Help clients take measure: CPAs can use performance measurement to become more complete business advisers.
Journal of Accountancy › Vol. 193 Nbr. 6, June 2002
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Extract
Help clients take measure: CPAs can use performance measurement to become more complete business advisers.
EXECUTIVE SUMMARY
* PERFORMANCE MEASUREMENT (PM) IDENTIFIES, monitors and improves those business activities that affect a company's profitability. The method uses both leading (future) and lagging (past) indicators to assess how well a business is meeting its targets in the present. * THE SEVEN ESSENTIAL STEPS FOR A PM system are: Prepare a strategic plan, identify the CSFs, determine the CSF measures, establish measurement standards, collect data and monitor results, make necessary operating revisions and reward success. * WHEN EMPLOYEES WORK WITH MANAGEMENT to pick critical success factors, all groups better understand how goals are met. Performance measures allow employees to see clearly what management cares about and the results it wants. * CSF MEASURES SHOULD BE IN terms of volume, time and/or quality. They should be capable of being assessed weekly or even daily. Choose measurement standards that are realistic to keep the PM process healthy. * A CPA WHO NOTES AND COMPARES weekly production figures with an industry benchmark during an audit or other engagement has spotted an ...See the full content of this document
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