The aim of the Performance Management exam is to develop knowledge and particularly skills in the application of management accounting techniques to quantitative and qualitative information for planning, decision making, performance evaluation, and control.
Performance Management relation to Management information Relationship between Management Information and Performance Management exams
The syllabus for Performance Management, builds on the knowledge gained in Management Information. This mid position is always a challenge for an examiner because such exams must represent a step up from the lower exam but a step down from the more advanced exam. Stepping up from MI, it is important to note that this is not simply a costing exam. Costing is obviously a key part of the syllabus but it sits amongst many other equally important key areas. While the format of the exam from November 2019 is changing, the rationale and relational position of MI and PM remains the same.
Assumed knowledge
Where an area of the Performance Management syllabus covers a topic already covered in MI as well, such as performance measurement, for example, there is twice as much reason to assume that candidates will be able to tackle such a question.
However, MI topics that arise again in Performance Management may be examined in a more challenging way in order to reflect the difference between the two exams. Also, by the time a candidate reaches this exam, they may sometimes be expected to work out which tool they need to take out of their toolbox in order to answer a question, rather than always being told which technique they will need to use.
Format of the exam
PM contains three sections: Section A, Section B and Section C.
Section A
Section A is comprised of a compulsory question and it can be tested from any aspect of the syllabus. The is worth 30 marks and questions is a combination of both narrative or calculative in nature.
Section A will include questions from the whole Performance Management syllabus. This means that, more than ever, it is important that candidates make sure that they cover the whole syllabus when preparing for the exam. The practice of ‘question spotting’ – ie trying to predict what will come up in the exam – has always been a dangerous one.
Section B
This second section of the exam contains three questions and you are expected to answer 2 of the questions each question is worth a total of 20 marks. These questions will be based around a common scenario ‘case’ and can come from any area within the four main syllabus sections. There will be a mix of calculative and narrative marks. Similar to the approach to Section A,
Section C
The third section of the exam will comprise three questions worth 15 marks each and you are expected to answer two questions only. These questions can be either one full 15 mark requirement or broken down into several requirements.
KEY Notes PREPARING FOR THE PM EXAMS
This is not an exclusive list, but it gives an indication of some of the examining team’s motivations:
- Organisations seem obsessed with financial performance measures, but the future is determined equally by non-financial performance. Both are important. Candidates should be prepared to answer questions on financial performance measures and non-financial performance measures, in both divisionalised and non-divisionalised business contexts; in both private sector and public sector/not for profit sector contexts; and in both manufacturing and service sector industries.
- The ability to perform management accounting calculations is important, and being able to determine the implications of those calculations is also essential for an accountant. It is worrying to see so many candidates sitting the PM exam while seemingly having forgotten the basic skills that were tested at MI
- The world around us has changed and is changing. Management accounting is unlike some subjects such as tax and financial reporting, which change from year to year. However, because the world around us is changing, the context of management accounting questions must change too and our knowledge has to adapt accordingly. Techniques such as target costing are used in service industries so you should not be surprised to see them examined in this way.
In conclusion, it will be highly recommended that you practise as many past exam questions as possible in other to develop business awareness. Many business problems – and Performance Management questions – can be solved using common sense. Actively seek out experiences involving the assessment of performance as these will be invaluable in the exam room.