Budgeting Importance
Pakistan Journal of Social Sciences (PJSS)
Vol. 31, No. 2 (December 2011), pp. 207-214
Beyond Budgeting: The Way Forward?
Michael Goode
M.Sc Accounting and Financial Management Programme
University of Hertfordshire
Hatfield AL10 9AB, UK
Email: m.goode@herts.ac.uk
Ali Malik, PhD
Senior Lecturer and Programme Tutor
University of Hertfordshire
Hatfield AL10 9AB, UK
Email: m.a.1.malik@herts.ac.uk
Abstract
Beyond Budgeting has been proposed as an influential idea that will reinvigorate management accounting contribution in business operation and performance. It is claimed that the traditional system has lost relevance with the modern business environment and is no longer satisfying the needs of managers. Budgets have been ingrained in the culture of business since their inception in the 1920s and managers will find it extremely difficult to radically shift to a system without budgets. The implications of a Beyond Budgeting system are; performance measures relative to competitors and a decentralised organisation structure. Alternatives such as the Better Budgeting techniques may be more favourable to management who desires a formal planning and control system. The Beyond Budgeting concept is still in its infancy and requires further development and practical implementation. Keywords:
Budget; Beyond Budgeting; BBRT; Management Control
I. Introduction
Beyond Budgeting has been proposed as an influential idea that will reinvigorate management accounting contribution in business operation and performance. According to Hope and Fraser (2003) the budgeting system, as implemented by most businesses, should be eradicated. The budgeting debate has arisen due to a movement into the information age (Drury, 2008). It is considered that the environment is now so complex and competitive that budgeting in its existing form is no longer useful for businesses.
Dissatisfaction with traditional budgets is growing in the business world and ‘Beyond
Budgeting’ has been suggested as a
Vol. 31, No. 2 (December 2011), pp. 207-214
Beyond Budgeting: The Way Forward?
Michael Goode
M.Sc Accounting and Financial Management Programme
University of Hertfordshire
Hatfield AL10 9AB, UK
Email: m.goode@herts.ac.uk
Ali Malik, PhD
Senior Lecturer and Programme Tutor
University of Hertfordshire
Hatfield AL10 9AB, UK
Email: m.a.1.malik@herts.ac.uk
Abstract
Beyond Budgeting has been proposed as an influential idea that will reinvigorate management accounting contribution in business operation and performance. It is claimed that the traditional system has lost relevance with the modern business environment and is no longer satisfying the needs of managers. Budgets have been ingrained in the culture of business since their inception in the 1920s and managers will find it extremely difficult to radically shift to a system without budgets. The implications of a Beyond Budgeting system are; performance measures relative to competitors and a decentralised organisation structure. Alternatives such as the Better Budgeting techniques may be more favourable to management who desires a formal planning and control system. The Beyond Budgeting concept is still in its infancy and requires further development and practical implementation. Keywords:
Budget; Beyond Budgeting; BBRT; Management Control
I. Introduction
Beyond Budgeting has been proposed as an influential idea that will reinvigorate management accounting contribution in business operation and performance. According to Hope and Fraser (2003) the budgeting system, as implemented by most businesses, should be eradicated. The budgeting debate has arisen due to a movement into the information age (Drury, 2008). It is considered that the environment is now so complex and competitive that budgeting in its existing form is no longer useful for businesses.
Dissatisfaction with traditional budgets is growing in the business world and ‘Beyond
Budgeting’ has been suggested as a