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Article: Budget busters.(Letter to the editor)
- Article from:
- Financial Management (UK)
- Article date:
- September 1, 2007
- Author:
CopyrightCOPYRIGHT 2007 Chartered Institute of Management Accountants (CIMA). This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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In his article on forward-looking finance (July/ August), Robert Shaw recommends avoiding the Beyond Budgeting movement. He states that "the thesis of Beyond Budgeting is that budgeting is backward-looking and should be abandoned". But the whole point about Beyond Budgeting is that organisations waste a huge amount of effort by highly talented individuals to create budgets that become out of date the moment they have been approved. From a behavioural point of view, they tend to reward mediocre performance through overstated costs and understated revenues.
Most of us are all too familiar with the way in which, if you reject the cycle of the bottom-up budget ...