The role of rolling forecasting in budgetary control systems : reactive and proactive types of planning
1Department of Economics, Accounting and Finance, Oulu Business School, University of Oulu
|Online Access:||PDF Full Text (PDF, 0.5 MB)|
|Persistent link:|| http://urn.fi/urn:nbn:fi-fe201902195407
|Publish Date:|| 2019-02-19
The paper examines how rolling forecasting is used in planning and linked to other practices in a management control system. The paper combines a function-based view of budgeting with a more disaggregation-based conceptualisation, considering individual control systems. A multiple-case-study approach was adopted to investigate differences in the design and use of control systems across three industrial firms that had recently sought to improve their planning. The findings reveal two approaches to forecasting. In proactive-type planning, rolling forecasting was employed to promote information oriented toward more realistic forecasts and ideas emerging from interactive discussion were often put into action before quantified monetary deviations between plans and targets emerged. In reactive planning, rolling forecasting supported the supremacy of annual budgeting, and a more stable, joint process for both enabled analysing variances formally in a diagnostically oriented manner and revising plans accordingly. Synergies between budgetary practices were also found—for instance, in the process of setting targets, wherein the forecasts informed managers of the outcome level that was likely to be achievable and hence served as a realistic basis for setting more demanding targets.
Journal of management control
|Pages:||327 - 360|
|Type of Publication:||
A1 Journal article – refereed
|Field of Science:||
512 Business and management
Open access funding provided by University of Oulu including Oulu University Hospital.
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