Got a tricky question? Receive an answer from students like you! Try us!

critically evaluate budgeting as a tool for planning and control. - Essay Example

Only on StudentShare
Masters
Author : diamonddickens
Essay
Finance & Accounting
Pages 5 (1255 words)

Summary

A CRITICAL EVALUATION OF BUDGETING AS A TOOL FOR PLANNING AND CONTROL Date For a long period, companies and firms have used budgeting as a tool for planning and control. At a personal level, financial experts encourage people to draw personal budgets as a way of monitoring their expenditures…

Extract of sample
critically evaluate budgeting as a tool for planning and control.

According to them, not only is budgeting a time consuming undertaking, it also is prone to manipulation by the management. Proponents of the budgeting process hold that it is only through budgeting process that firms can achieve proper financial planning. Despite having its advantages, budgeting has its disadvantages too. This paper aims at evaluating the pros and cons of budgeting, with reference to previous research done by different authors. Libby & Lindsay agree that budgeting has its own advantages and disadvantages. According to Libby and Lindsay, most organizations find budgeting as an important key in managing their control systems. Budgeting plays a number of major roles to the management in fulfilling their managerial roles in an organization. Through budgeting, coordination, communication, as well as performance evaluation of an organization is possible. Consistently, and over a long time, external evaluators have used the budget as a measure of organizational performance. The ability of the organization to meet its budgetary commitments determines the organization’s performance. Although in some regions, budgeting has lost meaning, in others, such as North America, it is still a very important element of management control. ...
Download paper

Related Essays

Management and Cost Accounting: Planning, Control and Budgeting
Furthermore, management accounting also aids an organisation to devise strategies as well as plans for improving competencies and efficiencies of an organisation. Management accounting is also known as internal accounting which is useful in improving internal business operations as well as effectiveness of an organisation. Management accounting is mainly utilised by managers of an organisation for enhanced decision making as well as in initiating strategies for successful performance of an organisation. Cost accounting is a process of determining production cost as well as cost involved in…
11 pages (2761 words)
Some Management Accountants Argue That Budgets Are Great for Planning, but Not For Control. What Do You Think They Mean?
First of all, control can mean making sure that the real numbers match the ones that were set out in the budgeting plan. It can mean ensuring the goals are met by controlling the expenditure, controlling the employees’ actions and controlling the outcome. Additionally, the use of planning cannot be underestimated. It is identified as an activity to plan a particular set of activities in order to serve a number of objectives. On the basis of objectives, the process of planning is identified and carried out. And, with the help of budgets, the process of planning is determined, discussed,…
6 pages (1506 words)
The Role of Budgeting in the Current Economic Climate
This essay offers a comprehensive review of the current state of budgeting theory and its implementation in the process of central planning of corporate firms. Initially the concept of budgeting was designed for the senior executives in an organization to control the activities in the organization directly from the business head. It acts as a management tool by which the financial health of the company can be controlled. The benefits of budgeting include that of forecasting the future performance of an organization, addressing its developmental issues, promoting cohesion amongst the different…
10 pages (2510 words)
Critically appraise the application of traditional capital budgeting techniques.
At the same time, many business organizations failed to survive stiff market competition and subsequently went out of the market. The last decade witnessed a series of corporate scandals and bank failures due to poor managerial accountability and ineffective corporate governance practices. Hence, today’s managements give particular focus to corporate governance principles and long term business decisions. In this context, the concept of capital budgeting is of considerable significance because it evaluates future cash inflows and outflows on a prospective business project and thereby…
18 pages (4518 words)
Management accounting and control (s-12 -5-8))
Organisations have to undertake number of decisions in order to stay in the business and among different decisions; the name of financial decision is one of them, in fact the most ones as well. Financial competitiveness is the thing on which the entire productivity of an entity depends upon. There are number of decisions that come under the ambit of financial management and managing the things accordingly is important for the companies. Decision making is one of the most important provisions for the entity as a whole and there are certain methods that could be used for the decision making…
15 pages (3765 words)
planning and budgeting
First, the key factors to consider when making pricing and service decision are considered to include the cost of production, profit mark-up and external factors including prices of competitors. Once the right prices and services are rendered, the facility is sure to have a very firm basis for financial performance. Again, there is consideration on the actual financial planning process, where it is said that there are as many as six components in the financial planning process. Each of these components relates to the other to ensure that a firm financial basis is built for the facility.…
10 pages (2510 words)
Read the Bourmistrov and Kaarboe (2013) paper and identify its key contribution(s). Critically evaluate and discuss the role of
However, the scope of accounting profession has tremendously changed over the last two decades, and today top managers encourage the accountants to be a management partner instead of a mere technical partner. In addition, the emergence of new business concepts like beyond budgeting has greatly increased the significance of the accounting profession because top executives cannot deal with those newly developed practices without the external support of accountants. This paper will identify the key contributions of the paper written by Anatoli Bourmistrov and Katarina Kaarboe and critically…
10 pages (2510 words)