ACCA P5 考官文章 MOVING UP FROM PAPER F5 TO PAPER P5

Paper P5 is an advanced performance management paper. It looks at different types of performance management systems and considers whether or not they provide useful information to the management of an organisation. By performance management systems, we include techniques such as budgeting, variance analysis, balanced scorecards and other such techniques used by organisations to manage their performance so they can plan and control their activities better. It also covers areas such as remuneration schemes for management and employees which attempt to motivate them to work towards the objectives of the organisation.

While performance management systems are covered in Paper F5, at Paper P5 additional models of performance management are included such as value based models, and the performance prism. In addition, candidates must be able to advise on what type of systems are relevant to a particular organisation. Different organisations have different information requirements, and candidates must be able to understand these, and be aware of the factors that determine what type of management accounting information is needed.

Finally, in Paper P5, there is more detailed discussion of qualitative factors surrounding performance management.

Candidates need to have much more depth of knowledge than at Paper F5. So rather than just knowing the rationale of the Balanced Scorecard, for example, candidates might be asked to evaluate it in the context of a specific scenario.

WHAT DO I NEED TO KNOW?

Since Paper P5 builds on Paper F5, the examiner could assume you know all of the Paper F5 topics. In practice, the examiner is unlikely to examine Paper F5 topics in detail unless they are also specifically included within the syllabus for Paper P5 too. It is advisable however to have a good knowledge of certain areas of the Paper F5 syllabus before starting to study Paper P5. The areas of particular importance are as follows:

• activity-based costing
• budgeting
• decision making
• performance measurement.

Activity-based costing, which is in Section A1 of the Paper F5 syllabus, feeds into activity-based management in the Paper P5 syllabus. Some activity‑based management questions in Paper P5 exams have required candidates to perform calculations using activity‑based costing principles, so it is important to have a good knowledge of this area.

The other specialist cost and management accounting techniques included in the Paper F5 syllabus which are also relevant to Paper P5 are target costing, lifecycle costing and environmental management accounting. However, as these are specifically included within the Paper P5 syllabus, candidates should be able to refresh and increase their knowledge of these from their Paper P5 materials.

Budgeting is another important area. In Paper P5, the focus is on whether budgets are a useful tool or not, and which types of budget are useful in what situations. It is useful, therefore, to be familiar with the following budgeting sections from Paper F5 syllabus:

• C1 – Budgetary systems
• C2 – Types of budget
• C8 – Performance analysis and behavioural aspects

While quantitative aspects of budgeting have been excluded from this list, candidates would have to have to deal with some maths – for example to deal with simple forecasting. Candidates would not be required to do detailed calculations involving techniques such as regression and time series analysis.

Decision making is an area that sometimes gets examined in Paper P5. Candidates may be asked to evaluate a decision, so some calculation may be required in such questions. It is important, therefore, to be familiar with relevant costing principles, which are in Section B1 of the Paper F5 syllabus. An awareness of CVP analysis (Section B2) is also useful although it is extremely unlikely that you would be required to draw any of the charts in Paper P5. In addition, a practical understanding of cost structures, cost behaviour (fixed and variable) and break even analysis will often be useful in analysing and giving advice in a scenario.

Knowledge of limiting factors (Section B3) is required, not just for decision making, but also because it feeds into transfer pricing. You should know how to solve basic limited factor decisions. It would not be necessary to go into solving linear programming problems for Paper P5.

Pricing (Section B4) is not specifically in the syllabus for Paper P5, but the examiner has indicated that he would expect candidates to be aware to be able to calculate a simple cost plus price.  Pricing is also relevant in the context of transfer pricing.

Risk and uncertainly is an important factor in control of an organisation so the Paper F5 topics on risk and uncertainty should also be known. Particularly important areas are expected values, maximax, maximin, minimax regret and the use of sensitivity analysis, and these have all been examined recently at Paper P5. It is unlikely that you would be asked to draw a decision tree at Paper P5 but knowledge the underlying principles of probability and joint probabilities would be useful.

Standard costing and variance analysis (Sections C4-C7) are core management accounting tools, so you do need to be aware of them, and be able to discuss whether they are useful techniques in a specific scenario and whether they provide useful information to management. Candidates may also be required to calculate variances at Paper P5 level, so it is important to understand how to do these – particularly those variances with strategic implications.

