Behavioural aspects in budgeting

Get Full Essay Get access to this section to get all help you need with your essay and educational issues. Behavioral Aspects of Budgeting Essay Sample Behavioral Aspects of Budgeting The technical process for setting a budget emphasizes the need for involvement at all stages of the process. In an ideal world that would produce the best solution. However, the world is not ideal and not everyone can be allowed to do exactly as he or she would wish at the first instance.

Behavioural aspects in budgeting

Behavioural aspects in budgeting

The behavioural Aspects of budgeting Critically evaluate the role of participation in budget setting, including any relevant theory.

Explain what you understand by such dysfunctional behaviour in budgetary control mainly in the public sector. Should managers be involved in setting budgets. Benevolent authoritative - motivation by reward, communication downwards but still centralized decision making and strong hierarchy 3.

Consultative - motivation by reward, communication two way but still largely centralised decision making 4.

Behavioral Aspects of Budgeting in Managerial Accounting | Bizfluent

Participative - group participation with good communication and decision making by group processes. Likert postulated that with the participative style there is greater involvement for individuals, better labor relations and higher productivity.

Management needs to attempt a participative in Behavioural aspects in budgeting on the assumption that Theory Y holds: Coch and French - study of participative v non-participative budgets; Hofstede - positive correlation between higher participation and higher budget motivation; and Bass and Leavitt - employees participating in setting standards performed better than those who did not.

Fieldler - suggests that styles of leadership other than participative can be perfectly effective. Argyris - danger of pseudo-participation Anthony - Budgets may be seen as commitments by managers to achieve the targets set Hofstede - "budgets and cost standards act as incentives for motivating budgetees" But what motivates people: Maslow - hierarchy of needs from physiological food, shelter etc ; safety job security, fair treatmentaffiliation social contactsesteem both self esteem and from others and finally self actualization doing what one is fitted for - widely tested and confirmed.

Behavioural aspects in budgeting

Maslow - stress those factors at the apex of the hierarchy of needs self actualisation and esteem as their basic needs will have been met. Herzberg - ensure that hygiene factors are adequate and focus on providing the motivating factors 3. Contradictory messages on the link between performance and pay - Herzberg suggest salary is a hygiene factor but in Maslow there may be a link to esteem 5.

Other motivational theorists Vroom expressed "motivation to perform an act" as a function of "orientation" and "expectancy" - in terms of budgetary control this means that the desire to achieve a budget target is a function of the preference for obtaining the result over not attaining it and perception of your ability to influence the outcome.

Becker and Green and Stedry linked aspiration levels of employees with performance. Stedry showed that the best results were achieved by those with the highest aspiration levels - thus we may say "budgets should be attainable but not too tight".

The difficult level produced the best and worst outcomes - good outcomes were where the budgetee saw the target as a challenge and bad outcomes where the target was deemed impossible and the budgetee withdrew.

Good performance was also linked with high achievers and younger people. Child and Whiting noted: As Lowe pointed out there is a balance for the budgetee of the benefits from achieving a target by negotiating down the target and disappointing his superior with the size of the present forecast.

Lowe also indicates that the goodwill based on past performance is important - if there is none the employee has little to lose by setting high targets to gain present acceptance but if the is a good record forecasts may be tempered with a view to maintaining the record.

Budget Communication Miles and Vergin summarised the following precepts: Solution Summary This problem involves the fundamentals of accounting.Accounting, Organizations and Society, Vol. 1, No. 4, pp. Pergamon Press, Printed in Great Britain SOME BEHAVIORAL ASPECTS OF BUDGETING FOR CONTROL: AN EMPIRICAL STUDY D.

Behavioural Implications of Budgeting (6 Implications)

GERALD SEARFOSS University of Utah Abstract The research reported in this article empirically evaluated the relationships between perceived participation in the budget process, . Nov 24,  · ACCA F5 Behavioural aspects of budgeting Free lectures for the ACCA F5 Performance Management Exams.

CHAPTER 9 • BEHAVIOURAL ASPECTS OF BUDGETING 1 9 Behavioural aspects of budgeting Objectives By the end of this chapter you will be able to: Page 1 Describe the purpose of budgeting systems xxx 2 Explain the role of budgeting as a means of .

CHAPTER 9 • BEHAVIOURAL ASPECTS OF BUDGETING 1 9 Behavioural aspects of budgeting Objectives By the end of this chapter you will be able to: Page 1 Describe the purpose of budgeting systems xxx 2 Explain the role of budgeting as a means of planning and control xxx 3 .

Key words: Beyond Budgeting; behavioural aspects; budget and human behaviour; budgeting process; and public sector/service budgets The Nature of Budgeting Almost every enterprise, regardless of size, complexity or sector, relies heavily on budgets and budgetary systems to achieve strategic goals.

Behavioural Aspects In Budgeting. Behavioural Issues in the Budgetary Control System Objectives of Budgeting Through budgeting organisations can provide information for strategic planning and control, these are the two main objectives of the budgetary control system.

Management and management accountants must work together and operate a system that achieves these objectives, they do so .

Outline the behavioural aspects of budgeting