Moving beyond Beyond Budgeting: A Case Study of the Dynamic Interrelationships between Budgets and Forecasts

Abstract

This study examines how budgeting and forecasting are used in a bank that abandoned the corporate budget but later reintroduced it. Although companies that implement Beyond Budgeting may reintroduce budgets, how companies returning to traditional budgeting maintain Beyond Budgeting elements and incorporate them into the budgeting process has not been previously studied. Specifically, we address how forecasts are deployed as part of the budgeting process. The paper is based on a case study with interviews as the primary data source. We show how the interrelationships between budgets and forecasts change through three phases; before, during, and after abandonment, and illustrate how the two control elements can simultaneously replace each other for specific groups of line items and become complementary for profit planning and control. We unfold how revenue-forecasts complement cost-budgets to fulfill various budgeting purposes, especially when forward-looking tight control is emphasized to ensure outward accountability. Altogether, the study demonstrates how management control systems evolve over time when companies implement control elements with inspiration from the Beyond Budgeting model alongside budgets.