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Performance
Management (APM)
March/June 2021
Examiner’s report
The examining team share their observations from the
marking process to highlight strengths and
weaknesses in candidates’ performance, and to offer
constructive advice for those sitting the exam in the
future.

Contents
General comments .............................................................. 2
Format of exam.................................................................... 2
General Approach to the APM examination ........................ 2
Question 1 – Fiag ................................................................ 3
Requirement (a) – 26 marks ............................................ 3
Requirement (b) – 12 marks ............................................ 5
Requirement (c) – 12 marks ............................................ 5
Professional marks .......................................................... 6
Question 2 – Harray ............................................................ 6
Requirement (a) – 6 marks .............................................. 7
Requirement (b) – 12 marks ............................................ 8
Requirement (c) – 7 marks .............................................. 9
Question 3 – Gaddon ........................................................ 11
Requirement (a) – 10 marks .......................................... 11
Requirement (b) – 8 marks ............................................ 11
Examiner’s report – APM March/June 2021 1
Requirement (c) – 7 marks ............................................ 12
Conclusion ......................................................................... 12
General comments

This examiner’s report should be used in conjunction with the published March/June
2021 sample exam which can be found on the ACCA Practice Platform.
In this report, the examining team provide constructive guidance on how to answer the
questions whilst sharing their observations from the marking process, highlighting the
strengths and weaknesses of candidates who attempted these questions. Future
candidates can use this examiner’s report as part of their exam preparation, attempting
question practice on the ACCA Practice Platform, reviewing the published answers
alongside this report.

Format of exam

The examination comprised two sections, A and B. Section A consisted of one

compulsory question for 50 marks in total. Section B consisted of two compulsory
questions for 25 marks each. Four professional marks were available within Section A
for the format, style and structure of the discussion of the candidate’s answer which
should be written as a report.

General Approach to the APM examination

The examining team continue to be concerned by the quality of answers which has
been observed, which is consistent with that of the previous diets of APM. The advice
in past examiners’ reports and approach articles does not seem to have been taken
up by many candidates. The examining team would strongly advise that candidates
use these materials to ensure that they have the right overall attitude to APM, which
is intended to lie at a post-graduate level.

Principally, this means paying specific attention to the question requirement: at APM,
questions demand that scenarios are “analysed”, “evaluated” and “assessed” rather
than described. The difference is fundamental and crucial, as an analysis involves a
study of applicability rather than a description. Also, providing a history of how and
when models were developed, although interesting adds little benefit when providing
advice.

Knowledge of any method or technique is essentially taken for granted at this level.
The essence of APM is the application of this knowledge to a practical scenario and it
is the demonstration of these skills which will make for a successful response on this
examination. Candidates who come to the APM examination expecting to repeat
memorised material will probably score only between 20% and 30%. Many candidates
have clearly been taught that they should define in their answer any ‘jargon’ terms in
the question requirement. However, they are wrong to assume that this alone will
provide them with a passing answer at APM.

A lack of basic knowledge was demonstrated by many candidates across these

questions – a significant number of candidates appeared not to understand or be able
to calculate variances or to comment effectively on liquidity indicators. Even where
details of models were provided for candidates, there were a significant number of
candidates who failed to use them appropriately.

Examiner’s report – APM March/June 2021 2

Candidates need to be aware that performance management is an area which, at an
advanced level, is dependent upon situation and environment. A good, professional-
level answer will go beyond the mere repetition of how a technique works and focus
on relating it to the entity's specific environment. As in previous diets, it was very clear
to the examining team that those candidates that had grasped the need for this went
on to pass the examination. Also, those candidates who specifically answered the
requirements, addressing each part specifically, paying attention to the relevant verbs
scored well.

Question 1 – Fiag

This question concerned a bicycle manufacturing business, Fiag Bicycles (Fiag) which
tested performance reporting, the performance measurement impact of an analysis of
the external business environment and issues relating to the decision to pay a bonus
to the production manager. Overall, performance was mixed which was disappointing
given the large number of commonly asked points present.

