ACCA AA Syllabus C. Internal Control - Value for Money - Notes ^{4 / 8}

As follows

1. Economy

   Are goals achieved at a minimum cost (still paying attention to quality)?

2. Efficiency

   Are resources being used to maximise output?

3. Effectiveness

   Are objectives being achieved?

These three areas can be thought of as Input – Process – Output.

• Inputs – Economy As cheap as possible given quality

• Process – Efficiency  Perform the process as efficiently as possible

• Outputs – Effectiveness These match objectives set

Problems with Value for Money

• It may be difficult to measure outputs and efficiency.  For example, how do we measure the output of a fire service?

• It may be difficult to define the objectives particularly of a Not for Profit organisations with many different factors influencing policy.

• Economy and efficiency may work against quality which will be required to ensure effectiveness.

• Cost control may be over emphasised.