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ACCA Strategic Professional · Strategic Business Leader · Governance scope and approaches

A university, a not-for-profit body, is judged by its governing council on teaching quality, research impact and access for disadvantaged students rather than on profit. Which statement best describes the implication for how its governance performance should be assessed?

Its governance performance should be assessed against its mission using a range of non-financial and value-for-money measures, alongside financial sustainability. A university's purpose is education, research and access, not profit, so commercial measures such as ROCE or share price would be misleading.

  1. AOnly financial ratios such as return on capital employed are relevant
  2. BSuccess should be assessed against its mission using a range of non-financial and value-for-money measures alongside financial sustainabilityCorrect
  3. CGovernance is unnecessary because there are no shareholders
  4. DPerformance should be judged solely by the share price of comparable listed firms

Explanation

Not-for-profit bodies pursue mission and public benefit, so performance is measured against several objectives, including non-financial outcomes and value for money, while still staying solvent. Ignoring governance or using ROCE and share price misapplies commercial measures.

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