Budgeting and Control: Analysis of E Krell's Article 'The Case Against Budgeting'
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Budgeting and Control The article, "The Case Against Budgeting" explains how the budgeting process has essentially become obsolete in the current business climate. Krell explains that many businesses feel that the budgeting process takes too much time and when it's finally completed the final product is usually less than desirable (2003). "Businesses need more agile forecasting and reforecasting capabilities, but the organizational barriers to those capabilities are formidable" (Krell, 2003). Krell reviews the most common reasons that most budgets fail; it's usually a hybrid of reasons from shoddy strategic planning, to an inability of the management to take strong corrective action, to a general absence of faith in the budget, resulting in an overwhelming amount of apathy (2003). Krell describes how ineffective budgeting can be toxic to a company, creating a state of overaggressive assumptions leading to decreased morale within employees, cash flow conflicts, consistent disappointment and necessary reforecasting, surprises in earnings, postponed capital acquisition, and developing a state where bad decisions are made over and over again (2003). Krell clearly highlights how perilous bad budgets can be for an organization, both fiscally and for the atmosphere and sense of accomplishment. Krell uses the article as a means of emphasizing how proper performance management processes and tools can assist in reallocating the time of financial planners and analysts (2003).