01 technical
examiner’s
approach to
Prior to my first exam in December
2010, the purpose of this article
is to explain my approach as a new
examiner and what, if any, changes can
be expected from the previous exams.
This article will be supplemented by
an example question which will appear
in Student Accountant and on the
ACCA website.
The Paper P5 exam is based on the
syllabus which has not significantly
changed in the past year. The main
capabilities that a successful candidate
must possess are to:
¤ use strategic planning and control
models to plan and monitor
organisational performance
¤ assess and identify relevant
macroeconomic, fiscal and market
factors and key external influences on
organisational performance
¤ identify and evaluate the design
features of effective performance
management information and
monitoring systems
¤ apply appropriate
strategic performance
measurement techniques
in evaluating and improving
organisational performance
¤ advise clients and senior
management on strategic business
performance evaluation and
on recognising vulnerability to
corporate failure
relevant to acca qualification paper P5
¤ identify and assess the impact
of current developments in
management accounting and
performance management on
measuring, evaluating and improving
organisational performance.
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 paper
will move towards the strategic level
of considering different performance
measurement techniques and
management systems. Paper P5
builds on knowledge gained at other
levels, for example, Paper P3 and
especially from Paper F5. Paper
F5 tests the candidate’s ability in
application and analysis of core
management accounting techniques.
Paper P5 develops key aspects
introduced at the Paper F5 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 Paper F5
style on topics but need to be aware
that all of Paper F5 knowledge is
assumed to be known and will now be
used in a more critical capacity.
Questions will continue to be set
within a specific scenario surrounding
a business or its sector. Candidates
will need to absorb the information
provided in the scenario as it will be
vital in order to be able to demonstrate
the ability to apply theory in practice.
However, general business knowledge
about a sector and the current issues
facing businesses will also provide
fertile ground for demonstrating a
candidate’s ability to make the skills
and knowledge built up at earlier levels
of study applicable in the real world.
At the Professional level, it is
necessary that candidates take a more
rounded view of the whole subject
rather than seeing it as a set of
disconnected topics. For example, the
candidate will be expected to be able
not only to explain and use a particular
method of performance measurement
or management but also, to be able
to evaluate its use compared to other
systems or metrics. This will mean that
single questions will often range over
different topics in the Study Guide.
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 papers; therefore, there will be a
reduction in the volume of computational
work required for this paper.
 student accountant issue 16/2010
02
Studying Paper P5?
Performance objectives 12, 13 and 14 are relevant to this exam

paper p5
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 will be 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.
However, computational work will not
totally disappear from Paper P5 but
it will feature more in the interpretation
and further analysis of data provided
in the question. Candidates will have
to demonstrate the ability to add value
to their advice by taking information
already produced and identifying the
important features. At the Professional
level, 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 it to
increased activity of the business or to
competitor performance.
Finally, the implications of the
information should be considered from
the business managers’ perspective
not just the finance professionals’.
Therefore, commenting on trends
or reasons for trends should be an
opportunity to demonstrate that the
candidate has absorbed the scenario
information and can combine it
with general business awareness
to provide useful advice for the
business’s managers.
Capabilities
Now, taking each capability in turn,
the first capability asks for the
application of strategic planning
and control models in performance
management. These models
emphasise the need to take a
holistic view of the factors affecting
the business and to consider them
when giving strategic advice on
performance. Good candidates at
Paper P5 often distinguish themselves
by being able to synthesise disparate
detailed points into an overall,
strategic approach for an organisation.
The second capability addresses
factors external to the business
and signifies an additional area of
concern for candidates from the lower
levels where the focus was more on
the internal factors associated with
traditional management accounting.
This second point emphasises the need
to consider the information needs of
the strategic level of management
rather than merely the operational and
tactical levels.
The third capability relates to the
information that management require
and the systems that are needed for
its delivery.
Candidates will not be required to
have detailed technical knowledge of
hardware and software but are expected
to 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 that is
most significant.

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 paper will move towards the strategic level of considering
different performance measurement techniques and
management systems.
03 technical
The fourth capability is the
application of the techniques of Paper
P5 and its assumed knowledge in
specific scenarios. The fifth capability
takes this information and seeks to turn
it into commercially valuable advice
for strategic decision makers. This
capability also requires the candidate
to be able to recognise and advise on
situations where the organisation is in
danger of failing.
The final capability reflects the
requirement that at the final level of
ACCA’s examinations, the candidate is
expected to show the ability to gather
new knowledge from the general
technical press and so the articles in
Student Accountant will be sources
of topics for exam. These articles will
also be the principal route by which
the students will have new techniques
and trends communicated outside of
the slower cycle of revisions to the
syllabus. Candidates should note that
unlike in the compliance topics such
as financial reporting and tax, changes
are not regularly made to the syllabus
areas so that older articles may well be
as relevant to the upcoming exam as
the most recent ones.
Any additional reading beyond the
ACCA-approved texts and Student
Accountant articles should be viewed
as advisory and not required. But
the candidate would also be advised
to broaden their general business
knowledge by the regular reading of
good quality business articles. This
will provide additional background and
examples of the techniques and issues
of performance management.
Professional marks will continue
to be a regular feature of at least
one of the Section A questions and it
should be possible for a well-prepared
student to score most of these easily.
Efficient preparation will involve the
identification of appropriate formats
and structures to use in answering
questions and practising writing
answers in order to improve clarity.
The effective use of appropriate
introductions, conclusions and helpfully
breaking the document into properly
headed subsections will help to
demonstrate a professional approach.
However, it should be stressed that the
approach taken will vary from question
to question and the exam tests the
candidates’ ability to apply their
knowledge of professional presentation.
In order to score full professional
marks, the answer will have to be
tailored to the specifics of the scenario
in the question recognising the needs
of the readers of the document.
Finally, there are some regularly
repeated but still valuable presentation
points. First, on rounding, at this
final level the candidate should use
their own judgment on how to round
figures – the basic rule is that there
should be enough detail to make a
useful conclusion without obscuring
it in insignificant figures. Second,
short paragraphs are usually clear
but single sentence paragraphs are
often insufficient and unable to get
to the depth required at Paper P5.
Bullet points are useful for lists but
not if commentary is required. Finally,
reading model solutions is not a
substitute for actually writing out your
own answers.
Practice brings the experience of
handling the time limitations that you
will face in reality and the confidence
of having met and defeated problems
outside the exam hall.
Conclusion
The key advice in order to pass
Paper P5 remains that the
candidate should:
¤ understand the objectives of the
exam as explained in the Syllabus
and prepare the detailed topics in the
Study Guide
¤ be very comfortable with the areas
tested in Paper F5 and Paper P3
¤ ensure that preparation for the exam
has been based on a programme of
study set for the required syllabus
and exam structure
¤ use an ACCA-approved textbook
for Paper P5. They are structured
around the syllabus and the
examiner reviews them so that they
give an effective coverage of what
is examinable
¤ practise questions under exam
conditions in order to improve speed
and presentation skills, ensuring
these test discursive, computational
and analytic abilities
¤ study all the relevant articles that
appear in Student Accountant
¤ be able to clearly communicate
understanding and application
of knowledge in the context of a
Professional level exam.
Alex Watt is examiner for Paper P5