The role of rolling forecasting in budgetary control systems: reactive and proactive types of planning

Tiina Henttu-Aho ()
Additional contact information
Tiina Henttu-Aho: University of Oulu

Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, 2018, vol. 29, issue 3, No 5, 327-360

Abstract: Abstract 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.

Keywords: Forecasting; Functions of budgeting; Planning; Budgetary control system; Diagnostic use; Interactive use (search for similar items in EconPapers)
JEL-codes: M10 M40 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://link.springer.com/10.1007/s00187-018-00273-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jmgtco:v:29:y:2018:i:3:d:10.1007_s00187-018-00273-6

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/187

DOI: 10.1007/s00187-018-00273-6

Access Statistics for this article

Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung is currently edited by Thomas Günther

More articles in Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().