Holmes Institute HA2011 Group Report: Activity-Based Budgeting for ANZ

This report provides a comprehensive analysis of activity-based budgeting, focusing on its application within the ANZ Banking Group. It begins with an executive summary and an introduction to the concept of activity-based budgeting (ABB), outlining its core features and benefits. The report then provides a detailed description of the ANZ Banking Group, including its services and geographical presence. A key section compares ABB with traditional budgeting methods, highlighting their differences in approach, data usage, and objectives. The report further explores how ABB facilitates planning and controlling within an organization, emphasizing its role in cost management and resource allocation. Finally, the report assesses the suitability of activity-based budgeting for the ANZ Banking Group, concluding with a summary of key findings and recommendations.

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Management accounting

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Executive summary
The report has been prepared and in that activity-based budgeting has been taken into
consideration. All of the details about the same are provided in respect of the ANZ banking
group. The information in relation to the group has been provided which helps in identifying
the activities which are performed by it. The main characteristics of the approach have been
identified and that helped in gaining the complete information about the same. There is a
proper comparison which is made and in that the differences among the traditional and
activity-based budgeting has been identified. The planning and controlling are enhanced with
the help of this method and it has been ascertained in the report in an effective manner. The
manner in which activity-based budgeting is suitable for the company has also been discussed
in the last section of the report which provided a complete understanding of the concept
involved.

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Table of Contents
Executive summary....................................................................................................................2
Introduction................................................................................................................................4
a) Description of ANZ banking group limited...........................................................................4
b) Activity based budgeting and its features..............................................................................4
c) Comparison of activity based budgeting and traditional budgeting......................................6
d) Planning and controlling by activity based budgeting...........................................................7
e) Suitability of activity budgeting for ANZ banking group......................................................8
Conclusion..................................................................................................................................9
References................................................................................................................................10

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Introduction
In the business, there is the need for the proper budgeting by which the operations can be
managed in an effective manner. There are various methods that are involved for the same
and one of them is activity-based budgeting. With the help of this, the budget will be
prepared on the basis of activities that are performed. All of the discussion in respect of the
same will be made in the report. There will be the inclusion of the description for the ANZ
banking group and the application of the budgeting in the same will be considered. The ABC
budgeting will then be compared with the traditional method of budgeting. All of the
discussions will help in gaining the appropriate knowledge about the methods available.
a) Description of ANZ banking group limited
In Australia, there are various banks that are operating and out of them, one in Australia and
New Zealand banking group which is providing various types of services and facilities to the
consumers. In that, all the aspects of the financial and banking services are taken into account
and that helps the company to gain more customers. The main centers at which the services
are provided by the group involve New Zealand, Australia, United Kingdom, Germany,
France and the Asia Pacific regions (Bloomberg, 2019). The units which are operating in
Australia involve commercial, banking and corporate. Various services such as a mortgage,
general banking, life insurance, lending and hire purchase are provided by the group.
All of the services which are made available are availed by all the people of that region and
this makes the company a success. The stockbroking and investment services are also
provided by the company and this attracts more people towards it.
b) Activity-based budgeting and its features
In the process of accounting, there are various aspects that are involved and for the
management of the targets, there is the need to make the budgets. This can be undertaken in
various forms and activity-based budgeting is one of the most important among all. This is
the approach in which the costing which is carried on the activity basis will be taken into
account (Bjørnenak, 2013). The budgets will be formulated by taking into consideration all of
the expenses as per that approach and in that costs related to the overheads will also be
incorporated. This is the tool in which the past data and budget are not used to make the

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budget for the current accounting period. There are the proper research and analyzation which
is performed in this respect and with that the activities of the current year will be identified
and they will be entered in the budget. The proper identification will be helping in making the
appropriate allocation of the resources to all the activities which will be performed in the
coming year.
It is a successful process and this is because of the various features which are incorporated in
the same. The main feature is that all the activities which are involved in the business will be
performed with the most efficiency (Pazarceviren and Celayir, 2013). For all the expenses
there are proper cost drivers and they are considered for the making of the best budget. Under
this method, the activities for which the cost will be incurred is recorded in place of expenses
which are to be made.
The method helps the company in reducing its expenses which is beneficial as the overall
reduction in cost leads to the improvement in the profits which will be increased. With the
help of this method, there is proper allocation which is made for all the resources (Cardoş,
2014). This helps in maintaining the level of the activities and they are carried in the manner
by which the best products are made and there is an effective business which is performed.
The decision making of the company improves with the use of activity-based budgeting.
All the discussions in relation to the operations can be carried in an appropriate manner
among the employees and lower managers. It is possible in this method as they will be having
the proper information about the activities which are to be performed and the resources which
have been allocated to the same (Rajabi and Dabiri, 2012). There will be proper
communication which will be established among the managers and employees as they will be
having all the information which needs to be communicated. All the areas in which the
improvements are required will be identified and then the plan can be made to deal with them
in the most effective manner. There will be best results which will be attained with the use of
this approach.
The budget will be helping in ascertaining the variations which are involved and this will be
helpful as management will be able to take the steps in relation to the same. As this will be in
relation to some activity so, the focus will be made on the same level (Kumar and Mahto,
2013). The manner in which consumption of the resources is taking place is determined and
all the inefficiencies are ascertained accordingly. There is proper integration which is