Performance measurement and control (Sections D1-D7) is introduced at Paper F5, and is a core topic at Paper P5. However, many of the relevant learning outcomes from Paper F5 are also included within the Paper P5 syllabus too, so you should be able to pick up the required knowledge of this area from your Paper P5 study material rather than needing to go back and review your Paper F5 notes. The performance measurement topics are developed further at Paper P5 with the introduction of new techniques such as Economic Value Added™, the performance pyramid and the performance prism.

STUDYING PAPER P5

The core part of your Paper P5 preparation will be your Paper P5 study materials. When studying for Paper P5, it is not necessary or desirable to learn everything in your study materials parrot fashion. Simply repeating what you have seen in your study manuals in an exam is never likely to satisfy the examiner’s requirements. What is important is to read the materials, understand and appreciate the issues, and think about them. Then practise past exam questions dealing with these areas. This will help you to develop the skills of critical analysis that you will need both in the exam, and in your professional work.

In the section on ‘beyond budgeting’ for example, your textbook may well include a list of weaknesses of traditional budgeting processes, as suggested by Hope and Fraser. More important than learning this list is to understand the weaknesses suggested, and think about whether or not you agree with them. By doing this, you will be better placed to answer a question in the exam on the weaknesses of budgeting by coming up with your own ideas, even if you could not remember the list from the textbook.

Have a broad knowledge of the syllabus. It is better to have a reasonable knowledge of the entire syllabus, than a perfect knowledge of say 60% of it, and not to know anything about the rest.

Being a Professional level paper, it is important to read around the subject too. There are plenty of technical articles on the ACCA website relating to Paper P5, and these are essential reading. These articles have a long shelf-life so the older articles are equally as important as the articles from the past few years.

As a Paper P5 tutor, I find that using real-life examples helps my students to understand the concepts covered during the courses and makes the materials come alive. These examples can be found in quality newspapers and news websites, so try to read a good quality newspaper/website, if not every day, at least once a week.

Practising past exam questions under timed conditions is essential. A big part of the challenge in Paper P5 (and indeed all the Professional level papers) is being able to analyse a detailed scenario, and provide relevant answers to the questions asked. Unless you practise this in advance, you are at a big disadvantage in the exam hall. Many students get into the terrible habit of reading the question and then auditing the answer. This is a waste of time. You only learn from a question if you really try it yourself.

Finally, you should also read the examiner’s reports from the last sittings. These provide a useful insight into where students have done well or badly in previous exams. You can learn from their mistakes. It also gives an insight into what the examiner likes and dislikes.  

SKILL REQUIRED FOR PAPER P5

Paper P5 is a Professional level paper, and the examiner expects candidates to demonstrate the skills that they would need when working in a professional environment as an advisor or consultant. This is more than is required at Paper F5.

In Paper F5, you are required to be able to apply given techniques to the short scenarios in the exam. For example, a question may ask you to calculate materials mix and yield variances for the last month. You are also required to be able to interpret numbers at Paper F5, for example, using pre-calculated variances to assess the performance of the sales manager. The scenarios in Paper F5 are usually fairly short, and the questions specify very clearly what is required of you.

In Paper P5 questions, particularly in Section A, you will need to be able to deal with much longer scenarios. The examiner is seeing if you can apply your knowledge to real, life like situations. This tests your ability to deal with a larger amount of data and identify the most important issues. Can you see the big picture when presented with a lot of detail?

You may also have to decide for yourself what particular techniques you will use to answer the question. In a recent question, the examiner asked candidates to analyse the business environment within which an organisation was operating, and the implications on this for its strategy. The examiner did not tell you which technique to use to answer this. So you could have used PEST analysis, or any other approach that was sensible.

One Paper P5 question may well focus on several different parts of the syllabus: at this level you can’t just view each topic as being in a separate box, you have to appreciate how they are all linked. This is much more like real life. If you are a management accountant in the real world, the management of the company may ask you to assess the performance of a particular division. They are not likely to tell you to ‘assess the performance of the division using residual income with annuity based depreciation’. They would leave it to you to decide how to assess the performance. The Paper P5 examiner tries to do the same.

CONCLUSION

The P5 syllabus builds on the knowledge covered in Paper F5, and there are certain Paper F5 topics that you should know well before embarking on Paper P5. Much higher skills are required at Paper P5, and there is much greater application of your knowledge to life like scenarios. In order to improve your chance of success, it is good to read around the subject and practise past exam questions.

Nick Ryan is a tutor at ATC International

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