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ACCA Strategic Professional · Advanced Performance Management · Budgetary planning and control

Kestrel Software has a highly stable, predictable cost base and a hierarchical culture with limited manager autonomy. The board proposes to abandon budgets fully and adopt Beyond Budgeting. Which assessment is most appropriate?

Beyond Budgeting needs devolved decision-making and a trust-based culture, which Kestrel's hierarchical, low-autonomy structure lacks, so an immediate full adoption is inappropriate. The approach still uses forecasts and relative targets, and stable costs are not its main prerequisite.

  1. AAppropriate, as Beyond Budgeting works best where control is centralised and employees follow instructions
  2. BAppropriate, as stable cost structures are the main prerequisite for removing budgets
  3. CInappropriate in the short term, as Beyond Budgeting needs devolved decision-making and a trust-based culture that Kestrel lacksCorrect
  4. DInappropriate, as Beyond Budgeting removes all financial targets and forecasts

Explanation

Beyond Budgeting depends on decentralised authority, trust and transparent information, so a hierarchical culture is a barrier. Stability of costs is not the main prerequisite; its benefits come more in volatile settings. It also retains forecasts and targets, so the last option is wrong.

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