BAA2533 MANAGEMENT ACCOUNTING ACC2223 QUESTION 5 Course Learning Outcome (CLO) 5: Apply management tools and techniques such as balance scorecard, operational measurement measures, quality and environmental cost management. (C3) Majlis Perbandaran Kangar (MPK) is a local government body which provides a range of services for Perlis. Perlis is a wealthy area within the country with many tourist attractions. One of MPK's tasks is to ensure that waste is collected from the homes and businesses in Perlis. The goal for MPK's waste management department is to maintain Perlis as a safe, clean and environmentally friendly place where people and businesses want to both stay in and return to.' The need for waste collection is linked to public health concerns, the desire to keep the streets clean and attractive and the desire to increase the amount of rubbish which is recycled. MPK is funded through a single local tax and does not charge its residents or businesses separately for most of its services, including waste collection. There is no public or political appetite for outsourcing services such as waste management. Waste collection is performed by the workforce using a fleet of vehicles. The waste is either taken to recycling plants or else to landfill sites for burying. MPK obtains revenues from all the recycled waste but this only just covers the cost of running the recycling facilities. Against this background estimate that waste will increase by 1% p.a. in the future, the national government has ordered local authorities, such as MPK, to promote the recycling of waste and has set a target of 40% of all waste to be recycled by 2020. In order to discourage the creation of non-recyclable waste, the government has imposed a levy per ton of waste buried in landfill sites and has stated that this levy will rise over the next five years in order to encourage continuing improvement in the amount of recycled waste. Currently, Perlis is in a long recession and so local authority revenues have fallen as tax revenues reflect the poor state of the economy. Along with other local authorities, MPK has tried to cut costs and so has focused on financial measures of performance. In a recent, private meeting, the chief executive of MPK was heard to say 'keep costs under control and we will worry about quality of Page 1 of BAA2533 MANAGEMENT ACCOUNTING ACC2223 service only when complaint levels build to an unacceptable level. As one of the area's largest employers, cutting staff numbers has been very difficult for MPK due to the impact on the local economy and the reaction of the residents. The current performance indicators used at MPK are drawn from the existing information systems with national figures given for comparison. Those relating to waste collection for the year ending 31 August 2019 are: Volume of waste (tonnes) MPK National total 14,350,000 Landfill 850,000 700,000 Re-cycled Total 7,500,000 21,850,000 1,550,00 0 Cost (RM'000) MPK Staff cost 110,000 250,000 National total 1,190,000 2,850,000 Total cost MPK National total 39,900 No. of staff No. of households 3,500 2,380,95 2 18,250 26,190,476 No. of complaints about waste uncollected Frequency of waste collections (days) 200,750 12 14 Notes on MPK data: 1. Cost data and no. of households comes from MPK's financial systems. 2. Waste data comes from weighing lorries at the landfill sites and recycling facilities. 3. Staff data is collected from MPK's HR system. 4. Complaints data is based on numbers of letters and phone calls to the waste management department. 5. Frequency of waste collection data is obtained from the department's vehicle schedules. Page 3 of BAA2533 MANAGEMENT ACCOUNTING ACC2223 Based on the above case study, you are required to: a) Discuss why non-financial indicators are particularly useful for public sector organizations, illustrating your answer with brief examples relevant to MPP. (10 marks) b) For non-profit making organization, the value for money uses the 3E, which are Economy, Effectiveness, and Efficiency i. Discuss how Economy should be assessed by suggesting and calculating justified performance indicators using the information in the scenario. (5 marks) ii. Discuss how Efficiency should be assessed by suggesting and calculating justified performance indicators using the information in the scenario. BAA2533 MANAGEMENT ACCOUNTING ACC2223 QUESTION 5 Course Learning Outcome (CLO) 5: Apply management tools and techniques such as balance scorecard, operational measurement measures, quality and environmental cost management. (C3) Majlis Perbandaran Kangar (MPK) is a local government body which provides a range of services for Perlis. Perlis is a wealthy area within the country with many tourist attractions. One of MPK's tasks is to ensure that waste is collected from the homes and businesses in Perlis. The goal for MPK's waste management department is to maintain Perlis as a safe, clean and environmentally friendly place where people and businesses want to both stay in and return to.' The need for waste collection is linked to public health concerns, the desire to keep the streets clean and attractive and the desire to increase the amount of rubbish which is recycled. MPK is funded through a single local tax and does not charge its residents or businesses separately for most of its services, including waste collection. There is no public or political appetite for outsourcing services such as waste management. Waste collection is performed by the workforce using a fleet of vehicles. The waste is either taken to recycling plants or else to landfill sites for burying. MPK obtains revenues from all the recycled waste but this only just covers the cost of running the recycling facilities. Against this background estimate that waste will increase by 1% p.a. in the future, the national government has ordered local authorities, such as MPK, to promote the recycling of waste and has set a target of 40% of all waste to be recycled by 2020. In order to discourage the creation of non-recyclable waste, the government has imposed a levy per ton of waste buried in landfill sites and has stated that this levy will rise over the next five years in order to encourage continuing improvement in the amount of recycled waste. Currently, Perlis is in a long recession and so local authority revenues have fallen as tax revenues reflect the poor state of the economy. Along with other local authorities, MPK has tried to cut costs and so has focused on financial measures of performance. In a recent, private meeting, the chief executive of MPK was heard to say 'keep costs under control and we will worry about quality of Page 1 of BAA2533 MANAGEMENT ACCOUNTING ACC2223 service only when complaint levels build to an unacceptable level. As one of the area's largest employers, cutting staff numbers has been very difficult for MPK due to the impact on the local economy and the reaction of the residents. The current performance indicators used at MPK are drawn from the existing information systems with national figures given for comparison. Those relating to waste collection for the year ending 31 August 2019 are: Volume of waste (tonnes) MPK National total 14,350,000 Landfill 850,000 700,000 Re-cycled Total 7,500,000 21,850,000 1,550,00 0 Cost (RM'000) MPK Staff cost 110,000 250,000 National total 1,190,000 2,850,000 Total cost MPK National total 39,900 No. of staff No. of households 3,500 2,380,95 2 18,250 26,190,476 No. of complaints about waste uncollected Frequency of waste collections (days) 200,750 12 14 Notes on MPK data: 1. Cost data and no. of households comes from MPK's financial systems. 2. Waste data comes from weighing lorries at the landfill sites and recycling facilities. 3. Staff data is collected from MPK's HR system. 4. Complaints data is based on numbers of letters and phone calls to the waste management department. 5. Frequency of waste collection data is obtained from the department's vehicle schedules. Page 3 of BAA2533 MANAGEMENT ACCOUNTING ACC2223 Based on the above case study, you are required to: a) Discuss why non-financial indicators are particularly useful for public sector organizations, illustrating your answer with brief examples relevant to MPP. (10 marks) b) For non-profit making organization, the value for money uses the 3E, which are Economy, Effectiveness, and Efficiency i. Discuss how Economy should be assessed by suggesting and calculating justified performance indicators using the information in the scenario. (5 marks) ii. Discuss how Efficiency should be assessed by suggesting and calculating justified performance indicators using the information in the scenario