Study Notes management accounting acca f2

4. 
Making agreements and developing plans for exchange visits. Formulating a common program 
for internal data collection 
5. 
Partner site visits by benchmarking teams collect data 
6. 
Analyzing data and developing plans for improvements 
7. 
Implementation and monitoring. 
 
Benefits of performance measurement systems
 
▪ 
Clarification and communication
of organizational objectives e.g. profitability. 
▪ Developing 
agreed measures
of performance within the organization e.g. ROCE. 
▪ Allowing 
comparison
of different organizations e.g. ratio analysis. 
▪ 
Promoting accountability
of the organization to its stakeholders. 

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F2 Management Accounting
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Problems
▪ 
Tunnel vision
– an obsession with maximizing measured performance at the expense of non-
measured performance e.g. staff welfare. 
▪ 
Myopia 
(short sightedness) – maximizing short run performance at the expense of long run 
success. 
▪ 
Manipulation of data
– “creative” reporting e.g. trying to classify all adverse variances as 
planning variances. 
▪ 
Gaming
– e.g. building slack into budgets. 
 
Solutions
▪ 
Participation
– involve staff at all levels in the design and implementation of the system. 
▪ Encourage 
a long-term view
among staff e.g. through company share option scheme. 
▪ Ensure the system of performance evaluation is “
audited
” by experts to identify problems. 
▪ 
Review
the system