Beyond Budgeting As A Control Essay

Length: 6 pages Sources: 12 Subject: Economics Type: Essay Paper: #58279299 Related Topics: Budget Planning, Activity Based Costing, Accountable Care Organizations, Management Control
Excerpt from Essay :

According to de With and Dijkman (2008), "Management control is the process by which managers influence other members of an organization to implement the organization's strategies. This process consists of four different phases-strategic planning, budgeting, measurement and reporting, and evaluation-each of which leads to the next phase" (27). Beyond the foregoing formal phases, management control also includes informal communications and interactions such as meetings and conversations (de With & Dijkman 2008). In a National Health Service setting, though, a control strategy must recognize the need for flexibility throughout the budgeted period of time in ways that might not affect a private sector counterpart. In this regard, Byrne (2006) notes that, "Ideally, the annual budgeting process sets the performance agenda for the year ahead. However, healthcare budgets are often only an estimate of income and expenditure, with incremental budget setting the dominant budget type employed" (67).

Because the management and control of a NHS hospital accident and emergency unit involves a multidisciplinary team of healthcare professionals that play an important role in the budget formulation process, Byrne suggests that innovative budgeting approaches can help provide effective delegation of managerial responsibilities. According to Byrne, "Delegating expenditure consumption up to a certain level can also improve the speed of decision-making if there is no need for authorisation from a higher-level manager. The quality of decisions may also increase given that (better-informed) individuals closer to the point of service delivery can make them" (68). The Beyond Budgeting Round Table advocates budgetary reform that includes the use of "multi-annual, real-time and bottom-up activity-based budgets whereby individual departments (or services) are allocated resources based on evidence-based needs assessment and evaluated and rewarded using a more balanced set of key relative improvement performance measures (for example quality)" (Byrne 2006, 68). Moreover, Byrne cites the tendency for many public sector healthcare organizations to ensure that their entire budget is spent by year-end in order to...


Byrne suggests that in order to achieve this sea change in budgetary approaches, there is a fundamental need for improved communication between different management levels and the healthcare organisation (Byrne 2008). In this regard, Byrne concludes that, "The latter recognises that rather than the principle of budgeting being at fault, the less-than-optimum application of budgets may have compromised their usefulness to date in the healthcare sector" (68).


The research showed that most organizations use some type of budgeting approach to help them plan and control their activities for a period of time which is typically a year that is divided into increments. Because so much time and effort is invested in the budgeting process, it is important for organizations to realize the maximum return on their investments. The traditional budgeting approach, though, was criticized for being cumbersome, expensive and unwieldy in providing executives and managers with the tools they need to guide their organizations effectively. In response to these charges, alternative budget approaches such as Beyond Budgeting have been introduced in an effort to facilitate the budgeting process in ways that can benefit organizations of all types, including public sector healthcare.


Anderson, J.A., 2004, June. "8 Ways to Change Your Financial Life: These Basic but Powerful

Strategies Can Boost Your Net Worth." Black Enterprise 34(11): 280-281.

Bunce, P., 2008, June. "Beyond Budgeting: Public Sector Interest Group (PSIG)." Retrieved


Byrne, M., 2006. "The Usefulness of Budgets in the Healthcare Sector." Irish Journal of Management 27(2): 67-68.

de With, E. & a. Dijkman, 2008. "Budgeting Practices of Listed Companies in the Netherlands."

Management Accounting Quarterly 10(1): 26-27.

Hope, J. & Fraser, R., 2003. Beyond Budgeting: How Managers Can Break Free from the Annual Performance Trap. Boston: Harvard Business School Press.

Kaplan, R.S., 2006. "Linking Strategy to Operations: Balanced Scorecard and Activity-Based

Costing Co-creator Shares Insights on Evolution of Management Accounting Tools."

Journal of Accountancy 206(4): 80-81.

