CIMA F3 Syllabus A. Financial policy decisions - Value for Money (VFM) - Notes ^{3 / 13}

1. Effectiveness

1. Financial indicators

   • Quality of service/output measures; e.g. exam results; pupil/teacher ratio

   • Utilisation of resources; e.g. hospital bed occupancy; are trained teachers fully used to teach the subjects they have been trained for?

   • Flexibility; e.g. average waiting time

2. Non-financial indicators

   • Workplace morale

   • Staff attitude to dealing with the public

   • Client satisfaction in the service being provided

2. Efficiency

Financial indicators to measure efficiency

• Cost per unit of activity (e.g. cost per student)

• Variance analysis

• Comparisons with benchmark information

• Cost component as a proportion of total costs

• Costs recovered as a proportion of costs incurred (eg payment received from householders requesting collection of bulky/unusual items of refuse)

A-value-for-money (VFM) audit will look also at the economy of the use of resources. It  involves checking to see if the organisation has sourced its outputs at the cheapest price possible for the desired level of quality.

for e.g. in the case of state education, it will look into the average teaching staff salary per student, the cost of books, equipment.