Analysing the Role of Rolling Forecast from a Broad Perspective

Abstract: The dynamic business environment requires the management control system (MCS) of an organization to be changed to be adaptable. Therefore, as a management control system, rolling forecasts are increasingly being adopted as a replacement for a static annual budget in more and more organizations under the current volatile economy conditions. However, rolling forecasts do not operate in isolation, and its efficiency depends upon what control systems it is combined with. In other words, rolling forecasts should be operated within the context of a management control system package. The lack of literature in this respect calls for more research on this topic. This thesis takes advantage of this opportunity to study the role of rolling forecasts on the basis of a previously described performance management system (PMS) framework. In this sense, we conduct a literature-based investigation of the topic. Based on the existing literature on rolling forecasts, we find that rolling forecasts interrelate significantly with other control systems, and that each relevant control system should be coherent with each other to serve the organizational objectives. This study contributes to the field of management accounting in three ways. This study provides a theoretical support for readers to understand the role of rolling forecasts in a holistic manner. It also provides practitioners with an overview of the interrelation between rolling forecasts and the various MCSs within an organization, and reminds them to have an MCS package thinking when designing and using rolling forecasts. Moreover, this study provides a foundation for future empirical and theoretical developments.