P5 Syllabus

8/6/2019 P5 Syllabus

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RELEVANT TO ACCA QUALIFICATION PAPER P5

Studying Paper P5Performance objectives 12, 13 and 14 are relevant to this exam

2011 ACCA

Paper P5 syllabus changes for 2011June 2011 will see an amended syllabus introduced for a number of ACCA

papers including Paper P5, Advanced Performance Management. In this article, I

will run through these changes explaining the rationale behind them and the

effect on the Paper P5 exam. The article begins with an overview of the main

changes and concludes with a detailed discussion of the changes to the study

guide.

Overview

The changes to the Paper P5 syllabus are not fundamental. The six learning

capabilities that a candidate must be able to demonstrate are unchanged.

However, there are a number of changes to the syllabus and detailed Study

Guide which are outlined below. Some of the changes were motivated by a

requirement to move some of the strategic management accounting topics out

of an optional paper and into an essential paper; some of the changes arose

from a desire to more clearly differentiate Paper P5 from Paper F5,

Performance Managementand Paper P3, Business Analysis and the remainder

were made in order to clarify and update the previous syllabus.

The substantive changes are:

Two new areas have been added to the syllabus from Paper P3. They are

quality and human resource management. Questions on these areas willconnect to the rest of syllabus by being focused on their impact on the

performance of the organisation and its performance management systems.

On quality management, the new areas seek to differentiate the different types

of activity involved in quality management and the impact of such initiatives on

existing performance management systems.

For example, a candidate may have to give advice on how quality initiatives

require:

the need for new information of a more subjective or qualitative nature changes to the key performance measures used in the organisation the culture and style of management to alter (team working) changes to human resources management (staff training, recruitment,

empowerment).

The application of quality management practices is not, in itself, new to Paper

P5 having been a current issue for some time and so the extension to cover

these other areas is quite natural.

On human resource management and reward systems, once again the change

is an extension of topics that have already been in the Paper P5 syllabus. The

connection between appraisal and reward systems and the motivation of staff

to improve the performance of an organisation has been present in thesyllabus for some time. The additional elements should be seen as adding


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2 PAPER P5 SYLLABUS CHANGES EFFECTIVE FROM THE JUNE 2011SESSIONFEBRUARY 2011

2011 ACCA

greater depth to those points. Appraisal and reward systems have been a topic

of current debate with many commentators arguing that they were a significant

factor in the recent banking crisis driving managers to take too many risks.

An area of greater emphasis in the syllabus is the need to address risk and

uncertainty in management decision making. This has appeared in articles and

past paper questions such as Question 2 in June 2010. It is not intended to

dramatically increase the depth of coverage of this area. However, in line with

ACCAs increased educational focus on risk management, the topic has been

given greater prominence in the Study Guide.

Two traditional topics from Paper P5 have moved to Paper P3. However, it is

important to note that they have not vanished from Paper P5. First, much of

the detailed pricing-technique testing has moved into Paper P3 although in

Paper P5, it will remain essential that candidates can recognise the impact oftheir suggestions and changes on the pricing decision as this is a key element

of performance management.

Second, certain elements of budgeting and costing will now also appear in

Paper P3 as it is necessary that these are considered in a compulsory paper.

These topics will still have relevance to Paper P5 as can be seen from the

coverage in Section A of the syllabus. The focus of Paper P5 questions in this

area will be in assessing different financial control systems and their

appropriateness for different types of organisation (eg profit making and

not-for-profit).

There now follows a detailed explanation of each of the Study Guide changes

and their impact on studying for the exam under the new syllabus compared to

the previous one.

A Strategic planning and control

1. Introduction to strategic management accounting Lifecycle issues have been removed from this section into the Paper P3

syllabus. These issues are still relevant in Paper P5 but they will appear

in the context of the use of specific accounting techniques and

addressing issues such as environmental accounting rather than

detailed work on product pricing (also now in Paper P3). The required knowledge level on benchmarking has been upgraded to

the capability to evaluate and apply the method as it is a key

performance management tool.

Issues relating to factors in the external business environment are nowall covered under Section B. The syllabus coverage has not changed

here.

2. Performance management and control of the organisation Although Paper P3 now contains an element of strategic management

accounting for control, a candidate must still be aware of cost

accounting and budgeting issues and be able to comment on these

within the context of designing a suitable performance managementframework for an organisation.


