ACCA SP Advanced Performance Management

Question 1

Which of the following best describes the 'performance prism'?

Accepted Answer

A stakeholder-centred performance framework with five facets: stakeholder satisfaction, strategies, processes, capabilities and stakeholder contribution

Answer

A framework measuring financial performance only

Answer

A three-dimensional scorecard using revenue, cost and quality

Answer

A risk management framework for public sector organisations

Question 2

Which of the following is a criticism of traditional financial performance measures?

Accepted Answer

They are lagging indicators that reflect past decisions and do not drive future value creation

Answer

They are too forward-looking

Answer

They are too difficult to calculate from published accounts

Answer

They focus too much on non-financial outcomes

Question 3

Economic Value Added (EVA) is calculated as:

Accepted Answer

Net operating profit after tax (NOPAT) minus (Capital employed × WACC)

Answer

Operating profit minus tax

Answer

EBIT × (1 − tax rate) ÷ Total assets

Answer

Revenue minus total costs

Question 4

In the context of transfer pricing for multinational companies, 'arm's length pricing' refers to:

Accepted Answer

A price that reflects what unrelated parties would agree in a free market transaction

Answer

A price set at marginal cost to optimise group output

Answer

A price set to minimise global tax

Answer

A price equal to the standard cost of production

Question 5

A 'reward management' system is most likely to be effective when:

Accepted Answer

Rewards are clearly linked to the performance indicators used in the performance management system

Answer

It is based solely on seniority and length of service

Answer

All employees receive identical bonuses regardless of performance

Answer

Rewards are determined by head office without divisional input

Question 6

Which of the following is a feature of 'beyond budgeting'?

Accepted Answer

Replacing annual budgets with rolling forecasts and relative performance targets, empowering front-line managers

Answer

Stricter top-down budget control

Answer

More detailed variance analysis of budget vs actual

Answer

Requiring budget approval from external auditors