Tài chính kế toán - Chapter 9: Purpose of budgets

Chapter 9Purpose of budgets1Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya AronfeldPurpose of budgetsPlanning:Necessitates setting of goals and establishing actions needed to attain goals.Organising:Involves the allocation of resources.Leading:Two main aspects are communicating & motivating.Controlling:Process of setting standards, measuring current performance and taking remedial action if needed.2Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya AronfeldBehavioral aspects of budgetingTo maintain supportive and cooperative relationships with staff.The use of punishment (authoritarian style) tends to encourage attempts to ‘beat the system’.Padding the budget means overestimating costs and/or underestimating revenue.Participation in the budgetary process tends to result increased productivity and satisfaction.3Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya AronfeldAdvantages arising out of staff participationImproved communication.Greater understanding of what is involved.Opportunity to thrash out problems.Increased acceptance.Improved commitment.4Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya AronfeldFactors affecting behaviourTargets perceived by employees as being too difficult.Targets that do not provide any challenge.Insufficient flexibility.Narrow-minded managers.Emphasis on financial goals to the detriment of non-financial goals.5Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya Aronfeld