Dynamic Budgetary Control

In a rapidly changing world, the amount of time spent looking backwards needs to be reduced, to free up time to look forwards.

The need now is to be proactive, forward looking, outward looking and dynamic.

Dynamic Budgetary Control ensures that the budget not only provides parameters for operational controls but is a means of monitoring and influencing strategy.

Most budgetary control systems in the UK were introduced in an environment in which the predominant management style was “command and compliance” to which the once-a year, for-a-year budget, expressed in the language of accounting provided a compatible approach.

As the rate of change in the business environment has increased, however, this approach to budgeting has come to be seen as not only inappropriate but dangerously misleading.

In this course we look at a different approach, designed to adapt to volatility and to match the increasingly prevalent “trust and commitment” style of management. It is infinitely flexible and expressed in the language of financial management.

Budgets should flow from strategy, not constrain it. The pressures on budgetary control should be seen in the context of the trends affecting management generally, e.g. the greater emphasis on strategy, customers, devolution, co-operation and intangibles. It recognises the importance of things that cannot be measured.

Dynamic Budgetary Control ensures that opportunities for enhancing the long term value of the business are considered properly and not evaluated on their short term impact.

Dynamic Budgetary Control enables the learner to

Introduction

The principles

Expectations

Hope

Fait

David Allen is a past president of CIMA and a past chairman of the Management Accounting Committee of the International Federation of Accountants. He was employed for many years by Cadbury Schweppes group holding directorships with various subsidiary companies, notably Cadbury Ltd.