The paper examines how rolling forecasting is used in planning and
linked to other practices in a management control system. The paper combines a
function-based view of budgeting with a more disaggregation-based conceptualisation,
considering individual control systems. A multiple-case-study approach was
adopted to investigate differences in the design and use of control systems across
three industrial firms that had recently sought to improve their planning. The
findings reveal two approaches to forecasting. In proactive-type planning,
rolling forecasting was employed to promote information oriented toward more
realistic forecasts and ideas emerging from interactive discussion were often
put into action before quantified monetary deviations between plans and targets
emerged. In reactive planning, rolling forecasting supported the supremacy of
annual budgeting, and a more stable, joint process for both enabled analysing
variances formally in a diagnostically oriented manner and revising plans accordingly.
Synergies between budgetary practices were also found—for instance, in the process
of setting targets, wherein the forecasts informed managers of the outcome level
that was likely to be achievable and hence served as a realistic basis for
setting more demanding targets.