Westport Electric Company

Decent Essays

Westport Electric Corporation

Case Context In a meeting, James King, the supervisor of administrative staff budget section of Westport Electric Company, a large manufacturer and seller of electric and electronic products, was discussing his displeasure with the proposed increase in budget of the offices. According to him, these are not justified and are clear indications of faults in the company’s budgeting system. The company currently has six staff offices like those mentioned and they are tasked with providing advice to top management and operating divisions as well as other staff offices. They also coordinated among the divisions depending on their areas of activity. These staff offices are budgeted using the …show more content…

The final decision rests in the hands of the president and the executive vice president, and finance rarely offers any dissenting opinion. Although it can be argued that these matters merit the close attention of and should ultimately be decided on by top management, the group suggests the empowerment of the vice president for finance, for the sole reason that his staff has probably the greatest amount of coordination to do insofar as the company’s operating divisions are concerned. As such, the head of the finance staff is in a better position to make truthful recommendations or offer noncompliant opinions as he/she works closer with each of the operating divisions for the most part. Moreover, financial issues should be the primary concern of the vice president for finance, as he is after all, being evaluated based on how successfully the financial resources of the company are being managed to achieve its purposes. The budgeting system, may therefore be designed as follows:

1) After each administrative staff completes its proposed budget for the year, requests should first be handed to the budgeting department, which should be tasked to examine the schedules turned in by the managers. Along with the corporate controller and the vice president for finance, the heads of each operating division must be called in to discuss their budgets with King and Kelly. The internal auditor may also be asked to join these discussions to

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