Requirement (a) – 26 marks

Part (a) on performance reporting was split into two sub-parts. Part (a) (i) required
candidates to assess whether the impression of performance given by the supplied
performance report was being manipulated. This part was poorly done with many
candidates appearing to be asked such a question for the first time. For a requirement
worth 12 marks, candidates’ analysis was superficial and often very short.

Examiner’s report – APM March/June 2021 3

A successful approach was to consider the choices that the author of the report had
made - what to include and what not to include and then to explain how this might give
a wrong impression of performance. Candidates needed to identify misclassification
of costs and in particular, explain the impact of those misclassifications on key
performance indicators for the company, for example, exceptional costs’ impact on
return on capital employed. The commentary provided was also full of examples of
‘telling only the good news’ and failing to put the figures into a broader context. It was
good to see that a large number of candidates noticed that the comments on revenue
only mentioned the good performance of the new models while ignoring the overall
drop in the company’s revenue. Candidates must be able to demonstrate the ability to
see the whole picture as well as the detail.

One detailed point worth noting again in an APM examiner’s report is that
candidates seem under the misapprehension that (audited) financial figures are
more able to be manipulated than (unaudited) non-financial ones. This idea of
financial figures being regularly manipulated appears time and time again in candidate
answers to many different questions and the examining team are surprised at the
failure by candidates at this stage of their qualification to understand the basic control
systems of a company.

Part (a)(ii) required the candidates to assess whether the supplied performance report
addressed the company’s objectives and briefly comment on other presentation issues
in that report. Although this is a frequently examined area for, candidate’s performance
was mixed.

Candidates often showed an incomplete ability to break apart and prioritise a

statement of the company’s objectives. A feature of such answers was that the
objective is merely ‘cut and paste’ into the report which offers no added value to the
reader. Given that the analysis of the objectives is critical to achieving the purpose of
a performance report, it is disappointing that this breakdown and prioritisation is not
done. There are many examples of this exercise in previous diets of APM.

Many candidates’ suggestions of possible issues in measuring the objectives were

good but lack depth, by which we mean there is a failure to follow up their suggested
solution with its implications. For example, it was correct to pick up on the need to
measure sustainable growth in returns to shareholders, but many candidates did not
say how that could be achieved, particularly in relation to the supporting strategies.

Unfortunately, there was still some candidates who continue to give an assessment of
the performance of the company rather than an assessment of the report.

On the presentation aspects of the company’s report, the lack of depth of answers
offered was often illustrated by candidates who simply said that the report should
contain ‘both financial and non-financial indicators as well as information from external
sources’ without providing justification of this advice or company specific illustrations
of what they meant. This justification is key to scoring marks so candidates should be
articulating in their report why these additions would be useful for Fiag.

Examiner’s report – APM March/June 2021 4

Requirement (b) – 12 marks

Part (b) required candidates to take an existing PEST analysis of the company’s
external business environment and advise on the implications of the factors noted on
the business and then, give suitable recommendations for performance indicators to
measure those implications. This part was generally well done with candidates often
getting close to maximum marks.

Most candidates followed the scenario instruction and related the consultant’s analysis
to Fiag’s business. The KPIs suggested were then mostly linked to this analysis. Those
that failed to show the link between their suggested indicator and the commercial point
at issue limited the marks available to themselves. Weaker candidates showed a
tendency to simply cut and paste the consultant’s comments without adding any
further comment - this added no value and so did not gain credit.

A good approach to this requirement would be:

• Heading – Political
• Advice on the implications for Fiag on the two factors identified by the
consultant
• Suggested KPIs with justification as to how they link to implications of the
factors

Then repeat for each PEST category.

