Accounting (APC 309)
Part 1/ Question 1
The purpose of this report is to cover one of the most important topics in management accounting and analyze them critically. This topic is about traditional approach of budgeting and budgetary control. Analyzing this topic will help to find the benefits and problems of traditional budgeting in two different business, where they are operating at different business environment.
It will also discuss some of the alternative methods of budgeting and how it can suit, where traditional methods are inappropriate. The beyond ...view middle of the document...
Computerized budgeting. 04
Beyond budgeting. 05
Traditional budgeting has been used by the business world for long time, until recently when some of the alternative approaches of budgeting have been discover. There is multiple function of traditional budgeting, and benefits and problems are found in both of them. Especially the benefits and problems of budgeting need critical evaluation, when there are two kinds of business, one operating in fast changing environment and another on slow pace environment. Husted’s cultural dimension can be used for better explanation of benefits and problems regarding traditional budgeting. Moreover, we will discuss the multiple functions of the traditional budgeting and their processes.
On the other hand, some of the alternative approach like computer budgeting, activity based budgeting and beyond budgeting process will be discussed critically. Scholarly suggestion and reviews of Hope and Fraser (2003), Dugdale and Lyne (2006) and speech by Bjarte Bognes on
‘’ Beyond Budgeting’’ will also be discussed.
(2) Traditional budgeting approach.
Traditional budgeting is about creating a budget based on next year budgeting process, which involves long term planning. Projection is being done about the next year amount, which is uncertain and volatile. The proposal of the budget is based on current information as future fact and information is not possible to find. The step by step functions of the budget contains planning, coordinating, communicating, motivating, controlling and evaluating.
2.1 Multiple Functions.
Planning contains shorting out the activities, which include day to day activities which are performed daily. These activities needed to be reported properly to the manager.
According to Belbin team roles theory, conflict can be avoided or solve easily if better coordination can be applied between the team members. In case of budgeting, a common plan can help to identify conflicts at early stage.
Communication will play a vital role in the budgeting process, as it will help the management staff to find their exception form each others.
Even though budget helps manager for better performance and towards gaining the objective.
It could be also, the reason behind conflicts and lack of efficiency between the managers. If we look at Herzberg’s motivation and hygiene...