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This report highlights the usage and
practice of budgets within this article , first of all the the
history or  background of budgeting is
presented , along with various budgeting practices followed by organizations
and  analysis of related theories in
traditional budgeting, considering  both
the merits and demerits of traditional budgeting. The second   part of
the paper continues with the discussion about alternative budgeting methods and
the benefits of using budgets for an organization. In the third part conducted
surveys and studies are analyzed in order to establish whether traditional or
alternative budgeting methods are better and have a positive impact on
businesses; or which has more practical usefulness. The final part provides
conclusions and discussions for future research

 Bugets and budgetary control has been known  since 19th century.however the use
of budget control was until the beginning of in 1920s in US. At that time
budgets support management  in controlling
management resources and activities  for
definite the 1960, budgets are used by organizations for predicting
future revenue and expenses of company for particular period of time and with
the passage of time it become act as a key drivers for measuring the
overall  performance of company .(cima,
goode and malik) after that ,budgets are taken into consideration for  making long term and short-term plans and
implementing strategies of enterprises.(Rickards,2006).  According to Ekbom and wallin, merchant and
van der Stede  budgets have historically
played a significant role in managing and controlling the basic operations of a
company.  In the present scenario,
budgets are used as a financial control tools by companies through which the
organizations can measure their financial performance for definite period.  budgets are important for organization due to
numerous reasons. According to Romanian authors (achim,2009a) budgets perform
several functions for management. It is used by companies for   planning their operations. It aids the
managers in forecasting future issues of company in advance and enable them to
act accordingly.  it also acts as a coordinator
as it brings coordination between different departments and employees of
company and it can provide help in communicating financial plans among
different departments to achieve its set objectives. budgets also utilize by
organizations for controlling the current activities of business by measuring
the actual performance with budgeted performance and determining the deviations
if that management can take the relevant decision to eliminate such deviations.
If the budgets have been properly prepared, it gives the management detailed
information about the next fiscal gives the possibility to set
objectives easier and becomes an important tool in decision making process.

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According to the
literature (Campbell, 1985; Horngren, Datar and Rajan, 2012) a traditional
budget is a  plan  which is used by management for estimation of
income, expenses, cash flows  for  a specified period .in this budget last year
budget is taken as a base and current year budget is prepared by making
alterations in previous years base. The main objective of this budget is to
provide aid to management in planning ,controlling and communicating the
proposed plans so that management  can
work according to the predetermined plans and thus, achieve the  overall goal of company. In another words it, serves
as a financial plan in support of a specified target. Thus,  traditional budgeting process proves to be benefical
for management as it helps the management in performing basic functions of
management, like planning, controlling and performance evaluation but there are
some issues regarding the use of budgets within organization.  Some authors criticize the   historical
budgets due to many reasons. Under traditional budgeting ,past information is
used by management for setting the goals of company and by using past data a
company can never cope with the future changing requirements of business world.(neely,
Sutcliff and heyns) in  2001 ,neely , highlights
the demerits of traditional budgeting .According to them,, these budgets consume
too much time,  too many management
resources and quite  expensive .the
installation and operation of budgets is very costly since it require the
engagement of large force of technical and qualified such it is not
suitable for smaller undertakings budgets constrain responsiveness and are
often a barrier to change as Budgets are prepared after a lot of ground work
done by different departments .Budgets encourage gaming and perverse behavior, budgets
do not react the emerging network structures that organizations adopting, they
are not  prepared frequently useually
developed and updated  on annual basis
only and make people feel undervalued. The main critique is that budget
introduces a vertical command and controlling, that constrain responsiveness
and barrier to changes. Instead of using budgets as a mean to implement strategy
the concentration is primarily on cost reduction that affects the people  behavior and encourage them to play games. Over
the years it has claimed that traditional budgeting has lost relevance with the
modern business environment and is no longer satisfying the needs of managers
(Rickards, 2006; Goode and Malik, 2011). Due to this reason researchers have
developed alternative budgeting methods that are more suitable to changing
requirements of modern business last five years, Beyond budgeting,
better budgeting, rolling forecasts, activity-based budgeting are  developed as a best alternative methods of budgeting.
  Beyond budgeting (BB) enables the
managers to carry out their operations with speed ,flexibility and simplicity
and it also helps in reducing the overall cost of operations .similarly ,
activity based budgeting eliminates all sorts of unnecessary activities, which
help  the business to save its cost. researchers
shows that improvements in methods of  budgeting has been seen as one of the most
important management control mechanisms in public and private companies. modern
 budgeting system plays a crucial role in
setting the targets of companies,as it set the standard for  performance in coming period .the important
advantages of budgets or budgetary control system due to which the management
can use budgets  are as follow:-1  Maximization of profits: .the budgetary
control system aims at maximization of profits of enterprise. To achieve this
objective,a proper planning and coordination of different departments is
undertaken. there is proper control over various capital and revenue
expenditures. the resources are put to gether for best possible use.2
Coordination:  the working of different
departments is properly coordinated  by
using budgets . coordination of various executives and subordinates is
necessary for achieving the budgeted targets. 3 Specific aims: the plans and
policies and goals are determined by top management and all efforts are put to
gether to reach the common goals of company.every department is given target to
be achieved.the efforts are dirtected towards achieving some specific aims.4  tools for measuring performace:  .by providing targets to various departments
budgetary control provides a tool for measuring 
managerial performance. The budgeted targets are compared with actual
results and deviations are determined.the performance of each department is
reorted to top management.this system enables the introduction off management
by exception.5 economy: the planning of will be systemetic and there will be
economy in spending.the finances will be put to optimum use.the benefits
derived will ultimately extend to industry and then to nation.  6 economy: the national resources will be used
economically and wastage will be eliminated.7 determining weakness: the
deviations in budgetsd and actual performance will enable the determination of
weak spots of company  .8 corrective
actions .: the management will be able to take corrective measures when there
is deficiency  in performance .the
deviations will be regularly reported to top management so the necessary action
is taken at the absence of budgetary control system,the deviations
can be find out only at the end of financial year.9 consciousness: it create
consciousness among the employees .by fixing targets for employess,they are
made conscious of their responsibilities.everybody knows what is expected to do
and he continues with his work.

 The  researchers and practitioners was very  excited about their research on budgeting .Over
the years studies were made in order to decide whether traditional or
alternative budgeting methods are better and have a positive impact on
businesses. Although traditional budgeting has met intense criticism it still
is used universally. The literature (Hansen, Otley




and Van Der Stedel,
2003) considers that  the percentage of
companies that use traditional budget it is very high, around 90% in developed
countries and developing countries (Goode and Malik, 2011; Pietrzak, 2013).in
2006 dugdale and lyne studied that about 95% of financial managers thought that
budgets are extremely important for planning, coordination,communication  and performance evaluation , and for
supporting the internal control system of organizations. The majority of the
respondents (80% of the Canadian and 77% of the US sample) indicated that
budgets were used for control purposes in their organizations and they were not
planning to abandon the use of traditional budgeting in the near future .similarly,
 Rickards (2006) presents a report about
well-known companies that successfully added beyond budgeting into their
management processes. Companies like Borealis (a leading European petrochemical
manufacturer), Unilever (health and hygiene), Rhodia (a French chemical
concern), German Railways, BASF-IT Services .

To conclude that Budgeting
is a major management activity without which the  management is not able to perform basic
operations of company. The  evolutions in
budgeting comes due to changing economic environment and business processes. To
conduct a profitable business, it is mandatory for every business to recognize
their strengths, weakness so that they can cope with the dynamic environment in
which it exists. Thus, ever company use budgets or making long term and short-term
plans and execute their plans accordingly.   From
the initial cash budgets and future income and expenditures estimation budgets
evolved to more modern techniques such as zero based budgeting, activity based
budgeting or beyond budgeting. The alternative budgeting methods gained
popularity as they proposed solutions to traditional budgeting’s perceived
problems. Eventhough several advantages were attributed to beyond budgeting the
movement is still in his early stages of development. The concept requires
further research, development and practical implementation before a real
breakthrough is managerial (Although traditional budgeting is often
inappropriate for the current environment is still very popular among
organizations and will not soon be eliminatedIT services) are the examples of
beyond budgeting successful implementation.


teacher MIRELA-OANA INTEA, ,. p.-D.-D. (n.d.).associate professor
VIOREL-DORIN LACATUS,assistant teache LIVIU-DANIEL DECEANU.  jjournal of purpose for budgeting-literature
neelly, s. h.
(2001,2003,2004,2013). use and practice of budgets within organization. traditional
budgeting vs beyond budgeting.
Bunce, P., Fraser, R.
and Woodcock, L. (1995) ‘Advanced budgeting: a journey to advanced management
systems’, Management accounting research, vol.6, iss.3, September, pp.
david dugdale and dr stephen lyne,( BUDGETING PRACTICE AND ORGANIZATIONAL





Budgets have traditional
played a crucial role in controlling the management actives,

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