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ACCA Strategic Professional · Advanced Performance Management · Management reports

Anselm Co is preparing an integrated management report for its board. Which of the following inclusions would most improve the report's ability to link non-financial performance to financial outcomes?

The best improvement is to present financial and non-financial measures together for each strategic objective, showing the assumed cause-and-effect links, such as training hours reducing defects and warranty costs. This lets the board see how non-financial drivers lead to financial results, unlike a separate appendix or more historical ratios.

  1. AA separate appendix listing all non-financial data without reference to financial results
  2. BShowing, for each strategic objective, financial and non-financial measures with the assumed causal relationships between them, such as how staff training hours affect defect rates and warranty costsCorrect
  3. CA longer list of historical financial ratios
  4. DReplacing all financial targets with qualitative statements

Explanation

Linking measures to objectives and showing cause-and-effect relationships, as in a strategy map, helps users see how non-financial drivers affect financial results. A separate appendix leaves the link unclear. More historical ratios or removing financial targets adds nothing to the link.

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