Research Korner: Managerial Accounting

Accounting For Managers – The Role Of The Human Resources In The Budgeting Process

The Role of the Human Resources in the Budgeting Process   The human resources play an essential role in a sound budget process and communication within the company.  Likewise, an efficient  and effective  budget  approach is one that communicates about the organizational objectives,  allocates resources, provides feedbacks and most importantly, always  ask  for the employees’ participation, as well as it motivates them to excel in their jobs.  Hence, the budgetary communication is important as the participation of the employees in the budgeting process.  And, this can be standardized by using budget manuals, budget forms, and formal procedures. Software, Program Evaluation and Review Technique (PERT), and Gantt which all help in facilitating the budgeting process and preparation. In the same manner, the timetable for the budget must be kept.  However, budget needs an appropriate timeframe setting in order to achieve the company’s realistic goals as well.  (http://onlinesuccesscentre.com/2010/07/how-to-prepare-a-sound-budget-process-six-steps-in-the-budgeting-process-bottom-up-versus-top-down-budget-plans/) Furthermore, the perception of the employees  is very  important in the budgeting process  because it  determines  if the budget   approach and allocation used by the company is suitable to  the needs and requirements of the  employees,  if it is  aligned with the organizational structure, as well as  the   participation of the employees lessen  the   responsibilities of the top management in the designing, planning, analysis of  important details that  only the employees can really explain vividly the   advantages and disadvantages of some limitations in the budgeting process.   Furthermore, the budgeting process must be based on the past experience of the company and the potential business advantages that the present business environment can provide to the organization.  Hence, the managers’ voice and employees opinions and views are very vital in order to come up with accurate details and figures that needed in a particular project, for all you know,   top management authority more often does not have any concrete ideas on the   various requirements that every department needs in order to function efficiently and effectively in a regular basis.  That is the main reason, that a company hires several managers to lead the tasks in every department and to take charge of disseminating the tasks to every employee.  The managers  are also the one who do  the reporting job about the  status  of the particular department , as well as if this  segment of  the organization is   getting productive or not.  At the same time, the managers act as the representative of the   group of employees, and the manager’s act also as the middleman between the top management and the workforce.  Without the help of the managers, the top management would not know development of the given job assignment, and would not know that there are employees who are remarkably competitive and deserve a recognition and reward motivation.  (http://hr.toolbox.com/blogs/the-new-hr/using-the-hr-budget-process-to-make-the-hr-function-more-strategic-46590) Correspondingly, the communication flow is very crucial in the budgeting process because it persuades other employees to adopt the proposed actions or decisions.    On the other hand, communication process facilitates the entire organization to understand the principles and the goals of the top management why a particular budget is approved or not approved. In vice versa, the communication process can help the employees to express their views and opinions about a certain project, as well as give them a chance to convince the approving authority to   approve the budget allocation that is requested...    At the same time, it gives the workforce a chance to share their skills and knowledge on a certain task, event, or project that needs joint effort in order to attain the specific goals of the organization.  In view of this, communication is very dominant in every aspect of the organization. It greatly helps the organization to develop a good relationship with its employees as well as with its clients.    A good communication process allows a good agreement among   the approving authority, the managers and the employees because it is a tool that everyone in the company can exercise his human rights in the workplace.  (http://hr.toolbox.com/blogs/the-new-hr/using-the-hr-budget-process-to-make-the-hr-function-more-strategic-46590) For the last time, the writer strongly believes that the perception of the employees is very important in the budgeting process.   For another reason that steps and actions, as well as the summary of information must be provided by the employees during the budget presentation.    This action is very necessary in order to convince the budget approval committee to approve the particular budget allocation.  Moreover, the budget documents like details, figures and information provided by the managers and their employees are part of the communication process, since all of them are the communication tool  to justify their    requirements as part of their jobs; and most of the time, the budget approval to a certain budget allocation  creates more productive and competitive  employees  in the company; as well as it gives  motivation to the employees to become more responsible  on  every assigned task.  (http://www.budgetanalyst.com/Communicate.htm) References: http://onlinesuccesscentre.com/2010/07/how-to-prepare-a-sound-budget-process-six-steps-in-the-budgeting-process-bottom-up-versus-top-down-budget-plans/  (http://hr.toolbox.com/blogs/the-new-hr/using-the-hr-budget-process-to-make-the-hr-function-more-strategic-46590) http://www.budgetanalyst.com/Communicate.htm     Interesting News Credit:ivythesis.typepad.com

Accounting For Managers – The Role Of The Human Resources In The Budgeting Process

The Role of the Human Resources in the Budgeting Process The human resources play an essential role in a sound budget process and com...

Accounting For Managers – Budget

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) Interesting News Credit:ivythesis.typepad.com

Accounting For Managers – Budget

The Differences between the Imposed and Participative Budgetary Approach In general, the communication process in the imposed budgetar...