Requirement (c) – 12 marks

Part (c) required candidates to consider the implications of a suggestion of breaking

down budget variances for controllable factors and how that would affect the bonus of
the production manager at the company specifically. As in previous diets, questions
around variances (planning and operational) are often done poorly. Many candidates
attempted no quantification work despite the fact that being able to comment on
whether the production manager had achieved her target required this work. The
calculation work was very straight-forward. Better candidates did make the attempt but
chose to compare unit costs to express their answers. The examiners felt that this is
not likely to be the best presentation for a board who would be looking for absolute
monetary values for the variances as these feed into profit performance. Nevertheless,
these candidates did gain credit for their efforts. As mentioned in previous examiner
reports there is a need for candidates to have brought forward knowledge of key
management accounting techniques from the Performance Management exam.

Examiner’s report – APM March/June 2021 5

Professional marks

As is now common at APM, those candidates who had practised writing professional answers
prior to the examination performed admirably in the presentation area (4 marks). The markers
were looking for suitable report headings, an introduction, a logical structure, signposted by
the good use of subheadings in the answer, and a clear, concise style. Overall, however,
performance in this area has slipped from previous diets.

The purpose of the examination is to produce documents which could handed to a client or
line manager. While the examiners take note of the time pressure that candidates are under,
this time pressure is common in a working environment for a professional and part of the test
that this examination represents.
Whilst there is the opportunity in the computer-based exams to use functionality like cut and
paste, it is not being used in the right way by a significant number of candidates. The cutting
and pasting of the requirements as both the introduction and the subheadings show a lack of
thought and effort and does not read well. In addition, many candidates are leaving the number
of marks available in their report. Candidates are encouraged to use the functionality but to
consider the purpose of the report as mentioned earlier, for example an introduction should
be a comprehensive paragraph detailing the contents of the report. In addition, copying out
the embedded requirement from the scenario is good technique to allow the candidate to refer
to it easily whilst that part of the question is being answered, these should be deleted after.
Leaving these in the report compromises the professionalism of both the reading of the report
and its look and feel.

Question 2 – Harray

This question was about a family-owned keyboard manufacturing company, Harray

Keyboards (Harray), which was seeking to use the Performance Pyramid (PP) to
analyse its performance indicators.

Examiner’s report – APM March/June 2021 6

Requirement (a) – 6 marks

Part a) of the question was generally well done. This was because candidates
explained how the different levels of the PP related to each other and how the PP
overall addressed areas of internal efficiency and external effectiveness. Good
responses here gave a clear indication of the specifics of that relationship: for
example, “a focus on quality at the operational level is likely to lead to enhanced
customer satisfaction at the tactical level. Enhanced customer satisfaction is then likely
to enhance Harray’s market share at the strategic level. In this way, the PP has helped
Harry achieve external effectiveness through its focus on specific indicators that are
customer focused at the three levels detailed in the PP.”
Responses which did not score as highly in this part tended to be very brief or simply
described the headings of the PP. Given that the headings were detailed in the
scenario, there is little credit available for description of information that has already
been conveyed. Some candidates described the headings in further detail but failed
to offer any explanation of the connection or links between them. It is the explanation
of the links which is the key focus of the requirement and it was very difficult for the
marking team to award much credit for responses which made no attempt to address
this.
Some candidates offered alternative indicators that could be used for the headings in
addition to those that were offered in the scenario. Unfortunately, such responses did
not address the question and the only advice the marking team can offer here is for
candidates to try and ensure they read the question and make themselves fully aware
of what the requirement is asking them to undertake.
A good way to respond to this part of the question overall would be to have:
• Offered an explanation of the PP in terms of how it links drivers of performance
through different layers of the organisation
• Demonstrate and exemplify how this is the case through describing the links
and how this might help Harray achieve internal efficiency, external
effectiveness and, ultimately, its corporate vision.

Examiner’s report – APM March/June 2021 7

Requirement (b) – 12 marks

Part b) which asked for an analysis of performance indicators for the PP to be

completed and then an evaluation of the operational indicators was generally badly
done.
Of most concern to the marking team was the very significant number of candidates
who did not comprehend which indicators that the operational level related to even
though the appendix of information listed out the headings of the pyramid in order.
As a result of not appreciating which were operational level indicators, many
candidates attempted to evaluate the performance indicators for every single heading
of the PP. As there are only four operational headings, and ten headings overall, this
led to candidates spending much of their time writing on areas that were irrelevant to
the question asked. Such responses were only worthy of merit when their answers
addressed the operational indicators.
The other consequence of this was that candidates wasted time which they probably
did not have, given that this was the last question attempted in many cases. It was
undoubtedly one of the reasons for the very brief responses in part c).
The part of the question that asked for the analysis to be completed was asking for
indicators to be calculated, based on the information given in the question’s appendix.
Many candidates did undertake relevant calculations and the vast majority of those
calculations were undertaken correctly. The three areas where calculations were most
relevant were the areas of waste, quality, and delivery.
Candidates were less competent, however, at offering an evaluation of the indicator.
Many candidates simply undertook the calculations and did not add anything additional
by way of discussion or evaluation. Often candidates simply gave an indication as to
what a measure might be – for example, % of late deliveries for the Delivery heading
– without saying why that would be useful for Harray. A response which had indicated
– “% of late deliveries would be an appropriate indicator to use for the Delivery
heading, as a high proportion of late deliveries is likely to have an adverse effect on
customer satisfaction. Whereas customers who receive their goods on time cannot
always be assumed to be satisfied, it can be logically inferred that a high proportion of
late deliveries would lead to unhappy customers” – would have demonstrated an
evaluation of the suitability of the indicator.
Some candidates offered a very brief discussion or a discussion which showed little
by way of commercial acumen. For example, Harray was working to approximately
86% utilisation and many candidates felt that this represented an unacceptable level
of wasted resource. In a similar manner, many candidates felt that Harray’s on-time
deliveries at 92% represented terrible performance. In truth, whereas the indicators

Examiner’s report – APM March/June 2021 8

used show there is a potential for improvement even if they do not pinpoint exactly
where that potential may lie, they nevertheless indicate that the company is
performing, generally, quite well.
A good approach to this requirement would be:
• Use headings for each of the operational indicators
• Under each heading perform the calculations where there was clear information
in the appendix to do so.
- Discuss what those indicators signify. For example, ‘waste would be a good
thing for Harray to measure as it would focus the entire production department
on continually improving performance to attempt to get to as close as 100% as
possible. By so doing, Harray would also be able to enhance its productivity’.

Requirement (c) – 7 marks

This part of the question was the poorest part undertaken overall.
The main reason for this is that many candidates either did not attempt this part or
wrote so little that it would have been impossible for them to score beyond one or two
marks at the very most. It is certainly not the case that a great deal of narrative will
automatically lead to many marks but, likewise, it is very difficult to award any credit
to any candidate response when so little has been written.
For those responses that did try to address the question, many (if not most) did not
fully appreciate that what they were being asked about was the reliability of non-
financial performance indicators (NFPIs) and not about the usefulness of NFPIs to
Harray. This latter area tended to be the focus of many responses and the advantages
of data such as on-time deliveries, customer satisfaction and time from placing of order
to delivery of it were given. It was, however, almost impossible for the marking team
to award any credit to such responses as they did not respond to the question asked.
Some responses also gave an indication of the potential effects of some of the NFPIs.
For example, an on-time delivery rate of 82% would surely mean that 8% of Harray’s
customers would go elsewhere. Such responses offered almost nothing on the actual
reliability of the NFPIs themselves.
A further area of concern with this part of the question was that, again, many
candidates did not recognise that they were only being asked about the reliability of
operational NFPIs, not NFPIs at every level in the PP.
Some candidates addressed this question as though it were asking for ways in which
Harray could improve their performance in the NFPIs that had been given in the
scenario and, in some cases, calculated in part b). Many responses therefore indicated
what Harray might do to enhance customer satisfaction, which often took the question

