The following statements have been made about measuring performance in not-for-profitorganisations:

(1) Output does not usually have a market value, and it is therefore more difficult tomeasure effectiveness.

(2) Control over the performance can only be satisfactorily achieved by assessments of‘value for money’.

Which of the above statements is/are true

(1) only

(2) only

Neither (1) nor (2)

Both (1) and (2)

A government is trying to assess schools by using a range of financial and non-financialfactors. One of the chosen methods is the percentage of students passing five exams ormore.

Which of the three Es in the value for money framework is being measured here

Economy

Efficiency

Effectiveness

Expertise

Which of the following statements, regarding the existence of multiple objectives in not-for-profit organisations, is/are correct

(1) They ensure goal congruence between stakeholders.

(2) Compromise between objectives can be problematic.

(1) only

(2) only

Both (1) and (2)

Neither (1) nor (2)

A government is looking at assessing hospitals by reference to a range of both financial andnon-financial factors, one of which is survival rates for heart by-pass operations andanother is ‘cost per successfully treated patient’.

Which of the three E’s in the ‘Value For Money’ framework is not measured here

Economy

Effectiveness

Efficiency

Externality

Explain the potential benefits of operating a transfer pricing system within a divisionalisedcompany.

Which of the following statements regarding standard setting is correct

Imposed standards are more likely to be achieved

Managers across the organisation should be targeted using the same standards

Standards should be set at an ideal level with no built in stretch

Participation in standard setting is more motivating than where standards areimposed

When setting performance measurement targets it should be considered that there is thepossibility that managers will take a short term view of the company and may even betempted to manipulate results in order to achieve their targets.

Which of the following would assist in overcoming the problems of short-termism andmanipulation of results

Rewards should be linked to a wider variety of performance measures includingsome nonfinancial measures

Managers should only be rewarded for the results achieved in their own departments

Any capital investment decision should be judged using the payback method ofinvestment appraisal

Setting targets involving the overall performance of the company will be moremotivating for managers

Stakeholders will have different objectives and companies may deal with this by having arange of performance measures to assess the achievement of these objectives.

Which of the following statements is true in relation to stakeholders

The aim of all performance measures should be to increase short term profit

The only interest of the government is that companies pay their taxes

Shareholders will be looking for increasing dividends and increased share price

Only internal stakeholders need to be considered by companies

The public service funding system operates on the basis that performance against non-financial objectivesleads to a reduction in the level of funding. True or false

True

False

Economy means cost cutting. True or false

True

False