Advanced Performance Management (APM) is one of the four Strategic Professional Options examinations in the ACCA Qualification. This article begins by considering the syllabus and overall aims of the exam, how it links to other exams and the format of the exam. It will then summarise advice about how to approach the exam using suitable example questions from recent exams to illustrate points.
There are six syllabus areas:
- Strategic planning and control
The syllabus introduces candidates to the strategic role of management accounting as a discipline for planning and controlling performance so that strategic objectives can be set, monitored, and controlled. Candidates will be expected to use strategic planning and control models to plan and monitor organisational performance. This emphasises the need to take a holistic view of the factors, both internal and external, affecting the business and to consider them when giving strategic advice on performance management and measurement solutions. Good candidates at APM often distinguish themselves by being able to synthesise disparate detailed points into an overall, strategic approach for an organisation.
- Performance management information systems and developments in technology
APM requires candidates to identify and evaluate the design features of effective performance management information systems. This does not mean having detailed technical knowledge of hardware and software but instead be conversant with the broad hardware and software trends and issues and how these interact with the provision of performance information throughout the organisation. It is the effect of these technologies on the performance management decision-making processes and subsequent reporting of performance which is most significant.
- Strategic performance measurement
Application of appropriate strategic performance measurement techniques in evaluating and improving organisational performance will be required. This capability requires the application of the performance measurement techniques of APM and its assumed knowledge in specific scenarios. These scenarios can range from private sector companies, public sector organisations, not-for-profit organisations, multi-national businesses, and regulated industries.
- Performance evaluation
The syllabus then moves to the scope and application of high-level performance measurement techniques in a variety of contexts, including complex business structures. Having covered the strategic aspects of performance management and operational systems for the measurement and control of performance, APM focuses on advice to senior management or independent clients on how to evaluate and control the performance of an entity.
- Professional skills
The professional skills section of the syllabus links to all others and provides a range of professional skills expected of a professional accountant.
- Employability and technology skills
The syllabus concludes with outcomes relating to the demonstration of appropriate digital and employability skills in preparing for and taking the APM examination. This includes being able to access and open exhibits, requirements and response options from different sources and being able to use the relevant functionality and technology to prepare and present response options in a professional manner. These skills are specifically developed by practising and preparing for the APM exam, using the learning support content for computer-based exams available via the practice platform and the ACCA website, and will need to be demonstrated during the live exam.
The syllabus comes with a Study Guide of more detailed guidance about the specific topics to be examined. The syllabus undergoes an annual review so it important to pay attention to any changes.
Links to other exams
Performance management systems are the systems in an organisation by which the performance of an organisation is measured, controlled and improved. The thrust of the APM exam is that move towards the strategic level of considering different performance measurement techniques and management systems. APM builds on knowledge gained at other levels; especially from PM, Performance Management and MA, Management Accounting. Areas covered in the SBL, Strategic Business Leader, are also useful for APM and vice versa. PM tests the candidate’s ability in application and analysis of core management accounting techniques and APM develops key aspects introduced at the PM level with a greater focus on the synthesis and evaluation of the key topics and techniques. It will also introduce more specialised techniques and current issues in performance management. Therefore, candidates should not expect to be retested in a PM style on topics but need to be aware that all of PM knowledge is assumed to be known and will now be used in a more critical capacity.
The exam is a three-hour 15-minute test. There are two sections in the exam:
Section A (a single compulsory question)
Section A of the exam will always be a 50-mark case study based on an organisation in a particular business context. The 50 marks will comprise of 40 technical marks and 10 professional skills marks. All the professional skills will be examined in Section A.
It is likely to include the organisation’s mission statement and strategic objectives and candidates will be expected to be able to assess the methods by which the organisation is controlling, managing, and measuring performance in order to achieve its objectives. This assessment could include an evaluation of the organisation’s performance report, its information systems, new strategies or projects and its performance management and measurement systems. Candidates should understand that they will be expected to undertake calculations, draw comparison against relevant information where appropriate and be prepared to offer alternative recommendations as needed.
Management accountants are required to look across a range of issues which will affect organisational performance, the achievement of objectives and impact on operations and so candidates should expect to see Section A of the exam focus on a range of issues from across syllabus sections A, B and C. These will vary depending on the business context the case study in Section A is based on.
Section A questions will ask candidates to produce a response in a specific format, for example a report to the Board of Directors.
Section B (two compulsory questions)
Candidates will be required to answer a further two 25-mark questions in Section B of the exam, which will normally comprise of scenario-based questions. The 25 marks will comprise of 20 technical marks and 5 professional skills marks. Section B questions will examine a combination of professional skills appropriate to the question. Each question will examine a minimum of two professional skills from Analysis and Evaluation, Scepticism and Commercial Acumen.
One of the Section B questions will come mainly from syllabus section D; however, the other Section B question can come from any other syllabus section.
Section B questions will also require candidates to address a range of issues influencing performance of organisations in specific business situations.
From September 2022, marks will be awarded in APM for demonstration of the skills of communication, analysis and evaluation, scepticism, and commercial acumen. In terms of earning these professional skills marks, the examining team will be looking for the skill to be evident in respect of the technical points you make. It is important, therefore, that candidates understand what these professional skills are, and details can be found in the APM Syllabus and Study Guide.
What is important to remember is that professional skills marks are earned by providing comprehensive and relevant responses to the technical requirements.
APM has used embedded requirements in Section A questions since September 2019. From September 2022, all questions in the APM will use embedded requirements.
Use of dates
All dates in the APM exam will be in the format 20XX – for example, 20X5. As this will make the dates for each exam session generic, the same dates will apply in each exam irrespective of the exam session.
