A: Value for Money

Shahid Musthafa
Mind Map by Shahid Musthafa, updated more than 1 year ago
Shahid Musthafa
Created by Shahid Musthafa over 6 years ago
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Master ACCA F9: Financial Management (A: Financial Management Function) Mind Map on A: Value for Money, created by Shahid Musthafa on 10/08/2013.

Resource summary

A: Value for Money
1 the performance measurement of a Non for profit organisations can be accessed through its achievement of the Value for money criterion .This can be achieved by maximizing the three "E's"
1.1 E
1.1.1 Economy
1.1.1.1 Using the least cost option to provide a requirement
1.2 E
1.2.1 Efficiency
1.2.1.1 Maximising the ratio of output to input
1.3 E
1.3.1 Effectiveness
1.3.1.1 The extent to which objectives are achieved.
2 Since profit is not available as a performance measure in a non-profit-making organisation, other performance measures need to be considered.
2.1 The value for money principle should ensure that the service is provided for minimum cost, or that the maximum benefit is achieved by the users of the service for the sum of money provided to fund the service organisation.
3 CASE 1
3.1 By purchasing a cheap component for a system, we may achieve economy
3.1.1 by producing an output at an increased level due to the reduced cost involved, we have achieved efficiency
3.1.1.1 but if the quality is poor then the effectiveness objective is not achieved.
4 TESTING EFFECTIVENESS OF VALUE FOR MONEY
4.1 Comparing the Actual performance with the non financial targets and financial targets
4.2 By conducting surveys and questionare with the audience of the services offered
4.3 Appointing regulators or experts to monitor performance
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