Performance Management and Control Flashcards
6 cards from real CIMA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Performance Management and Control flashcards as text
What is the purpose of a 'post-completion audit' of a capital investment project?
Answer: To review actual outcomes against forecasts and improve future investment appraisals
A post-completion audit reviews the actual performance of a completed project against original forecasts to improve future investment decisions and management accountability.
In budgetary control, 'budget slack' refers to which practice?
Answer: Deliberately understating revenues or overstating costs to make targets easier to achieve
Budget slack is the practice of deliberately understating revenue estimates or overstating cost budgets to create an easier performance target.
Which type of cost remains constant in total regardless of changes in the level of activity within a relevant range?
Answer: Fixed cost
Fixed costs remain constant in total within the relevant range of activity; they do not change as output levels increase or decrease.
What does 'economic value added' (EVA) measure?
Answer: The profit earned above the cost of all capital employed, measuring true economic profit
EVA measures the profit earned above the total cost of capital (both debt and equity), representing the true economic value created for shareholders.
In the context of performance management, what does 'benchmarking' involve?
Answer: Comparing performance against external standards or best practices to identify improvement opportunities
Benchmarking involves comparing an organization's processes and performance against external best practices or competitors to identify improvement opportunities.
Which performance measurement framework uses a 'results and determinants' matrix, distinguishing between lagging and leading performance indicators?
Answer: Results and determinants framework (Fitzgerald and Moon)
The Fitzgerald and Moon results and determinants framework separates results (competitiveness, financial) from the determinants (quality, flexibility, resource utilization, innovation) that drive them.