Question

CPA plays strategic rule that impacts the economic value of the society. what they should implement and how to measure their performance?

Answer 1

Formalised strategic planning processes that outline quantitatively measured goals and detailed plans of action:

• Strategy implemented and controlled through a combined use of budgets and performance measurement systems (such as balanced scorecards)

– Budgets serve primarily as a system to monitor and evaluate deviances from targets, while performance management systems are used more intensively to encourage information sharing, debate and to direct attention towards new opportunities

– Measurement systems incorporate a broad range of dimensions and measures used for subordinate evaluation, particularly ‘leading’ measures that provide an indication of future financial performance Greater emphasis on performance-contingent compensation

• Use of structural mechanisms, such as task forces, project committees and cross-functional teams, that cut across traditional hierarchical relationships to encourage information sharing

• Use of policies and procedures that limit the scope of subordinate behaviours in a non-invasive way, such as codes of conduct, and pre-action reviews that subject subordinate activities to review prior to implementation but provide significant autonomy once approved

• Emphasis on human resource procedures and development of shared organisational values, which provide a foundation for decision making

• Organisations that emphasise efficiency as a strategic priority used performance measurement systems as a means of accountability and evaluation, and emphasise bonus compensation determined objectively on the basis of short-term targets

• Organisations that emphasise innovation used budgets and performance measurement systems to evaluate past actions and to develop new strategic directions. To give subordinates significant operational autonomy and structure the firms encouraged information sharing between departments

• Organisations attempting to balance innovation and efficiency had highly formalised strategic planning processes and

encouraged subordinate participation and used both budgets and performance management systems intensively

• High performing firms, irrespective of strategic priority, benefited from a focus on human capital and organisational values.

Measurement systems are typically used for two main purposes.

1. The first is decision-making, which refers to the use of information to identify problems and their solutions, and the second is control, which refers to the use of information to influence behaviour within the organisation. Our focus here was primarily on the latter.
2. Two systems that are commonly used for control are budgets and performance measurement systems (PMSs). PMSs are defined as information systems that provide financial and non-financial indicators that measure multiple dimensions of performance, examples being key performance indicators (KPI), dashboards and the balanced scorecard.