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developed with this among the management and budget. They both work in such a manner
that all the goals of the company are attained in the best possible manner and sustainable
growth in the business is maintained.
c) Comparison of activity-based budgeting and traditional budgeting
Activity-based budgeting is a new approach and before that, there was traditional budgeting
which was used. They both are different in various aspects and manners and this is the main
part that needs to be focused upon. In traditional budgeting, there was a simple approach that
was followed and for that, there was no research that was needed. In this, the past year budget
was taken into account and the same was adjusted as per the required changes. All of the
variances which were involved in the earlier budgets are identified and then changes in the
new budget are made as per them (Pietrzak, 2013). This is a simple approach and does not
require much of the effort. On the contrary, the activity-based budgeting is a deep concept
and in that deep research is required to be made. There is no consideration of the previous
budget and the new budget is formulated each year. This requires more time and effort to be
formulated. All of the activities which are involved and the complete information in respect
of them are collected in this approach. With the help of the collected data, there is the
allocation that is made of the resources to all the available activities. This is mostly used in
the companies in which there are many changes that take place and it is required to make the
fresh research to make the proper budget.
The main objective and focus of the traditional budgeting were on the accounting which is to
be made. There were various accounting procedures that were followed and in them, all of
the information was required to be recorded. The activity-based budgeting is mainly in
relation to some decision or for the project which is to be undertaken. In this, the aspects of
the project are researched upon and then the budget is formulated on the basis of the findings.
The traditional budgeting is based on the previous year's data and in that no justification is
required in the response of the same (Réka, Ştefan and Daniel, 2014). All of the aspects
which are entered in the activity budgeting require the justification as they are required to a
particular project and for that, the manager responsible will be required to provide the
justification.
The main changes which are made in the traditional budgeting are on the basis of the past
year's data and then in the same adjustments are made for the inflation which has taken place

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so that the expenses of the current period can be met in an effective manner. In the activity-
based budgeting, there is the consideration of the various activities which will be performed
and then the actions will be taken accordingly (Ozyurek and Uluturk, 2016). By taking them
the resource allocation is made to comply with all the requirements and attain the results in an
appropriate manner.
All of the areas in which the methods of budgeting are different have been identified and they
will be useful in further planning which will be made. The benefits which are obtained by the
one over others are determined and will help in making such decisions which will be yielding
the best results by appropriate allocation of the resources. This will lead to the enhancement
of the overall efficiency and effectiveness of the business.
d) Planning and controlling by activity-based budgeting
All the businesses are required to have a proper planning and controlling system by which the
operations will be carried in the best possible manner. This is carried with the help of
activity-based budgeting as under that there is a proper plan which is made in respect of the
activities which are performed in the business. All the expenses which are incurred by the
company on all the transactions are identified and recorded so that they can be implemented
and the planned cost is maintained (Berry, 2014). This helps the business to eliminate the
extra cost which is incurred and affect the overall profitability of the company. In case ANZ
also there are various activities which are performed for several services which are provided
and that helps it in planning the manner they shall be carried.
In this method, the focus is made on the various types of activities and the volume which is
involved. With the help of this, the activity levels which are involved are reduced in such a
manner that there is an increase in the profitability of the business. In this method, it is
required that all of the managers who are involved shall have complete information about the
processes which need to be undertaken and by that they will be able to have proper control.
The cost will be managed in an effective manner by this and all the expenses which are
irrelevant will be eliminated from the business.
In the budget there is the specification of the cost which is incurred on the activity and the
management will be required to make the decisions in such a manner that they will be
managed. The resources are specified and it will be required to plan the procedure in the
manner by which there will be proper control which will be established and the level which is

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provided is maintained appropriately (Huynh, Gong and Huynh, 2013). The actions will be
planned by the ANZ banking group accordingly and that will be helping in managing all of
the activities in such a manner that the customers will be satisfied to the highest level. This
will be making the business grow in a proper manner and maintain long term sustainability.
All of the discussion which is provided will be leading to the most effective planning and
control in the company and that will help in making strong management. The cost will be
controlled in such a manner that there will be an increase in profitability which is the ultimate
aim of any business.
e) Suitability of activity budgeting for ANZ banking group
The application activity-based budgeting in the ANZ group will be of benefit to the group as
there will be various aspects that will be covered in the same. The budgeting process helps
the business to manage all the activities in the available resources by following the best
possible method and procedure. There will be the most effective and efficient utilization of
the resources which will be made and that will be for the benefit of the company.
The evaluation will be made in the best manner and in that all the important areas which are
involved in the business will be taken into consideration. There will be coverage of the
incorporated activities and the details of the same will be identified which will be available to
the managers to maintain the position in the best possible manner (Mahal and Hossain, 2015).
There is a high level of competition that is available in the Australian banking sector and in
that it is highly required that all of the resources shall be maintained appropriately. This is
made possible by the activity-based budgeting as in that all of the activities are covered and
there is no aspect which is left unattended.
There will be proper transparency which will be involved in the company with the help of
this approach as all of the data and information which is obtained in the research is available
to be used by all and is incorporated in the budget. The costs which will have to be incurred
will be traceable by the management in the budget and this will help them in managing all the
expenses in such a manner that they are reduced to the minimum level possible (Faraji and
Reiszadeh, 2013). All of this will be helping to create the balance among the various
activities as the allocation will be made in the manner that satisfies the need of all the areas.