Krell, E., 2009, Fall. "Beyond Boundaries Business Innovation." Baylor Business Review 28(1):


Lorenz, E. & B.A. Lundvall, 2006. How Europe's Economies Learn: Coordinating Competing

Models. New York: Oxford University Press.

Master, W., 2003. "The Manager's Musings." The Public Manager 32(4): 2.…

Sources Used in Documents:


Anderson, J.A., 2004, June. "8 Ways to Change Your Financial Life: These Basic but Powerful

Strategies Can Boost Your Net Worth." Black Enterprise 34(11): 280-281.

Bunce, P., 2008, June. "Beyond Budgeting: Public Sector Interest Group (PSIG)." Retrieved


Cite this Document:

"Beyond Budgeting As A Control" (2010, May 06) Retrieved November 29, 2022, from

"Beyond Budgeting As A Control" 06 May 2010. Web.29 November. 2022. <>

"Beyond Budgeting As A Control", 06 May 2010, Accessed.29 November. 2022,

Related Documents
Budgeting Beyond Budgeting, Two Words That Some
Words: 671 Length: 2 Pages Topic: Economics Paper #: 51581290

Budgeting Beyond budgeting, two words that some believe hold the future to a company's financial strength and profitability. No longer is it necessary to implement a plan, make and sell business model. Instead, in today's current business environment it is much simpler to organizations to go beyond the traditional budgeting organization to one that goes beyond that budgeting process by providing the opportunity to respond much faster to the demands of

Beyond Budgeting
Words: 543 Length: 2 Pages Topic: Business - Management Paper #: 11523174

Beyond Budgeting" by Jeremy Hope The Significance of Budgeting on Effective Management: Analysis of "Beyond Budgeting" by Jeremy Hope In the book "Beyond Budgeting," author Jeremy Hope gave an altogether different conceptualization of the significance of budgeting on effective management. In it, he emphasized the need for better and well-thought out budgeting plans in order not to sacrifice the management decisions and ultimately, the efficient performance of a company or organization.

Performance Indicators and Internal Budget Controls Like
Words: 349 Length: 1 Pages Topic: Accounting Paper #: 64661360

performance indicators and internal budget controls like reviewing staff hours can be used to assess individual and organizational accountability. Strict AICPA standards are required for the peer-review process. In addition, internal budget controls are also effective performance indicators. The American Institute of Certified Public Accountants (AICPA) has published extensive and strict guidelines regarding the CPA peer review process (AICPA). The standards for membership in the AICPA are strict, "to retain

Budgeting As an Adequate Tool for Planning
Words: 1676 Length: 4 Pages Topic: Business - Management Paper #: 23624982

Budgeting as an Adequate Tool for Planning and Control in Organizations: A budget apart from being a coordinated and comprehensive financial plan for the resources and operations of a given future period is also intended to promote the managerial functions of control and planning. Over the years a budget has been perceived as a tool for forced planning as it constitutes the most important and basic management functions since other managerial

Budgeting and Financial Planning Distinctions Between Budgeting
Words: 1094 Length: 3 Pages Topic: Business - Management Paper #: 12466280

Budgeting and Financial Planning Distinctions between budgeting & financial planning. The difference between budgeting and financial planning The difference between budgeting and financial planning Budgeting and financial planning are often used interchangeably in the speech of laypersons, when they are talking about the economic outlook of organizations. They are, however, very different processes, although the two are interrelated. One analogy is that of someone trying to maneuver the organization like a rowboat over a

Budgeting an Adequate Tool for Planning and
Words: 830 Length: 3 Pages Topic: Economics Paper #: 819490

budgeting an adequate tool for planning and control in organizations and when should alternative approaches be considered? Is budgeting obsolete in the 21st century? Starting with the last question first, although budgeting does seem to have its problems with it, and although it fails to produce results, nonetheless studies find that the majority of managers still turn to budgeting as means of conducting their business unable to surrender the system. Criticisms