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'The budget is a tool of repression rather than innovation' cited by Hope and Fraser - Essay Example
Finance & Accounting
Pages 8 (2008 words)
Budgeting Name Institution Budgeting The Budget Is a Tool of Repression Rather Than Innovation A budget refers to a financial tool or plan that lists all planned revenues and expenses. A budget functions as a plan for spending, borrowing, saving, and it is an essential tool for microeconomics…
Budgets also enable the measurement of actual financial operations against a forecast and establish the costs constraints of a project, operation and program (Daum 2001, p. 21). Budgets have been used as tools for aiding the planning of actual operations by ensuring managers consider changes in their environment. Additionally, budgets enable managers to outline steps and measures for ensuring the organization meets it objectives. Budgets crucially help managers to examine the relationships between the different departments and their own operations. Most importantly, budgets control resources, and help in communicating organizational plans within the different settings (Drury 2007, p. 31). It is equally crucial to mention that budgets motivate managers to work towards the achievement of the organization’s objectives, provide visibility of the organization’s performance, and help when evaluating the performance of managers. Recently, budgets and budgeting processes have faced immense criticism consequently attract publicity. Critics to budgets and budgeting note that budgets provide barriers to successful management and utilization of organizational resources. According to these critics, budgets influence managers and employees in counterproductive ways. ...