Finance and Accounting for Managers

Question: Budgeting is more successful when folks can own and relate to the budget. When can budget become a tool for manipulation? Answer: Forewords It is essential to understand the components of the budget plan, as it plays the pivotal role in developing an effective budgeting. The major components cover the employees and knowledge to the methods and technology. It is important for an individual to develop a proper sense of how these components affect the overall operations and decision-making processes of the business to align and maintain the success (Masi et al. 2015). Therefore, budgeting process should need to be initiated by appropriately assessing the skills of employees and allocating their responsibilities in accordance with the requirements. Budgeting as a Tool for Manipulation The preliminary discussion suggests that budgeting provides guidelines to the business regarding developing planning, demonstrating, and controlling the major organizational functions. However, like the other processes, budgeting too has its dark sides. The unfavourable variances (shortfalls and losses) and unrealistic business goals are two amongst the vast number of examples. Based on the comparison between the budgeted figures and actual performance of the business, the managers are used to hold responsible based on their areas of accountabilities within the organization. The particular stage requires highlighting the variances in the proper manner (Seifert, Carlitz, and Mondo 2013). In the general context, the managers do not mind taking credit for the favourable variances. However, in the larger organizations, different scenarios suggest that a favourable variance might be the result of manipulating the budget in the first place in order to surpass the budgeted benchmarks easily. Deduction Based on the discussion, the emergence of unfavourable variances requires the careful interpretation. The managers, in this case, should need to hold responsible in case the budgeted goals and targets are fair and reasonable. In conclusion, the stern action should need to be implemented in the field of budgeting to determine adequately what went wrong and what requires due improvement. References Masi, S., Meulman, E.J., Aubaile, F., Krief, S., Todd, A. and Pouydebat, E., 2015. Food manipulation and processing in wild western gorillas of Central African Republic: implications for studying behavioural variability.Revue de primatologie, (6). Seifert, J., Carlitz, R. and Mondo, E., 2013. The Open Budget Index (OBI) as a comparative statistical tool.Journal of Comparative Policy Analysis: Research and Practice,15(1), pp.87-101.