Examiner’s report – APM March/June 2021 9

into areas such as changing strategic direction. Sadly, such responses again failed to
address the question asked.
Some responses did address the question demands and those responses tended to
focus on the information given in the scenario that was relevant to the question asked.
For example, a very good response would highlight: “Harray is relying on information
from Achall to detail the percentage of on time deliveries. As this information is
supplied to Harray by Achall from Achall’s systems, Harray seems to have little or no
way of verifying that it is correct. We do not know what the service level agreement
(SLA) between the two companies indicates but it can be safely assumed that Achall
would not want to pass on to Harray information which indicates that it has broken the
SLA and may be liable for a payment penalty. The information is not only unreliable,
therefore, but Achall also would appear to have a motive to manipulate it should it be
unfavourable for them.”
A good response to this question would:
• Take each operational NFPI in turn and discuss how reliable it might be:
o Quality, for example, relies upon the quality inspector’s count of the
rejected keyboards. The quality inspector may not have counted
accurately and/or, possibly, may have missed some keyboards which
perhaps should have been rejected. The indicator in its current format is
therefore unreliable and there should either be an automated way of
ascertaining which keyboards should be rejected or someone else
should work with the production manager to ensure that there is some
verification of both the inspector’s work and the number of rejected
keyboards.

Examiner’s report – APM March/June 2021 10

Question 3 – Gaddon

The question concerned a service company, Gaddon, which operated a chain of

gymnasiums and tested the corporate failure area of the syllabus. Overall, this
question was reasonably done as is often the case when this area is examined.

Requirement (a) – 10 marks

Part (a) required the calculation of a quantitative failure model score and comments
on the use of such a model. The calculations required were straight-forward and often
well done. Candidates also made reasonable use of the spreadsheet which was
pleasing to see. The narrative part of the question was more poorly done with
candidates lacking knowledge of how quantitative models are constructed and so not
able to comment on the assumptions built into it.

Requirement (b) – 8 marks

Part (b) asked candidates to advise on the importance of liquidity indicators in

assessing failure and then use them to consider the likely failure of the company in the
scenario. This part was poorly done. Many candidates fixated on the current ratio and
discussed only this aspect of the company’s position. There were many unrealistic
suggestions concerning cash collection from receivables given that this is a

Examiner’s report – APM March/June 2021 11

gymnasium operator collecting from the general public. Thereby, candidates omitted
easy (and more important) comments on the actual cash position illustrated by the
company’s current difficulty to meet its cash obligations. There was some attempt at
calculations but like the commentary these tended to focus on the current ratio,
ignoring interest cover.

A good approach to this question would have been to:

• Offer advice as to why liquidity is important

• Identify issues from the scenario which indicate Gaddon had problems
• Recall appropriate liquidity measures like the current ratio, and interest cover,
calculate them and comment on what they mean for Gaddon.

Requirement (c) – 7 marks

Part (c) focused on an evaluation of the factors that had led the company to its current
precarious position. This part was reasonably well done as it required only that the
candidate could identify from the scenario those aspects driving the problems of the
company. Successful candidates often used the ideas contained in Argenti’s model to
help themselves in this selection process although the model itself was not being
tested.

Conclusion

Overall, there were opportunities on these questions to score well, and some
candidates on each part of each question managed to do this. However, as with
previous diets the main lessons that can be learnt for those attempting APM in the
future are;

• ensure that fundamental, underpinning knowledge is learnt and understood;

• specifically answer the requirement that is set and ensure that all parts are
answered;
• use the requirement and its component parts to define the structure of the
answer;
• all answers should relate to the scenario set, and sensible examples from the
scenario should be used/suggested, and;
• ensure that reports in Section A questions have a professional appearance.

The examining team would advise candidates to practice using the requirements and
their component parts to structure questions when attempting them. In addition, it is
recommended that candidates use the Practice Platform to familiarise themselves with
the CBE environment and how APM is presented on CBE. This will help candidates to
assimilate the APM questions more effectively and produce professional and targeted
answers which will improve examination performance.

Examiner’s report – APM March/June 2021 12