The management time and management

The management time and management accounting time you spend on explaining variances should be spent on making action plans.

The imposed targets would remain unchanged regardless of developments in the external environment. They were to be described in a performance contract and they were to be made part of the bonus system, which consisted of personal targets, business-unit targets and the overall group target. The targets would include financial and non-financial targets, with lower and upper caps on the bonuses.

However, despite the focus on aggregated targets, Food Corp maintained a traditional budget report, which was distributed to its executive management and the board of directors. In that report, the actual profit and loss statement (P&L)was still compared to the budget, and explanations of variances were included. The difference between the old bottom-up method of budgeting and the top-down target setting was explained by an executive director:

When you follow up on budget variances in the traditional budget world [you] say: “This was my budget and here are my variance explanations […] so now you can explain”.

However, this was different in the new system:

We are employed in order to reach our targets despite that the exchange rate to the USD is 5.37, and they are to take corrective actions when necessary. This is the major difference.

And further on:

Now we tell you: “This is fine, we listen to you but it does not change your goal”.

Thus, the target was fixed and could only be changed in extreme situations. The executive director explained:

Results (Indonesian) 1:

The management time and management accounting time you spend on explaining variances should be spent on making action plans.The imposed targets would remain unchanged regardless of developments in the external environment. They were to be described in a performance contract and they were to be made part of the bonus system, which consisted of personal targets, business-unit targets and the overall group target. The targets would include financial and non-financial targets, with lower and upper caps on the bonuses.However, despite the focus on aggregated targets, Food Corp maintained a traditional budget report, which was distributed to its executive management and the board of directors. In that report, the actual profit and loss statement (P&L)was still compared to the budget, and explanations of variances were included. The difference between the old bottom-up method of budgeting and the top-down target setting was explained by an executive director:When you follow up on budget variances in the traditional budget world [you] say: “This was my budget and here are my variance explanations […] so now you can explain”.However, this was different in the new system:We are employed in order to reach our targets despite that the exchange rate to the USD is 5.37, and they are to take corrective actions when necessary. This is the major difference.And further on:Now we tell you: “This is fine, we listen to you but it does not change your goal”.Dengan demikian, target adalah tetap dan hanya dapat diubah dalam situasi yang ekstrim. Direktur Eksekutif menjelaskan:

Results (Indonesian) 2:

Waktu manajemen dan akuntansi manajemen waktu yang Anda habiskan untuk menjelaskan varians harus dibelanjakan untuk membuat rencana aksi. Target yang dikenakan akan tetap tidak berubah terlepas dari perkembangan lingkungan eksternal. Mereka harus dijelaskan dalam kontrak kinerja dan mereka harus menjadi bagian dari sistem bonus, yang terdiri dari target pribadi, target unit bisnis dan kelompok sasaran keseluruhan. Sasaran akan mencakup target keuangan dan non-keuangan, dengan topi bawah dan atas pada bonus. Namun, meskipun fokus pada target agregat, Makanan Corp dipertahankan laporan anggaran tradisional, yang dibagikan kepada manajemen eksekutif dan dewan direksi. Dalam laporan itu, laba rugi aktual (P & L) masih dibandingkan dengan anggaran, dan penjelasan dari varians dimasukkan. Perbedaan antara metode bottom-up lama penganggaran dan pengaturan sasaran top-down dijelaskan oleh direktur eksekutif: Ketika Anda menindaklanjuti anggaran varians dalam dunia anggaran tradisional [Anda] berkata: "Ini adalah anggaran saya dan di sini adalah . saya penjelasan varians [...] jadi sekarang Anda bisa menjelaskan "Namun, ini berbeda dalam sistem baru: Kami bekerja untuk mencapai target kami meskipun bahwa nilai tukar USD adalah 5,37, dan mereka mengambil tindakan korektif bila diperlukan. Ini adalah perbedaan utama. Dan lebih jauh: Sekarang kita memberitahu Anda: "Ini baik-baik saja, kami mendengarkan Anda tetapi tidak mengubah tujuan Anda". Dengan demikian, target itu tetap dan hanya bisa berubah dalam situasi yang ekstrim. Direktur eksekutif menjelaskan: