ACCA - P5 Advanced Performance Management - Passport ATC 2009
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PAST QUESTION ANALYSIS
Accountancy Tuition Centre (International Holdings) Ltd 2009 0301
SUMMARY OF PAST EXAMS
Topic June
2009
December
2008
June
2008
December
2007
Pilot
Paper
Introduction to strategic management accounting:
Strategic planning
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Multinationals
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Life cycle issues
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Swot analysis
Benchmarking
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Risk and uncertainty
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Budgeting for control:
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Changes in business structure
Continuing effectiveness of traditional
Business Process Reengineering
Activity Based Management
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Effect of information technology
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PAST QUESTION ANALYSIS
Accountancy Tuition Centre (International Holdings) Ltd 2009 0302
Topic June
2009
December
2008
June
2008
December
2007
Pilot
Paper
Environmental factors:
PESTEL analysis
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Stakeholders/ Ethical issues
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Pricing
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Performance measurement systems and design:
Anthony’s model
Contingency theory
Agency theory and hard accounting
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Strategic Performance measurement:
Performance Hierarchy/ Mission
Porter’s five forces
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Boston consulting group matrix
Ansoff’s product market matrix
Financial performance evaluation
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Non financial performance evaluation
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Net present value calculation
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PAST QUESTION ANALYSIS
Accountancy Tuition Centre (International Holdings) Ltd 2009 0303
Topic June
2009
December
2008
June
2008
December
2007
Pilot
Paper
Further aspects of performance measurement
Balanced Scorecard
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Performance Pyramid
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Service industries
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Non profit organisations
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Remuneration schemes
Potential problems with PM systems
Corporate failure
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Divisional Performance evaluation:
ROI/Residual Income
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Economic Value Added (EVA)
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Transfer pricing
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PAST QUESTION ANALYSIS
Accountancy Tuition Centre (International Holdings) Ltd 2009 0304
Topic June
2009
December
2008
June
2008
December
2007
Pilot
Paper
Current developments in performance evaluation
Current developments in management accounting
techniques
Value based management
Total quality management
√ √
Six sigma
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Performance Prism
Contemporary issues
EXAMINER’S COMMENTS
Accountancy Tuition Centre (International Holdings) Ltd 2009 0401
JUNE 2009 – EXAMINER’S REPORT
General Comments
Firstly I would like to offer my congratulations to all of those
candidates who achieved a pass at this diet and my
commiserations to those who did not.
The examination paper comprised two sections, A and B.
Section A consisted of two compulsory questions for 35 and
25 marks respectively. Section B consisted of three optional
questions for 20 marks each from which candidates were
required to answer two questions.
The consensus of opinion from the marking team is that the
paper was well balanced between computational and
discursive elements, providing candidates with the
opportunity to obtain relatively high marks. It was pleasing to
see that well-prepared candidates passed the examination
comfortably. However the examination revealed a very large
number of candidates who fell well short of achieving a pass.
Indeed, there were relatively few marginal candidates at this
diet. The overall results suggest that far fewer candidates
than expected were adequately prepared for this examination.
Sadly, many candidates did not answer all of the question
subsections and in not doing so imposed limitations on the
marks available to them.
Candidates should avoid the temptation to undertake
“question spotting”. The P5 examination paper continues to
examine the full syllabus and as such will continue to reveal
those candidates who are poorly prepared. That said there
was still much in this examination that was consistent with
previous examination papers (Questions 1, 2 and 4) which
should have given the more able and prepared candidates a
sound foundation for success.
Candidates need to be aware whether they have the
knowledge to answer discursive questions. If they do not then
it is essential that they realise that the quantity of work
produced is not a substitute for quality. This was particularly
evident from candidates’ answers to Question 3.
Workings were generally shown but were at times difficult to
follow. Many candidates continue to display their answers
poorly, with a lack of clear labelling to indicate which
questions are being attempted. Each question should be
started on a new page and candidates must give more thought
to the layout and organisation of their answers. This is
especially the case given the potential to earn professional
marks in this or any other of the professional level
examination papers.
EXAMINER’S COMMENTS
Accountancy Tuition Centre (International Holdings) Ltd 2009 0402
Question One
In general, the answers to this question were poor. Whilst
there were a significant number of candidates who achieved
very high marks, there were a large number who did not
provide answers of a pass standard. In part (a) a large number
of candidates confined their comments to “higher than” or
“lower than” or “better than or worse than budget” using only
absolute figures for the purposes of comparison. Many
candidates made insufficient use of the numerical data
contained in the question. Whilst many used percentage
calculations, few calculated meaningful ratios. Indeed, there
were some candidates who arrived at a bed occupancy rate in
excess of 100%!
