The controlling function compares the actual performance with predetermined standards, finds out deviation and attempts to take corrective measures. Eventually, this process helps in formulation of future plans too. Thus, controlling function helps in bringing the management cycle back to planning.
“Managerial control implies the measurement of accomplishment against the standard and the correction of deviations to assure attainment of objectives according to plans”. Koontz And O’Donnell
Financial Planning and Analysis (FP&A) teams play a crucial role in companies by performing budgeting, forecasting, and analysis that supports major corporate decisions of the CFO, CEO, and the Board of Directors.
Source: Corporate Finance Institute (includes also the 10 roles of corporate FP&A)
Rolling forecasts are a method for continuous planning. Unlike budgets or “revised forecasts”, rolling forecasts look beyond the current financial year.
Rolling forecasts contain a minimum of 12 forecast periods but can include 18, 24 or 36 or more. Each time the model is “rolled” forward and updated with a period of actual results, the forecast is extended to maintain the required number of forecast periods.
Source: ‘Quarterly rolling planning – get it right the first time.’ CIMA Insight, 2001 and Strategic Focus
Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be justified for each new period. The process of zero-based budgeting starts from a “zero base,” and every function within an organization is analyzed for its needs and costs. Budgets are then built around what is needed for the upcoming period, regardless of whether each budget is higher or lower than the previous one.
Section currently in progress, more to come…