 3 2 Performance management and control of the organisation .................................................................................... 45 3 Business structure, IT developments and other environmental and ethical issues ................................................. 63

Part B External influences on organisational performance

4 Changing business environment and external factors.......................................................................................... 133

Part C Performance measurement systems and design

5 Performance management information systems .................................................................................................. 163 6 Management information, recording and processing and management reports................................................... 197

Part D Strategic performance measurement

7 Performance hierarchy......................................................................................................................................... 237 8 Scope of strategic performance measures in the private sector ........................................................................... 273 9 Divisional performance and transfer pricing issues ............................................................................................. 323 10a Strategic performance measures in not for profit organisations........................................................................... 353 10b Non-financial performance indicators.................................................................................................................. 375 11 The role of quality in management information and performance measurement

systems ............................................................................................................................................................... 395 12 Performance measurement: strategy, reward and behaviour ................................................................................ 445

Part E Performance evaluation and corporate failure

13 Alternative views of performance measurement and management ....................................................................... 487 14 Strategic performance issues in complex business structures............................................................................. 527 15 Predicting and preventing corporate failure ......................................................................................................... 557

Part F Current developments and emerging issues in performance management

16 Current developments, issues and trends............................................................................................................ 585

Mathematical tables

615

Practice question bank

619

Practice answer bank

641

Index

695

Review form

Contents iii

A note about copyright

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iv

Helping you to pass

BPP Learning Media ? Approved Content Provider

As an ACCA Approved Content Provider, BPP Learning Media gives you the opportunity to use study materials reviewed by the ACCA examination team. By incorporating the examination team's comments and suggestions regarding the depth and breadth of syllabus coverage, the BPP Learning Media Study Text provides excellent, ACCA-approved support for your studies.

The PER alert

Before you can qualify as an ACCA member, you have to not only pass all your exams but also fulfil a three year practical experience requirement (PER). To help you to recognise areas of the syllabus that you might be able to apply in the workplace to achieve different performance objectives, we have introduced the 'PER alert' feature. You will find this feature throughout the Study Text to remind you that what you are learning to pass your ACCA exams is equally useful to the fulfilment of the PER requirement. Your achievement of the PER should now be recorded in your online My Experience record.

Tackling studying

Studying can be a daunting prospect, particularly when you have lots of other commitments. The different features of the text, the purposes of which are explained fully on the Chapter features page, will help you while studying and improve your chances of exam success.

Developing exam awareness

Our Texts are completely focused on helping you pass your exam. Our advice on Studying P5 outlines the content of the paper, the necessary skills you are expected to be able to demonstrate and any brought forward knowledge you are expected to have. Exam focus points are included within the chapters to highlight when and how specific topics were examined, how they might be examined in the future, and how different topics within the syllabus fit together.

Using the Syllabus and Study Guide

You can find the syllabus and Study Guide on pages xiii-xxiii of this Study Text.

Testing what you can do

Testing yourself helps you develop the skills you need to pass the exam and also confirms that you can recall what you have learnt. We include Questions ? lots of them ? both within chapters and in the Practice Question Bank, as well as Quick Quizzes at the end of each chapter to test your knowledge of the chapter content.

Introduction v

Chapter features

Each chapter contains a number of helpful features to guide you through each topic.

Topic list

Topic list

Syllabus r ef er ence

What you will be studying in this chapter and the relevant section numbers, together with ACCA syllabus references.

Introduction Study Guide Exam Guide

Knowledge brought forward from earlier studies FAST FORWARD

Examples

Key terms Exam focus points Formula to learn

Question Case Study

Puts the chapter content in the context of the syllabus as a whole.

Links the chapter content with ACCA guidance.

Highlights how examinable the chapter content is likely to be and the ways in which it could be examined.

What you are assumed to know from previous studies/exams.

Summarises the content of main chapter headings, allowing you to preview and review each section easily.

Demonstrate how to apply key knowledge and techniques.

Definitions of important concepts that can often earn you easy marks in exams.

When and how specific topics were examined, or how they may be examined in the future.

Formulae that are not given in the exam but which have to be learnt.

Gives you a useful indication of syllabus areas that closely relate to performance objectives in your Practical Experience Requirement (PER).

Gives you essential practice of techniques covered in the chapter.

Real world examples of theories and techniques.

Chapter Roundup Quick Quiz Practice Question Bank

A full list of the Fast Forwards included in the chapter, providing an easy source of review.

A quick test of your knowledge of the main topics in the chapter.

Found at the back of the Study Text with more comprehensive chapter questions. Cross referenced for easy navigation.

vi

Introduction

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