Section A

A rapidly growing tech company is abandoning traditional annual budgeting in favor of the 'Beyond Budgeting' model.

Which TWO of the following are core principles of the Beyond Budgeting approach?

Answer options:

Using rolling forecasts instead of fixed annual targets.

Tying managerial bonuses strictly to fixed financial targets.

Decentralizing decision-making to frontline teams.

Implementing Zero-Based Budgeting across all departments annually.

How to approach this question

Recall the two main pillars of Beyond Budgeting: adaptive management processes (like rolling forecasts) and decentralized leadership.

Full Answer

Beyond Budgeting is a management philosophy that abandons traditional, rigid annual budgets. Its core principles include using rolling forecasts to remain adaptable to market changes, evaluating performance based on relative benchmarks rather than fixed targets, and decentralizing authority to empower frontline teams to make quick decisions.

Common mistakes

Assuming Beyond Budgeting just means using a different budgeting technique like ZBB or Activity-Based Budgeting.

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Practice the full ACCA PM — Performance Management Practice Exam 6

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