Performance

Management
Financial & Non Financial Parameters of EPM
Responsibility Centres
Responsibility Accounting

► a kind of management accounting that is accountable for all the

management, budgeting, and internal accounting of a company
► The primary objective of this accounting is to support all the Planning,
costing, and responsibility centres of a company.
Essential Features of Responsibility
Accounting
Relationship between
Planned and Actual Identification of Organisation
Inputs and Outputs or
Information or Use of Responsibility Structure and
Costs and Revenues
Budgeting Centres Responsibility
Accounting System

Assigning Costs to
Individuals and Transfer Pricing Performance Participative
Limiting their Efforts Policy Reporting Management
to Controllable Costs

Human Aspect of
Management by
Responsibility
Exception
Accounting
Steps for Achieving Goals of
Responsibility Accounting

Divide Organization

Set Targets

Record Performance

Variance analysis

Corrective action
Malcolm Baldrige Framework
Baldrige Excellence Framework
Baldrige Award Recipients
Transfer Pricing
TP Methods
TP & Performance Management

►Performance evaluation
►Performance-related pay
►Make/abandon/buy-in decisions
►Motivation
►Investment appraisal
►Taxation and profit remittance
Key takeaways of TP

► Transfer pricing is an accounting practice that represents the price that

one division in a company charges another division for goods or services
provided.
► A transfer price is based on market prices in charging another division,
subsidiary, or holding company for services rendered.
► However, companies have used inter-company transfer pricing to reduce
the tax burden of the parent company.
► Companies charge a higher price to divisions in high-tax countries
(reducing profit) while charging a lower price (increasing profits) for
divisions in low-tax countries.
Financial Parameters

ROI
ROA
MVA
EVA