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Practical aspects of business process budgeting as part of financial planning for the corporate development of holding companies

Vol. 22, Iss. 7, JULY 2019

Received: 14 January 2019

Received in revised form: 29 January 2019

Accepted: 4 June 2019

Available online: 15 July 2019

Subject Heading: NATIONAL STANDARDS OF ACCOUNTING AND REPORTING

JEL Classification: G31, L92, M11, M41, O21

Pages: 779800

https://doi.org/10.24891/ia.22.7.779

Kozhanova A.V. State University of Management (SUM), Moscow, Russian Federation
a_kozhanova@bk.ru

ORCID id: not available

Subject Activity-based budgeting becomes more important in financial planning of major holding companies since it allows top managers to make managerial decisions on various types of activities.
Objectives The study focuses on practical aspects of the existing budgeting techniques used by holding companies, reveals the substance of the modern activity-based budgeting approach and determines how companies could switch from the traditional budgeting approach to the activity-based one.
Methods Based on the critical comparative analysis, inductive method, systematization and generalization, I examined various aspects of using budgeting systems in holding companies that prove their inclination to the traditional approach. I propose the technique for adopting the activity-based budgeting approach.
Results I propose my own technique for setting budgeting control over some business processes in holding companies by integrating the elective approach, existing budgeting system and modern methods in order to make corporate management more effective with a brand new activity-based mechanism. I formulated key aspects for regulating the technique and substantiate the creation of the activity-based budgeting system. The article also shows the efficiency of such an approach and identifies difficulties in using the traditional one.
Conclusions and Relevance To develop methodological approach to budgeting processes in the current economic situation, I systematized the existing practical aspects. Having analyzed the current practical techniques for budgeting in holding companies, I revealed that they tend to the traditional approach since it has a long historical track record and accommodates the sectoral specifics of companies. Analyzable techniques seriously impede the transition to activity-based business. I provide the rationale for activity-based budgeting in major holding companies and propose a new technique improving corporate performance and competitiveness.

Keywords: budgeting, financial planning, activity-based budgeting, traditional budgeting, holding company

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