Budgetary Control As An Assessment Tool

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In this essay budgetary control in an unpredictable environment will be discussed. Budgets and budgetary control will be defined, the use of which will be examined. The limitation of budgetary control as an assessment tool be examine, as well as the behaviour problems that can arise with its use. The notion of implead flexibility associated practice of budgetary control will be analysed. Control and the implementation of change via the use of budgetary control will be looked upon. Finally the hospital and budget redundancy will be reflected upon before conclusion are drawn. (Seal et al, 2015, page 883) define a budget as “a detailed plan for the acquisition and use of financial and other resources over a specified time period”. While…show more content…
If the budget is inaccurate use budgetary control can be irrelevant and costly to the firm, in the short run as it can be fixed in the long run. There are also behavioural problems associated with budgetary control (Demski and Feltham, 1978, page 336) states that “the dysfunctional behaviour thy may induce are well known”, they being budgetary control. In terms of budgets that are inflexible, (Jones, 2006, page 94) speaks of managers using “creative budgeting ” by “ creating slack in the system to give themselves leeway ” this is a way to mitigate shocks to the business, especially in am an unpredictable environment. This may not be ethical but mangers see it as a necessary evil, as their use of the budget tend to be used as a means of assessment and evaluation. As they fight to control the budget, they also fight to maintain their jobs and current position within the firm. Therefore this unsavoury behaviour is created by the use of budgetary control, and where the business environment is unpredictable this behaviour, can become even more damaging to the business as a whole and not just the department itself. It also “creates a use it or lose it mentality that encourage managers to spend their entire budget to avoid a reduction in resources” (Whitecotten et al, 2013, page 328). This unnecessary spending again is costly to the business, as
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