Academic journal article Journal of Accountancy

Rolling Forecasts vs. Budgets

Academic journal article Journal of Accountancy

Rolling Forecasts vs. Budgets

Article excerpt

Steve Player, CPA, CGMA, the North American program director of the Beyond Budgeting Round Table, offered insight into the state of the budget and the shift toward better forecasting methods:

On abandoning budgets: "The debate about abandoning budgets is ongoing actively, and many companies are actually dropping the budget. Yet, finance organizations in many cases are the last bastion to hold on to the budget. Understand how damaging that is to the organization, how irrelevant that makes finance, and really make finance the leader in breaking free from that, and instead going to a continuous rolling forecast in terms of moving forward."

On tracking the right metrics: "You have to step back and say, 'What is our strategy? What's critical to our success, and what metrics tell us if that's happening?' And you need to make sure you've got a balance of metrics, not just output measures, not the final score.... Move that even further upstream to begin to have not only process measures, but predictive measures. What things have to start way at the beginning of the process that foretell the future results coming down the road in terms of where we're marching to? …

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