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The management will be having all the information and this will help them to make the plan
for the other aspects also. There will be various initiatives that will be taken by the
management to maintain the level which is specified in budget and accomplish all the goals
and targets which have been set under budget. They will be making the proper teams and the
delegation of the tasks will be made in such a manner that best results are attained. They are
responsible for the task which is allocated to them and will be performing in such a manner
that they are accomplished in order to prove themselves. This will be in favor of the business
as all the gains which will be made will be for the company ultimately.
There will be an improvement in the decision-making process and that will help in having
such decisions which are for the benefit of the business. The level of the services which are
provided will be upgraded and that will raise the customer satisfaction level (Jänkälä and
Silvola, 2012). ANZ will be benefiting as they will be able to retain the customers for a
longer duration of time. This will be resulting in long term success which will be attained by
the business.
Conclusion
From the report that is presented above all of the information in respect of activity based
budgeting has been gained. The description of the ANZ banking group has been provided and
that helped in gaining the information about the activities which are performed by the
company and the areas which are covered by it. There is complete information which is
gained with reference to the business. The discussion for the activity-based budgeting is made
in the next section in which all of the details about the approach and the manner it is useful
are identified. The main features which are involved with this method have been ascertained
and provided in a detailed manner. With the help of that complete understanding of the
method has been obtained. The traditional budgeting was earlier used by the businesses and
the manner in which it is different from the activity-based budgeting has been ascertained.
There is a proper description that is provided in relation to both of them and the differences
are identified in the best manner. It is very important to identify the manner in which the
company will be benefiting from the use of this approach and it has been done in the report.
The ways in which there will be appropriate planning and controlling in the company with
the help of budgeting has been determined. It is found that with the use of the approach there
is proper planning which is done and the business will be able to control the expenses of the
company.

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References
Bloomberg. (2019) Australia & New Zealand Banking Group Ltd. [Online] Available at:
https://www.bloomberg.com/profile/company/ANZ:AU [Accessed 29 December 2019]
Bjørnenak, T. (2013) Management accounting tools in banks: are banks without budgets
more profitable. Kaarbøe, K., Gooderham, PN, Nørreklit, H. and (Keine Angabe)(Ed.),
Managing in dynamic business environments: between control and autonomy, pp.51-68.
Pazarceviren, S.Y. and Celayir, D. (2013) Target costing based on the activity-based costing
method and a model proposal. European Scientific Journal, 4, pp.1-21.
Cardoş, I.R. (2014) New trends in budgeting–a literature review. SEA–Practical Application
of Science, 2(04), pp.483-489.
Rajabi, A. and Dabiri, A. (2012) Applying activity-based costing (ABC) method to calculate
cost price in hospital and remedy services. Iranian journal of public health, 41(4), p.100.
Kumar, N. and Mahto, D.G. (2013) Current trends of application of activity-based costing
(ABC): A review. Global Journal of Management and Business Research Accounting and
Auditing, 13(3).
Berry, P.J. (2014) Starting with ABC and finishing with XYZ: what financial reporting model
best fits a faculty and why?. Journal of Higher Education Policy and Management, 36(3),
pp.305-314.
Huynh, T., Gong, G. and Huynh, H. (2013) Integration of activity-based budgeting and
activity-based management. International Journal of Economics, Finance and Management
Sciences, 1(4), pp.181-187.
Pietrzak, Ż. (2013) Traditional versus activity-based budgeting in non-manufacturing
companies. Social sciences, 82(4), pp.26-37.
Mahal, I. and Hossain, M.A. (2015) Activity-Based Costing (ABC)–An Effective Tool for
Better Management. Research Journal of Finance and Accounting, 6(4), pp.66-74.

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Réka, C.I., Ştefan, P. and Daniel, C.V. (2014) TRADITIONAL BUDGETING VERSUS
BEYOND BUDGETING: A LITERATURE REVIEW. Annals of the University of Oradea,
Economic Science Series, 23(1).
Faraji, F. and Reiszadeh, A. (2013) The activity-based costing and target costing as modern
techniques in determination of product cost. Islamic Azad University Iran.
Jänkälä, S. and Silvola, H. (2012) Lagging effects of the use of activity‐based costing on the
financial performance of small firms. Journal of Small Business Management, 50(3), pp.498-
523.
Ozyurek, H. and Uluturk, Y. (2016) Flexible budgeting under time-driven activity-based cost
as a tool in management accounting: Application in an educational institution. Journal of
Administrative and Business Studies, 2(2), pp.64-70.