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Beyond Budgeting - Feasible in a contemporaryorganisation?

Student Name: Daniel W JenkinsStudent Number: 11006662

Subject Name: Accounting Information for usinessWord !ount:

Executive Summary

A business re"ort t#at e$"lores %#et#er it is %ort#%#ile for a contem"orar& business toada"t to t#e "rinci"les outlined in 'e&ond udgeting'(

Contents

) 1(0* Abstract (page 1)

) 2(0* Introduction (page 1)) 2(1* +istor& ,f udgeting (page 1)) 2(2* A Need -or !#ange (page 1)

) .(0* /ain od& (page 1)) .(1* ,rigins ,f e&ond udgeting (page 1)) .(2* olution ,f e&ond udgeting (page 1&2)) .(.* Strengt#s ,f e&ond udgeting s raditional 3ractices (page 2)) .(4* !riticisms ,f e&ond udgeting (page 3)

) 4(0* 5ecommendations (page 3)

) (0* !onclusions (page 3)

) 5eferences (page 4)

- 1.0) bstract

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#is re"ort aims to e$"lore %#et#er it is adantageous for an organisation to ado"t to t#e"rinci"les of e&ond udgeting( #e re"ort looks at secondar& sources of data to gie t#ereader a %ider understanding of e&ond udgeting and aims to #el" a "erson to come toa conclusion %#et#er or not its feasible to ada"t to e&ond udgeting( #e re"ort alsolooks at t#e #istor& of t#e notion and its eolution in t#e "ast decade(

- !.0) "ntroduction

- !.1) #istory $% Budgeting

Since time immemorial7 budgeting #as been an im"eratie "art of t#e econom& andciili8ation( -or e$am"le7 t#e goernment uses budgets to "lan on %#ere s"ending isallocated %#ilst a famil& %ould use budgets to allocate mone& to different "riorities(!om"anies use budgeting as a means to measure managerial "erformance and it isargued t#at management is not "ossible %it#out it 9ibb& and indsa&7 200;*(

- !.!) &eed For C'ange

udgets can fail miserabl& or be t#e forefront to success7 it all de"ends on "lanning( Ane$treme or im"ractical budget causes man& conse

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Senska as a model e$am"le of #o% organisations can effectiel& use conce"ts torelease t#e "o%er of "eo"le in t#e front line( 9S( 3la&er7 200.*

#e aboe object is ada"ted from t#e %ork of ecker and s#o%s #o% e&ond udgeting#as eoled from 1;;)2010( +ere %e can clearl& see t#at t#e conce"t %as deelo"ed asbudgeting %as a 'barrier for economic gro%t#' 9ecker et al7 2010*( We can also see t#att#e idea is a some%#at %ork in "rogress and #as "otential for man& more models androom for im"roement(

- (.() Strengt's o% Beyond Budgeting vs *raditional +ractices

+o"e and -raser deelo"ed si$ ke& fundamental "rinci"les for %#ic# in turn "in "oint#o% t#ese im"roe efficienc& %#en com"ared to traditional budgeting tec#ni

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set u" and %it# t#e ra"id c#ange in economic enironment in recent &ears t#at budgets#ae to be c#anged eer& &ear to meet t#ese demands 9Sardjoe7 200;*(

,)- (.,) Criticisms o% Beyond Budgeting

+orngren #as obsered t#at t#ere are "eo"le %#o beliee t#ere is no need for a c#angeto budgeting7 t#at t#e traditional "ractices are still t#e best for contem"orar&organisations( +e states t#at t#ere is not#ing contradictor& about budgeting but t#at t#e"roblems t#at do arise are not because of budgeting itself but because of #o% "eo"le useit and it makes it im"ossible to get t#e "romised results( 9+orngren et al7 2004*

An eident discre"anc& %it# is t#e lack of ackno%ledgment for #uman error( models assume t#at t#e "eo"le %#o gain res"onsibilit& are> full& trained7 ada"table toc#ange7 innoatie #uman beings and t#is delegation of trust can be some%#at subjectieand "rone to "oor judgement( #e model assumes t#at t#e "eo"le %orking for t#eorganisation are some%#at "erfect and doesn't look at t#e fact t#at7 just like traditional

budgeting7 t#ere is s"ace for error( #is is a big reason %#& t#ere are still "lent& oforganisations %#o #ae not ado"ted to t#e "rinci"les of and %#ere trust is delegatedcan be debatable %it# management(

)- ,.0) ecommendations

/)- .0) Conclusion)

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