ExpertMedium2 marksMultiple Choice
ACCA · Question 04 · Budgeting and control
Section A
CloudServe, an IT consultancy firm, is considering abandoning traditional annual budgeting in favor of a 'Beyond Budgeting' approach due to the rapidly changing tech landscape.
Which TWO of the following are core principles of the Beyond Budgeting model?
Section A
CloudServe, an IT consultancy firm, is considering abandoning traditional annual budgeting in favor of a 'Beyond Budgeting' approach due to the rapidly changing tech landscape.
Which TWO of the following are core principles of the Beyond Budgeting model?
Answer options:
A.
Setting relative performance targets rather than fixed absolute targets.
B.
Centralizing decision-making to ensure strict cost control.
C.
Tying management bonuses strictly to the achievement of pre-agreed financial budgets.
D.
Organizing around a network of empowered teams rather than a centralized hierarchy.
How to approach this question
Identify the principles that align with flexibility, decentralization, and adaptive performance measurement, which are the hallmarks of Beyond Budgeting.
Full Answer
Beyond Budgeting relies on two main sets of principles: Leadership principles (empowerment, decentralized networks, relative targets) and Management processes (dynamic planning, rolling forecasts, relative performance evaluation). Centralization and fixed targets are features of traditional budgeting.
Common mistakes
Selecting options related to strict control, which is the opposite of the Beyond Budgeting philosophy.
Practice the full ACCA PM — Performance Management Practice Exam 2
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