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.

Syllabus

There are six syllabus areas:

• Strategic management and value creation
  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 affecting the business and to consider internal and external factors, financial and non-financial factors and the impact of sustainability when giving strategic advice on performance management and measurement solutions.
• Performance optimisation
  Candidates will be expected to assess, recommend and apply budgetary methods for planning and control and demonstrate an appreciation of the link between performance measurement and reward. The syllabus then moves on to the application of performance improvement models and techniques for performance optimisation in a range of scenarios. These scenarios can range from private sector companies, public sector organisations, not-for-profit organisations, multi-national businesses, and regulated industries.
• Performance reporting
  Candidates will be expected to evaluate the content and presentation of performance reports in light of strategic objectives and the needs of the users, and recommend improvements in presentation of the reports, including the use of data visualisation techniques.  
• Technology and information systems
  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. Candidates are also expected to understand the use of data analytics and how this can be used to improve the performance management and measurement within an organisation.
• 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.

Exam format

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 scenario 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.

The scenario 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 planning, controlling and managing performance in order to achieve value creation and performance optimisation. 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 areas from across syllabus sections A and B. These will vary depending on the business context the scenario 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 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 C and the other will come mainly from syllabus area D.

Professional skills
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.

Embedded requirements
APM has used embedded requirements in Section A questions since September 2019. From September 2022, all questions in the APM exam 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.

Time management
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 using strategic performance management models and performance improvement models and techniques. For example, the Section A question in the specimen (Ealach) requires the calculation of a cost gap for a new product using target costing and an evaluation of the techniques which could be used to close the cost gap. It then requires an evaluation of the use of Kaplan and Norton’s balanced scorecard and how it could be used to improve performance at Ealach. This part requires the consideration of the measures to be used within each perspective of the balanced scorecard.

A common type of question which arises is how the choice of performance measures impacts 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. Changing performance management in an organisation will have an impact on achievement of objectives, costs, reporting, information systems, processes, people and culture.

It is important to remember that any evaluation in an APM question needs to be coherently applied to the context which the organisation is in.

Finally, in thinking about syllabus issues remember that APM builds on PM knowledge applying it in more complex scenarios so candidates should ensure that they bring forward this PM knowledge to the APM 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 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.

Overall

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