The Differences between the Imposed and Participative Budgetary Approach
In general, the communication process in the imposed budgetary approach in accounting focuses mainly on meeting the budgetary objectives of the management. In this regard, the employees tend to feel that they are not given importance by the management. Management goals are more likely for some individuals’ beneficial and not for the entire organization, which supposed to include the workforce. Even the subordinate managers in this type, are not given chances to participate and contribute their knowledge on the operations and on local market conditions with the decision making of the key officers in the company. In the contrary, the participative budgetary approach gives participation to subordinate managers on budget planning and implementation. This second accounting approach communicates a sense of responsibility to the managers of the company to contribute their knowledge in budgeting matters in the organization. This also gives the managers a high level of performance and task to achieve the common goals of the organization; as well as the employees are given chances to take part in the budgeting plan and implementation in order to involve themselves 100 percent in the implementation of the company’s policies, so as to set their own standards of giving their best into their jobs for the success of the entire organization. This type of accounting approach shows the joint effort of all the people in the organization in every budget activity, hence, the success of failure of their decision really depends on their budgeting skills.
(http://www.google.com.ph/#sclient=psy-ab&hl=tl&source=hp&q=communication+flows+when+the+budgeting+process+is+imposed+or+Participatory%3F&pbx=1&oq=communication+flows+when+the+budgeting+process+is+imposed+or+Participatory%3F&aq=f&aqi=&aql=&gs_sm=s&gs_upl=5470l8148l0l9196l1l1l0l0l0l0l160l160l0.1l1l0&bav=on.2,or.r_gc.r_pw.,cf.osb&fp=c4a92c6f294922ee&biw=1024&bih=566)
Furthermore, in the imposed budgetary, the communication flows from the top to the bottom. It is only a one-way flow. Top-down budgeting greatly concerns merely on the decision made by the highest level of management, this communicates the fact that the managers and other employees ‘opinions are not needed. And, if there is an upward flow of communication, it must be an agreeable one to the decision made by the highest authority in the company. Whereas, in the participative budgeting process, the communication flows are important for both the highest authority and the people down the line. The opinions and views of the managers as well as the other employees matter in every budgeting decision. The participatory budgeting gives tremendous importance and worth to the employees of the organization. This type of budgeting approach is most likely communicates a harmonious and solid relationship of the owners of the company with their employees; which is seemingly, most efficient and effective way in communicating with the workforce in order to achieve the goals of the entire organization.
(http://www.google.com.ph/#sclient=psy-ab&hl=tl&source=hp&q=communication+flows+when+the+budgeting+process+is+imposed+or+Participatory%3F&pbx=1&oq=communication+flows+when+the+budgeting+process+is+imposed+or+Participatory%3F&aq=f&aqi=&aql=&gs_sm=s&gs_upl=5470l8148l0l9196l1l1l0l0l0l0l160l160l0.1l1l0&bav=on.2,or.r_gc.r_pw.,cf.osb&fp=c4a92c6f294922ee&biw=1024&bih=566)
Nevertheless, participative budgeting has also its own share of disadvantages for the managers. For instance, the managers may tend to either set the budget too freely or too tightly. There is a tendency to have an over estimate or under estimate in costing. Another negative factor in this kind of budgeting, the top management may assume of total control of the budgeting process, sometimes just seeking opinions of the managers, but, just the same, the final say is still from the top management. According to Scott Weidner’s participative budgetary policy has certain insufficiencies. Firstly, the managers do not have real participation in the setting target budget allocation for every project. Secondly, setting an upper expenditure budget still needs final approval from the top management. Thirdly, setting early restrictions like maximum limits and estimate of non controllable fixed expenses preceded to departmental decisions can overcome the purpose of participative budgetary management. Fourthly, arbitrary allocation of the approved budget can defeat the participative budgeting process. Fifth, The division manager has the authority to hold back a percentage of each department’s allocation for optional use. Lastly, reporting and evaluation based on every department’s performance and attainment of company’s goals must be accompanied by rewards.
(http://www.accountingformanagement.com/participative_or_self_imposed_budget.htm#Definition%20and%20Explanation%20of%20Participative%20or%20Self%20Imposed%20Budgeting)
In the final note, the success of the budget program greatly depends on how the budget is being developed, planned and implemented. The most successful budget approach is where the managers can have an effective cost control responsibilities in preparing their own budgets which will be presented before the approval committee. The proper coordination and effective communication between the top management and the managers of every division has great impact on the attainment of the success of every budgeting allocation. The managers have the participatory responsibility in order to determine the appropriate requirements in every department by the top management; since it has limited knowledge about important details in the operations. Hence, the participation of the managers is needed in order to provide some important details and information that might essential in the budgeting process and approval of the allocation.
(http://www.accountingformanagement.com/participative_or_self_imposed_budget.htm#Definition%20and%20Explanation%20of%20Participative%20or%20Self%20Imposed%20Budgeting)
References:
(http://www.google.com.ph/#sclient=psy-ab&hl=tl&source=hp&q=communication+flows+when+the+budgeting+process+is+imposed+or+Participatory%3F&pbx=1&oq=communication+flows+when+the+budgeting+process+is+imposed+or+Participatory%3F&aq=f&aqi=&aql=&gs_sm=s&gs_upl=5470l8148l0l9196l1l1l0l0l0l0l160l160l0.1l1l0&bav=on.2,or.r_gc.r_pw.,cf.osb&fp=c4a92c6f294922ee&biw=1024&bih=566)
(http://www.accountingformanagement.com/participative_or_self_imposed_budget.htm#Definition%20and%20Explanation%20of%20Participative%20or%20Self%20Imposed%20Budgeting)
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