1. are motivated to incorporate these changes in



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1. Budgets should be oriented towards results. The results or goals should be realistically established. The budgets should have a built- in provision of periodic evaluation and assessment of performance and progress along the way to the achievement of results. The appraisal of performance would be more fair and realistic if budgets allocated are appropriate for the established goals.

2. Budgetary control is more effective if the duties and responsibilities for all operations are well defined and rightly assigned. This would make it easier to trace any deviations to proper accountable persons or departments so that proper and corrective action can be taken 3.

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Budgets should be based an documentable information and not simply guesswork and judgements. If the budget request is rejected or returned back for modification, the reason should be justified in writing. This would make it easier to make corrections in the same budget and provide additional information for preparing future budgets. 4. A budget should be simple and understandable, fair and objective. It should be understood by all and if there are any changes to be made in the existing budget, then these changes should be made very clear to the persons responsible for operations so that they are motivated to incorporate these changes in the budget. 5.

A quick and two-way communication should be adopted so that the managers get timely information on deviations. This would result in prompt action by the management to correct these deviations and these corrections can be communicated to other concerned persons quickly. The system should also be such that the minor deviations can be self-corrected or taken care of at the lower level of management. 6. The budgets should be viewed as positive and be conducive to self- control. Budgets, when not correctly built or implemented can result in major human relations problems in organizations.

Chris Argyrissuggests that rigid budgets and strict applications can build pressures, create tension and cause harmful conflict between management and employees. Also, since budgeting involves allocation of scarce resources to different operating centers, it can cause a severe competition for these resources within the organization, which can have highly negative consequences. All efforts should be made to involve the users of budgetary resources in preparing the budgets so that they view budgets as means of improving performance, rather than as a reporting or a policing function.

This would result in greater success for the entire budgetary control process.

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