StudentShare solutions
Triangle menu

Management accounting-Bias Budgets - Coursework Example

Nobody downloaded yet

Extract of sample
Management accounting-Bias Budgets

Question One (a): Why do managers want to manipulate their budgets? After budget approval, the company may use it to carry out budgetary actions. As a result, the managers use it to ensure they carry out the organization objectives and plans and in the end, they have to compare budget plan against the real performance. Once compared, the difference in amount is usually the budget deficient or bias which is cause by manager`s manipulation or distortion on the proposed budget. There are various reasons as to why mangers manipulate budget. Firstly, if the rewards and motivation through performance evaluation help to achieve the budget results, the managers may end up manipulating the budget to include more of rewards in order they can hit the target more easily like league table and bonuses. Besides, managers are highly involved in cases of budget slacks-where organization set their revenue to be too low and a high cost, the organization may end up losing sales since the resources required to raise production with the short time given have been limited. Moreover, the managers who have been promised some rewards on attaining certain goals set their target to be very low such that they easily attain them without caring whether the company looses or gains. Likewise, the senior managers dictate on a budget for performance. As a result, it forces the mangers to keep focus of resources on the performance of their department. Consequently, the mangers end up presenting a budget request biased on his department not for organization as whole. Hence, the direction of bias is downwards. Secondly, the company`s practices and norms is subtle in determining the performance of the company`s budget. Notably, prevailing work conditions help to dictate what is morally right. As a result, the management, which focuses on self-manager performances, will give incentives directed to managers alone. However, the aggregate accounting performance from his action is focusing on organization as whole. On the other hand, the management focusing on others gives a hard determination of degree of performance. As a result, it reduces the aggregate performance although it induces co-operation and collaboration to other firms. Moreover, when there occurs some change in the budgetary system from being top-down or centralized, and an acceptable estimate of growth is set, with the changing budgetary system to may be bottom up, and company`s practices remaining similar, bias of unknown direction happens. Lastly, the mangers may feel insecure in their job and as a result, they are more than ready to use the budgetary trick when a chance arises. By this, it mean, the managers are quick to spend until the entire budgeted amount is consumed when the chance of buying goods occurs at a lower price. In fact, in the managers operating in the declining sales department makes use of entire budgets usage under the assumption that the future is uncertain. As a result, the budget becomes wasteful at the expense of the manager approving his need of upholding the job since the amount needed by the company and the bought one is very varying. Hence, strong upward bias occurs. (b): Why are they able to do? What are the constraints on such behaviour? As a long as the departmental budget exists, some head of the department will always try to game the budget. Additionally, there are numerous reason as ...Show more

Summary

Student`s Name: Instructor`s Name: Subject: Most companies’ top officials are the one responsible of approving the budget prepared by their juniors. The approved budget then becomes the guide on the use of company in the following financial year…
Author : westmona
Management accounting-Bias Budgets essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the coursework on your topic
"Management accounting-Bias Budgets"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Management Accounting Assesssment
These changes are in the form of corporate strategy, business strategy and even in day to day operations. Before introducing the change, companies conduct in-depth analysis of its strengths as well as weaknesses. They also evaluate the external environment (political, economic, social, technical, legal and environmental) to identify external threats as well as opportunities.
8 pages (2000 words) Coursework
Management Accounting
It states the best in management accounting advise such as how to apply the budgeting process, the impacts of a budget and how to incorporate a budget in an organization. I can use this to illustrate the role played by a budget in management accounting. This book concludes that budgeting is important in managing a business and this is true since it forecasts profitability, costs and thus used for decision making.
10 pages (2500 words) Coursework
Coursework on Budgets
Another definition of a budget is that it is a financial or a quantitative statement that is prepared and ratified of which ratification means it has undergone a defined process of implementation to realize its output. Budgets are done from time to time and their success depends on whether certain strategies and acts including certain decisions are undertaken to realize the outcome of the forecast (Hammonds, 2006).
8 pages (2000 words) Coursework
Management accounting and control
This has prompted the use of the balance scorecards approach which enables the organizations to balance the internal and process measures with results and the financial measures which gives the managers a complete picture of the organization as well as the areas where they should make improvements (Lipe and Salterio 2000).
15 pages (3750 words) Coursework
Management accounting and control (5-8)
As time passes on, the roles of the accountant keeps changing. In addition, they become more diversified enabling the roles of the accountant to be viewed in varied forms of activities. Management accountant hence applies several forms of concepts and practices in the process of budgeting.
15 pages (3750 words) Coursework
Management accounting and control (s-12 -1-4))
This variance from an organisation’s budget is what directs attention to important aspect of budgetary process, the control process. There is need for accountants to explore all variances as a practice of “management by exception” (Bunce et al 1995).In the management of public resources, it is important to adopt a control model that aids the process of good governance.
15 pages (3750 words) Coursework
Management account-R12
In accounting, there are several theories which give guidance in understanding certain aspects. In management accounting, there are specific theories; among them is the contingency theory. In management accounting, contingency theory is basically concerned with the situational factors.
18 pages (4500 words) Coursework
Supervisory management/managerial accounting
It is an activity on the part of management to get things done by others, willingly and not by compulsion. Leadership is the process of influencing subordinates in an organization for the achievement of organizational objectives. It is the mangers' ability to induce employees to perform their tasks confidently and enthusiastically.
8 pages (2000 words) Coursework
Accounting
So, what was the root cause of corporate fiascos such as Enron/Arthur Anderson and WorldCom and what force serves as incentives for
2 pages (500 words) Coursework
Strategic Management Accounting
The findings obtained accordingly reflect that proper strategic decision and market research were the key roles of the business. In the case scenario provided with regard to Fransoko,
8 pages (2000 words) Coursework
Hire a pro to write
a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Click to create a comment
Contact Us