Phase III completes the firm’s journey to discontinue the traditional budget and its derivative income statement. Unfettered by the budget, OIS Phase III has has two important advantges for the firm:
- an income statement with a forecast that includes the most profit possible because its functioning is disentangled from the budget.
- the elimination of the traditional budget. This relieves departmental managers of manipulating their budgets’ costs with actions that are disincentives for the firm’s well being.