Martyn Jones, a Senior Lecturer in accounting at Winchester University, is looking for help from the hospitality finance community for a research project about budgeting.
Martyn is hoping to make contact with senior financial staff working for hotel groups who would be willing to talk about the budget setting and sales forecasting process in the recession, on a confidential basis. The project will look at budgeting in an unpredictable environment and the evolving role of practitioners within the service sector.
Martyn quotes Anthony Hopwood, from his classic 1974 text “Accounting and Human Behaviour”:
"Budgeting now occupies a central position in the design and operation of most management accounting systems…Nevertheless, despite its wide acceptance, budgeting remains one of the most intriguing and perplexing of management accounting procedures."
The text, says Martyn, is just as relevant and just as perplexing today in the context of an on-going recession as it was 40 years ago.
There has been much academic research over time into the budgeting process, and selectively Ekholm and Wallin (2000) considered whether the budget was seen as capable of meeting the demands of the competitive environment in the information age, concluding that “the annual budget is not yet ready for the scrap heap”. More recent North-American research (Libby & Murray Lindsay, 2010) carried out an extensive survey of practitioners in Canada and United States. The authors considered criticisms of the budgeting process, and in particular addressed the forceful case made against traditional budgeting by Hope and Fraser (2003). The conclusion of their research was that budgets are still widely used for control purposes and were still widely perceived to be value-added. The authors did identify, however, the need for further research into companies operating in unpredictable environments.
Many organisations are still facing a business environment within the UK characterised by uncertainty and in the in the context of the on-going financial crisis, and the conventional budgeting approach may be less useful as companies are more likely to focus upon cash and using continuous planning in addition to the conventional budgeting approach. Anecdotal evidence suggests that many organisations have recently been forced to move towards a process that accommodates more frequent replanning with more of a focus on cash management and cash forecasting.
Over a longer time frame, the changing competitive environment and indeed change in its own right has arguably facilitated the development of strategic management accounting over the last 20 years or so. Paradoxically recent academic research from Nixon and Burns (2012) has identified both a fusion of financial roles and also a diffusion of management accounting techniques.
Within the context of the on-going financial crisis and the changing competitive environment, this project aims at finding out more about the role of the practitioner working within the service sector in the UK. The primary objective of this study is to engage with service sector practitioners to find out more about the budgeting process in a recession, and also about the evolving role of practitioners.
Funding has been received to support this project from the Committee for Departments of Accounting and Finance (CDAF) of the British Accounting and Finance Association (BAFA). The author is very keen to hear from any practitioners working for hotel groups who are interested in talking more about their role and their recent experiences with the budgeting process.
If you would like to get involved, please make contact with Martyn Jones from Winchester University Business School at martyn.jones@winchester.ac.uk
Martyn Jones Senior Lecturer in Accounting Department of Business, Law and Sport University of Winchester West Downs Campus Romsey Road Winchester SO22 4NR
Telephone: +44 (0) 1962 827006
Comments