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2011 ACCA

Behavioural aspects associated with budgeting have moved but are stillin the syllabus and dealt with generally under section D9.

3. Changes in business structure and management accounting

The changes to this section are purely for better organisation of thesyllabus.

Changes in the business environment are dealt with in Section B. Thesyllabus coverage has not changed here.

Activity-based management is handled now in Section E1. Again, theoverall syllabus coverage has not changed here.

4.Effect of information technology (IT) on modern management accounting There were no substantive changes to this section. Other environmental and ethical issues. This section has been moved in its entirety from Section B in the 2010

syllabus, so there is no substantive change.

B External influences on organisational performance

1. Changing business environment This section has been created to add new emphasis to existing areas in

the 2010 syllabus. The ability to assess different methods of

management accounting and advise on appropriate approaches will

remain at the core of Paper P5. The handling of risk and uncertainty is

an increasing part of all aspects of business and an area of many of the

current developments in management accounting.

2. Impact of external factors on strategy and performance

There were no substantive changes to this section.C Performance measurement systems and design

1. Performance management information systems

It was felt that it was appropriate for an accountant to be able to applyexisting understanding of the concept of lean systems (understood in

broad terms of appropriate quality for optimal resource use) in a

company to the performance information systems and to be able to

value these systems.

There have been minor changes to indicate the need to relate systemstheory to performance management and emphasising the use of large

unified corporate databases and their interaction with management

accounting systems.2. Sources of management information

The internal and external aspects have been brought together under oneheading for better presentation.

3. Recording and processing methods

There has been a minor update of the IT development examplesmentioned, but no changes to the substance of this area.

4. Management reports

A new syllabus point has been added to address the issue ofinformation overload. This fits with the shift in emphasis for Paper P5

away from the production of data towards the assessment of systems. It

reflects the type of activities that a professional is now more concernedwith in the modern organisation where the use of IT systems has meant


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2011 ACCA

that calculation of data is now so easy that a core skill is knowing what

not to produce. A good Paper P5 candidate will be able to assess the

outputs of a system with respect to the needs of the user and the

organisation and then, recommend improvements to avoid such issues.

D Strategic performance measurement

1. Performance hierarchy

A new point has been added to emphasis the link between strategicobjectives and performance metrics using critical success factors. This

technique is useful in performance systems design as it ensures an

efficient alignment of the overall needs of the organisation and its key

monitoring and control data.

2. Strategic performance measures in private sector

A minor addition has been made to include the modified internal rate ofreturn measure along with other metrics.

The importance of benchmarking is emphasised by the introduction ofseparate point.

The Study Guide point on Six Sigma measures has been moved to thissection from Section F in the previous syllabus.

3. Divisional performance and transfer pricing issues

There were no substantive changes to this section.4. Strategic performance measures in not-for-profit organisations

There were no substantive changes to this section.5. Non-financial performance indicators

This section has been moved from E2 in the previous syllabus as it fitsbetter within Section D on performance measurement.

The role of quality in management information and performancemeasurement systems.

This is the new section on quality management discussed above,although some of this was covered already under the previous syllabus

in F12c).

Performance measurement and strategic human resourcesmanagement issues

Performance measurement and the reward systems Points 7 and 8 are the new sections on human resource management

and reward systems discussed above.

Other behavioural aspects of performance measurement This section along with certain points in sections 7 and 8 are simply the

previous syllabus D6 points.

E Performance evaluation and corporate failure

1. Alternative views of performance measurement and management

Points (d),(e) and (f) on the Performance Prism, activity-basedmanagement and value-based management have been moved here from

elsewhere in the old syllabus for the sake of clarity.

2. Strategic performance issues in complex business structures

This has been moved here from Section D and a new point (c) has beenadded to clarify what is meant by complex structures and to indicatethat future questions may be set using these scenarios.


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2011 ACCA

3. Predicting and preventing corporate failure

Point (d) on lifecycle has been moved here from Section A for clarity. A new point on operational changes has been added to clarify that in

future questions will ask for suggestions for improvement at this level.

F Current developments and emerging issues in performance management

Two new points on the use of benchmarking and targets in the publicsector have been added and these will be the subject of a future article.

Certain points already mentioned have moved elsewhere in the syllabus.Alex Watt is examiner for Paper P5

We will be publishing a new examiner approach article in the 23 February issue

of Student Accountant.

Documents

P5 Syllabus