Performance Management (PM)
The aim of the syllabus is to develop knowledge and skills in the application of management accounting techniques to quantitative and qualitative information for planning, decisionmaking, performance evaluation, and control. The syllabus for Performance Management (PM), builds on the knowledge gained in Management Accounting (MA) and seeks to examine candidates’ understanding of how to manage the performance of a business. It also prepares candidates for more specialist capabilities which are covered in Advanced Performance Management (APM). The syllabus begins by focusing on the information needs, technologies and systems required by organisations to manage and measure performance in the modern, competitive environment. It is vital for an accountant to understand how information systems and developments in technology influence the management accounting techniques employed and how vital information systems are in the mechanisms of managing and controlling an organisation.
The syllabus then introduces more specialised costing and management accounting topics. There is some knowledge assumed from Management Accounting (MA) – primarily overhead treatments. The objective here is to ensure candidates have a broader background in management accounting techniques. The syllabus then considers decision-making. Candidates need to appreciate the problems surrounding scarce resources, pricing and make-or-buy decisions, and how this relates to the assessment of performance. Risk and uncertainty are a factor of real-life decisions and candidates need to understand risk and be able to apply some basic methods to help resolve the risks inherent in decision-making. Budgeting is an important aspect of many accountants’ lives. The syllabus explores different budgeting techniques and the problems inherent in them. The behavioural aspects of budgeting are important for accountants to understand, and the syllabus includes consideration of the way individuals react to a budget.
The preparation of fixed, flexible and incremental budgets is assumed knowledge from Management Accounting (MA). Standard costing and variances are then built on. All the variances examined in Management Accounting (MA) are assumed knowledge in Performance Management (PM). Mix and yield variances, and planning and operational variances are explored here and the link is made to performance management. It is important for accountants to be able to interpret the numbers that they calculate and discuss what they mean in the context of performance. The syllabus concludes with performance measurement and control. This is a major area of the syllabus. Accountants should appreciate the importance of both financial and nonfinancial performance measures in management and should also appreciate the difficulties in assessing performance in divisionalised businesses and the problems caused by failing to Performance Management (PM)
© ACCA 2020-2021 All rights reserved. consider external influences on performance. This section leads directly to Advanced Performance Management (APM). All of the subject areas covered in this syllabus could be examined in either a public sector or private sector context.