Chapter9 behavioral aspects of budgeting
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Transcript Chapter9 behavioral aspects of budgeting
Chapter 9
Purpose of budgets
Copyright 2003 McGraw-Hill Australia Pty Ltd
PPTs t/a Budgeting, second edition, by Banks & Giliberti
Slides prepared by Mya Aronfeld
9-1
Purpose of budgets
Planning:
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.
Copyright 2003 McGraw-Hill Australia Pty Ltd
PPTs t/a Budgeting, second edition, by Banks & Giliberti
Slides prepared by Mya Aronfeld
9-2
Behavioral aspects of budgeting
To 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.
Copyright 2003 McGraw-Hill Australia Pty Ltd
PPTs t/a Budgeting, second edition, by Banks & Giliberti
Slides prepared by Mya Aronfeld
9-3
Advantages arising out of staff
participation
Improved communication.
Greater understanding of what is involved.
Opportunity to thrash out problems.
Increased acceptance.
Improved commitment.
Copyright 2003 McGraw-Hill Australia Pty Ltd
PPTs t/a Budgeting, second edition, by Banks & Giliberti
Slides prepared by Mya Aronfeld
9-4
Factors affecting behaviour
Targets 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 nonfinancial goals.
Copyright 2003 McGraw-Hill Australia Pty Ltd
PPTs t/a Budgeting, second edition, by Banks & Giliberti
Slides prepared by Mya Aronfeld
9-5