chapter 3

Question 1

how can variance analysis help to improve budgeting

Answer 1

shows the differences between the budget and the actual expense or income

can help to inform management when planning future budgets and improve its accuracy

Question 2

what are three techniques that can be used to monitor progress against a business plan

Answer 2

management accounting

critical success factors

key performance/risk indicators

Question 3

what are three types of key risk indicator

Answer 3

IT downtime

complaints

examples of fraud

Question 4

what is strategic information used for

Answer 4

used by senior managers to plan the objectives of their organisation and to assess whether the objectives are being met in practice

Question 5

what is a project

Answer 5

considered to be a finite piece of work

Question 6

what is a change management programme

Answer 6

seeks to implement changes in real time

should also handle all stakeholders that are affected by change

Question 7

what are the two main approaches to managing knowledge in financial services organisations

Answer 7

codification strategy

personalisation strategy

Question 8

what is codification strategy

Answer 8

knowledge is codified and stored in databases, it is easily accessible by appropriate employees

Question 9

what is personalisation strategy

Answer 9

knowledge is closely tied to the person who developed it and is shared mainly through direct person to person contacts and structured training programmes

technology is used to help people communicate knowledge rather than to store it

Question 10

what are critical success factors

Answer 10

critical to realising a company’s mission by either exploiting opportunities or by fending off dangers posed by external threats and internal weaknesses

Question 11

what is a kpi

Answer 11

quantifiable points in the development of a company’s strategy that show whether or not the company is reaching its targets and objectives

can be results oriented or effort oriented

Question 12

what is a kri

Answer 12

measures the type and effectiveness of controls that are in place

e.g. it downtime

Question 13

what is a balanced scorecard

Answer 13

identify knowledge, skill and systems that employees will need in order to innovate and build the right strategic capabilities and efficiencies

Question 14

what is benchmarking

Answer 14

allows a company to compare its own progress with that of a comprehensive standard

Question 15

types of benchmarking

Answer 15

internal, external, functional

Question 16

what is functional benchmarking

Answer 16

assessment of the company’s main functions and processes and compares them against the same functions and processes in other organisations but not necessarily competitors

Question 17

what is mbo

Answer 17

management by objectives

process of defining objectives within an organisation so that both management and employees agree to the objectives and understand what they need to do in order to achieve them

Question 18

what is top down budgeting

Answer 18

decide on individual plans for each department and function, these plans are given to the individual managers to implement

Question 19

what is bottom up budgeting

Answer 19

department managers construct their own budgets within set guidelines

these are then passes up to the managers and directors who incorporate the individual budgets into the organisation’s master budget

Question 20

what is zero based budgeting

Answer 20

relies on managers to justify their expenditure from a fresh standpoint

Question 21

what are rolling budgets

Answer 21

always looking ahead, at the end of each month a new month is added at the far end of the whole period

Question 22

what is variance

Answer 22

difference between actual and budgeted performance

Question 23

what is unfavourable variance

Answer 23

when budgets are not met

Question 24

what is favourable variance

Answer 24

when budgets are exceeded

Question 25

what is strategic information

Answer 25

what and why a business chooses to do something

Question 26

what is tactical information

Answer 26

how an organisation plans to accomplish their strategic objectives

Question 27

strategic planning covers what time range

Answer 27

3-10 years

Question 28

timescale for tactical planning

Answer 28

1-3 years

Question 29

what do operational plans look at

Answer 29

routine day to day matters

Question 30

Key performance indicators are quantifiable points in the development of a company’s strategy that show

Answer 30

whether or not the company is reaching its targets and objectives

Question 31

example of effort orientated kpis

Answer 31

number of potential customers contacted

number of debtors pushed