Video: Balanced Scorecard

In this lesson, join Nick Palazzolo, CPA, as he demystifies the concept of financial scorecards, emphasizing their role as performance management tools tailored to fit various entities. Discover how scorecards benchmark business performance against objectives like revenue growth or cost reduction. Nick delves into the concept of strategic business units, how they fit into a company’s financial responsibility framework, and the importance of understanding your role within these segments. Then, gear up for a deep dive into the Balanced Scorecard, a comprehensive performance metric that incorporates critical success factors across finance, customer satisfaction, internal business process, and innovation and HR, benefiting a broad range of organizations from for-profit to nonprofit and government agencies. Get ready to familiarize yourself with the essentials of Balanced Scorecards and see a tangible example that brings this strategic performance management tool to life.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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Financial scorecards. What the heck is this? Well, if you were wondering, then I am here to share with you what it is. These are benchmarking performance management metrics, right? This is a way to measure performance and these are customized to fit each type of entity using them.

Think about it, it's a scorecard. So what's the scorecard? It's going to rate you, let's say from one to ten. That's not necessarily the financial scorecard. I'll show you an example of one and financial.

So it's going to say, all right, based on these numbers, this is how well you're doing. These financial scorecards can include comparing budget versus actual performance variance reports. Did we have a high or low variance? Did we do better than expected budget versus actual overall business performance? Nothing crazy there. Financial performance goals are met through performance objectives given to each segment.

Could be raise revenue by 5% or cut costs by 5%. Right? Types of responsibility segments. These are just segments on the financial scorecard. I'd say not as important as what we just previously saw to memorize, but nonetheless, still something I would say to memorize.

These are also known as strategic business units. So SBU. SBU classified into four financial measures, also known as performance objectives, for which managers may be held accountable. SBUs are utilized to organize and establish effective financial responsibility. Okay, we know if we are under the revenue SBU, then we're probably going to have certain tasks assigned to us.

The cost SBU. Maybe you're a manager that runs the plant, you're probably more in line with the cost SBU and you know what your goals are because the company assigns, oh, cut costs by 5% and they assign it to the cost SBU. If you are in sales and marketing,

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Performance Analysis & Cost Accounting

Module: 4 Concepts, 44 Videos

Performance Management Metrics Overview and Objectives

1:43

Introduction to Performance Management Metrics

2:13

Productivity Ratios

4:20

Benchmarking