Candidates should allocate time based on the technical marks available, as the professional skills marks should not be thought of as separate requirements and should be addressed throughout the entire answer.
Approaching the APM exam
The best approach to the exam can be summarised as:
- cover the whole syllabus
- be prepared to apply all your knowledge to a business scenario
- read and answer the question asked
- create information from data
- add value to the organisation which is being advised
Cover the whole syllabus
Remember that, broadly, the exam tests the capabilities which are required of a candidate. The exam aims to address issues at the strategic, tactical, and operational levels and often requires a candidate to understand the connections between these levels. For example, the Section A question in the specimen (Deeland Police) asks about critical success factors, recommending key performance indicators, assessing performance in terms of value for money and considering the introduction of league tables. Critical success factors are necessary for an organisation to achieve its mission and key performance indicators are how that achievement is measured.
A common type of question which arises is how does the choice of performance measures impact on the strategic, tactical, and operational performance of the organisation? A phrase that rings true in many situations is Drucker’s dictum ‘What gets measured gets done’. This phrase succinctly points to the impact that the choice of performance metrics has on the management activity of the organisation.
Questions in APM will also expect candidates to evaluate performance management methods, models, systems, and processes. It is important to remember that any evaluation needs to be coherently applied to the context which the organisation is in. Changing performance management in an organisation will have an impact on achievement of objectives, costs, reporting, information systems, processes, people and culture.
Finally, in thinking about syllabus issues remember that APM builds on PM knowledge applying it in more complex scenarios so candidates should ensure that this PM knowledge is available in the exam.
Apply your knowledge to the question scenario
The exam tests a candidate’s ability to assess different approaches to performance management from a variety of perspectives. This will entail the candidate knowing what the approaches are and more importantly being able to compare one with another in the context of a scenario – for example, profit and value approaches, financial and non-financial perspectives, short-term and long-term issues.
A good candidate will be able to tailor the approaches suitable to the organisation described in the scenario and justify this advice using the evidence given in the scenario.
The scenario describes the organisation, its objectives and its business environment. A good candidate will show how they have taken in this information and then applied it to the performance management of that organisation. For example, when assessing different performance management approaches, a useful question to ask is ‘Does this meet the objectives/needs of the organisation?’ so obviously, the candidate must have identified these from the scenario.
Candidates must make sure that they can:
- assess the current situation of the organisation (for example, its existing performance management systems) and then
- consider how to apply a new approach to performance management (for example, value-based or based on one of the many models mentioned in the syllabus such as the performance pyramid or the building block model), and
- assess whether this new approach will be an improvement (for example, by helping to meet the corporate objectives).
Lists of rote-learned advantages and disadvantages for different approaches will not produce a complete answer as a candidate will be expected to tailor this knowledge to the situation given in the question. Also, simply writing the appropriate jargon words or phrases associated with a model or method will not score heavily. It is essential that candidates demonstrate that they know how to apply these appropriately to the scenario.
Answer the question asked
The embedded requirements get a great deal of attention from the examining team. Candidates are given credit where their answer is technically correct and relevant to the question asked. There has been a tendency by candidates to write good answers to questions that they wish had been asked by the examining team rather than the one actually set in the exam. This latter approach scores little if no credit. There is a longer article entitled ‘Reading the Question Requirements of APM’ (see ‘Related links’) that illustrates the common misinterpretations seen in previous sessions. In addition, there is a two-part article entitled ‘Improving Your APM Answers’ that is very useful reading (see ‘Related links’).
Create information from data
As the business environment has been profoundly affected by the increased use of technology, there is less need at a strategic level to manually perform calculations. This is already tested heavily in earlier exams; therefore, there has been a reduction in the volume of computational work required for this exam compared to the lower levels. Occasionally, longer computations may appear but these will be used as a way of allowing the student to absorb the data in a question and become comfortable with the scenario. Large repetitious calculations are avoided but it should be noted that some repetition is inevitable as, for example, a trend can only be identified with at least two, or more realistically three data points.
Computational work in APM focuses more on the interpretation and further analysis of data provided in the question. Candidates have to demonstrate the ability to add value to their advice by taking information already produced and identifying the important features. At Strategic Professional, comments should be helpfully quantified where possible and the commercial implications discussed. Candidates should be constantly on the lookout for ways to make their numbers more understandable, for example, by comparing them to increased activity of the business or to competitor performance.
A valuable management accountant will create information from the detailed data given in a question. It is often best to begin by considering the ‘big picture’ (what is the overall objective); next, break down the data into smaller but meaningful (and manageable) chunks; finally, discuss the individual lines of the data table and even then, a candidate should focus on the data that explains the overall picture of changes.
It is important to realise that, at the APM level, it is not enough to throw down all the ratios and measures that can be imagined. In doing this, the candidate is probably going to overload the report reader with unnecessary data. It is essential that candidates try to be selective in their choice of what to calculate. This is an important testing area in the exam as it shows that the candidate has appreciated the strategic goals or key drivers of performance and can focus on them. Note specifically that in handling data heavy questions, the level required for APM is for answers to go beyond repeating, in sentence form, the data given in (say) a table in that question.
Candidates will be expected to analyse not merely calculate numerical data given from a scenario.
Add value to the organisation
A candidate would be advised to consider if the answer they have produced would help the organisation to answer the question requirement.
Remember, try to add value with your answers by way of comments relevant to the issue at hand.
Applying correct methods and knowledge to differing and complex scenarios, adopting an integrative and holistic approach, demonstrating comprehensive professional skills, and adding value in the recommendations and advice offered, are the factors which will lead to success in the APM exam.
Written by a member of the APM examining team