ACCA-KPMG report: Current planning, budgeting and forecasting processes not aligned to operational reality

cherriemeyer —  July 27, 2015 — Leave a comment

ACCA recently released a report together with KPMG entitled ‘Planning, budgeting and forecasting: an eye on the future’.

With views of over 900 finance professionals represented across 50 countries, this report is an interesting read for finance professionals involved in planning and budgeting for businesses.

PBF_Cover

While planning, budgeting and forecasting (PBF) is supposed to serve the organisation in understanding how its on-going activities contribute to delivering its future longer term strategy, this report suggests that current PBF process are flawed, and the following are some of the key findings:

  • Two-thirds of respondents said urgent change was needed to make financial planning a joint effort between operations and finance
  • 65% said their finance team spent the most time on planning and forecasting, with only 7% of operations teams playing a similar role
  • Respondents were also very cynical about the relevance and reliability of the budgeting process. Almost one in two (46%) said it was a politically agreed number, generated from the top of the business, and not linked to operational reality
  • 62% said budgets simply reflected a point in time and quickly ceased to be relevant as the financial year went on

It was also  revealed that organisations are struggling to use data effectively.

31% of the finance professionals surveyed said that the quality of the data was the biggest impediment to using it in their planning processes.

17% also said that management ignored the data available and simply pursued the same decision.

With these challenges, there were three critical areas of focus suggested on how to improve the current PBF process, better aligning them to a leading practice performance.

  1. Create the right organisational culture and ways of working;
  2. Integrate the PBF process, leveraging high quality data;
  3. Deploy effective and scalable technology solutions.

ACCA KPMG PBF Report info

For the full report, please click here.

About the research: 

This global report is the first of three pieces of research that have been jointly commissioned by ACCA and KPMG to assess how the Enterprise Performance Management (EPM)* capability within Finance is providing the CFO with the appropriate people, processes and technology to support Planning, Budgeting and Forecasting. 

We will keep you updated as other research reports become available. 

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