Furthermore, many candidates prepared their report to the
management of the Glasburgh Trust using no statistics
whatsoever. All too often calculations were undertaken and
then not explained or explained in such terms that they did
not address the requirements of the question. In their answers
to part (b) a large number of candidates did not evaluate the
balanced scorecard used by the Glasburgh Trust or provide
recommendations which would improve its usefulness as a
performance management tool. A significant minority of
candidates wrote all they knew about the balanced scorecard
including inappropriate profitability measures, and
mentioned products, delivery times and other measures not
relevant to the scenario. Some candidates chose to discuss the
“performance pyramid” of Lynch and Cross or the work of
Fitzgerald and Moon either in addition to or in place of the
balanced scorecard of the Glasburgh Trust.
Question Two
There were significant variations in the quality of candidates’
answers to this question. Answers to part (a) revealed that the
majority of candidates were unable to calculate correctly the
discount rate. A large number of candidates also included the
development costs in the tax calculations of F4U. In general,
answers to part (b) were poor. A significant number of
candidates appeared to attempt to “guess” the answer and a
sizeable number made no attempt to answer part (b) which
was potentially worth six marks. There were a large number
of very good answers to part (c) which achieved high marks.
However, in answering part (c) many candidates offered a
discussion of a variety of non-financial performance
measures instead of discussing ways in which reliance solely
on financial performance measures can detract from the
effectiveness of the performance management system within
an organisation, as required by the question. There were
many correct answers to part (d) with candidates achieving
maximum marks. However, a significant number of
candidates demonstrated a lack of knowledge of maximax,
maximin and minimax regret decision rules. What is more, a
significant number of candidates made no attempt to answer
EXAMINER’S COMMENTS
Accountancy Tuition Centre (International Holdings) Ltd 2009 0403
this subsection of the question which was potentially worth
seven marks.
Question Three
This question was the least popular of the optional questions
which, in general, candidates found rather challenging. There
were some very good answers to parts (a)(i) and (a)(ii) which
achieved very high marks.
However, there were a large number of answers which
demonstrated a misunderstanding of the nature of the
relationships which were the focus of the requirements of
these parts of the question. In particular, there were many
confused efforts to explain expectancy theory. There were
also a significant number of candidates who completely
ignored the scenario contained in the question. In part (b)
candidates were unable to explain “hard accountability” in
the context of the three specific areas within the Universal
University.
Question Four
There were significant variations in the quality of candidates’
answers to this question. Many candidates who observed the
relationship between price and quantity demanded in the
scenario and applied MR = MC to calculate correctly the
profit-maximising fee per double room, achieved maximum
marks in part (a)(i). Three common errors in part (a)(i) were
as follows:
using 1,800 rooms instead of 1,440
being unable to calculate P0 as 760, and
using a marginal cost figure of 100 instead of 200.
As a consequence of achieving maximum marks in part (a)(i)
many candidates were able to achieve maximum marks in
part (a)(ii). Where candidates had not reached the correct
solution in part (a)(i) credit was given accordingly to answers
to part (a)(ii) which, in general, was satisfactory.
There were few correct solutions to part (b) with only a
minority of candidates undertaking the required calculations
to reflect the revised marginal cost. There were a large
number of answers to part (c) which earned maximum marks.
However, there were some answers where candidates simply
ignored the scenario of the McIntyre Resort and were
therefore unable to gain any of the four available marks
EXAMINER’S COMMENTS
Accountancy Tuition Centre (International Holdings) Ltd 2009 0404
Question Five
In general, answers to part (a) were of a good standard with
the majority of candidates being able to identify and explain
the six-sigma DMAIC methodology and thereby achieving
high marks. It was obvious that a significant number of
candidates were not familiar with the methodology and
attempted to guess the answer to this part of the question and
in so doing achieved very few marks whilst at the same time
losing valuable examination time.
There were a large number of good answers to part (b) in
which candidates demonstrated their abilities to apply the
six-sigma DMAIC methodology and consequently achieved
high marks. However, many candidates who had been able to
explain the methodology were unable to apply it to the
scenario of The There 4 U Company and often did little more
than provide a list of problems, often repeating what was
contained in the question, with little or no attempt to analyse
and address the issues therein.
DECEMBER 2008 – EXAMINER'S REPORT
Firstly I would like to offer my congratulations to all of those
candidates who achieved a pass at this diet and my
commiserations to those who did not.
The examination paper comprised two sections, A and B.
Section A consisted of two compulsory questions for 35 and
25marks respectively. Section B consisted of three optional
questions for 20 marks each from which candidates were
required to answer two questions.
The paper was seen to have a well balanced computational
and discursive elements providing candidates with the
opportunity to obtain relatively high marks. However, the
examination revealed a significant number of candidates who
were inadequately prepared for this examination and many
candidates did not answer all of the question subsections and
in not doing so imposed limitations on the marks available to
them. Nevertheless, the overall results for this diet are better
than those in respect of the previous diet.
