Drawbacks of the Budgetary Control System in Practice
The budgetary control system analyses the Management Accounting as a Behavioural Process more than simply a financial process. The budgeting process at Charles ltd was not accepted by the departments primarily because of several behavioural issues that can be highlighted from the provided case. The case suggests a great deal of evidence whereby practical implementation of budgets calls for addressing behavioural issues more than making the budget acceptable within the organization.
In case of Charles Ltd., the managers found it difficult to make their budgets accepted across departments of the company. After the 3 month period, they found large variances of actual production from planned estimates. Janet, a supervisor at Department D thought that the plan was some paperwork that did not require her attention and also the report prepared was unfair to for their team with several inaccuracies (ICSA, 2005).
1. The managers lack of concern acts as major criteria for non acceptance of financial plans by departments. Such lack of concern arises from lack of communication between the concerned departments while formulation of budgetary estimates. The managers need to be well aware of the production techniques and usage requirements and also understand efficiency norms and standards for various inputs. Only after due consideration of the interrelated production processes can the budget plan well at the departmental and hence the managerial level.