ExpertMedium2 marksMultiple Choice
ACCA · Question 10 · Budgeting and control
Section A
FinTech Innovators, a rapidly growing startup, has decided to abandon its traditional annual budgeting process in favor of a 'Beyond Budgeting' approach.
Which of the following is a key characteristic of the Beyond Budgeting model?
Section A
FinTech Innovators, a rapidly growing startup, has decided to abandon its traditional annual budgeting process in favor of a 'Beyond Budgeting' approach.
Which of the following is a key characteristic of the Beyond Budgeting model?
Answer options:
A.
Centralized decision-making to ensure strict cost control.
B.
Performance is evaluated against relative benchmarks and peers rather than fixed annual targets.
C.
The use of highly detailed, rigid 12-month financial plans.
D.
Tying employee bonuses strictly to the achievement of pre-set financial budgets.
How to approach this question
Recall the principles of Beyond Budgeting, which focuses on agility, decentralization, and relative performance.
Full Answer
B.Performance is evaluated against relative benchmarks and peers rather than fixed annual targets.✓ Correct
The Beyond Budgeting model argues that traditional budgets are too rigid and time-consuming. Key characteristics include decentralized decision-making, using rolling forecasts, and evaluating performance based on relative success (e.g., beating the competition or internal benchmarks) rather than hitting an arbitrary fixed target set a year in advance.
Common mistakes
Confusing Beyond Budgeting with Zero-Based Budgeting, or assuming it means having no financial control at all.
Practice the full ACCA PM — Performance Management Practice Exam 4
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