One major problem was candidates “memorising” model
answers to past paper questions and attempting to “shoehorn”
these answers into questions without even attempting to
adapt these answers to the question context. Question 2(d)
provided cases of this practice. The question clearly asked for
performance measures to assess the quality of service of a
software provider, yet there were answers such as ‘the quality
EXAMINER’S COMMENTS
Accountancy Tuition Centre (International Holdings) Ltd 2009 0405
of meals, waiting time at reception, staff uniforms and
cleanliness, as well as specific mention of hotels. This
practice was also evident from candidates’ answers to
Question 4(b) with many different organisations mentioned
and only the minority of candidates actually referring to
BAG.
Also evident was the inability of many candidates to interpret
the numbers and ratios and translate them into “good” and
“bad”, even things such as a “lost items percentage” being
higher than the target was seen as constituting good
performance simply because the number was higher! This
suggests that candidates are taking a rote-learning approach
which is inappropriate for this level of examination.
Question 1
It was pleasing to see a large number of good answers to
question 1. Many candidates achieved maximum marks in
part (a)(i). A minority of candidates reversed the 1/0 notation
but nevertheless demonstrated an understanding of the need
to rank the depots of TSC according to the 12 measures
provided in the Appendix to the question and were rewarded
favourably.
It was also pleasing to observe that the majority of answers to
part (a)(ii) were satisfactory as most candidates provided
acceptable comments on the relative performance of each
depot. That said, many candidates limited their evaluation of
the performance of the four depots to ranking them “first”,
“second”, “third” and “fourth” (or last) and thereby ignoring
which depots had in fact achieved (or had not achieved) the
“target values” which were at the heart of the performance
measurement system of TSC.
In genera, answers to part (a)(iii) were satisfactory, and
indeed, some were excellent. Poorer answers were offered by
candidates who did not relate answers sufficiently to the
examples contained in the scenario and/or chose to state that
there was insufficient information contained within the
question to enable them to provide a relevant assessment of
TSC using the required criteria.
The quality of answers to part (a)(iv) varied significantly.
Many candidates achieved maximum marks whilst poorer
answers referred solely to the need for more financial
performance measures within TSC. In general, candidates
provided satisfactory comments relating to the simplistic
nature of the performance measurement system within TSC
but few answers indicated the need to focus on the
determinants of success rather than the results.
Again, Part (b) produced a significant variation in the quality
of answers provided by candidates. Many candidates
achieved maximum marks whilst others evaluated potential
“benefits” without referring to any “problems”. Sadly, a
significant number of candidates chose not to provide an
EXAMINER’S COMMENTS
Accountancy Tuition Centre (International Holdings) Ltd 2009 0406
answer to part (b) and which was worth a potential six
marks.
Question 2
This question provided the best “relative” mark achieved by
candidates. In general Part (a) was well answered, although
some candidates showed a lack of basic analysis. Many
candidates provided either quantitative ratios or comment but
not both, and a number of candidates ignored the requirement
to “highlight additional information”. Regrettably, many
candidates provided an answer that was so brief that they
obviously ignored the fact that was a potential fourteen
marks available.
In general, answers to part (b) were satisfactory. However,
poorer answers were confined to comments concerning the
bonus of the operational manger of Bonlandia with little or
no regard for the effect of the views of the operational
manager on the business of SSH.
It was pleasing to observe that part (c) produced some very
good answers, especially given the importance of “quality
software” in the modern business environment.
In part (d) candidates’ answers varied significantly. Better
answers suggested performance “measures” (as required),
whereas poorer answers referred to performance “criteria”
such as “cleanliness”, “appearance” and “responsiveness”.
The worst answers, (as always in this type of question
requirement), simply provided a bullet-note list of criteria
extracted from the “balanced scorecard”, “performance
pyramid”, or the work of Fitzgerald and Moon. That said, the
poorer answers were also presented in the form of one word
“bullet points”
Question 3
This was the best answered of the three optional questions.
Part (a) was answered very well or very badly insofar as
candidates either did or did not understand the term
“planning gap”. This was worth a potential five marks.
Answers to part (b) were, in general, satisfactory as the
majority of candidates made sound use of the information
contained in the question and referred to the issues of cultural
problems, lack of experience of acquisitions and the impact
of government action.
Again, in general, most candidates’ answers to part (c) were
satisfactory. Usually issues relating to non-biodegradable
nappies were cited however, few candidates drew attention
on “washable nappies” as an eco-friendly alternative.
A significant number of candidates provided very good
answers to part (d). However, many candidates needed to
suggest a greater range of government actions in order to
have achieved higher marks. Many candidates failed to