Examining the Behavioural Aspects of Budgeting with particular emphasis on Public Sector/Service Budgets
Moolchand Raghunandan (Lecturer in Accounting)
Narendra Ramgulam (M.Sc. Student)
Koshina Raghunandan-Mohammed (Assistant Lecturer in Accounting) With significant contributions from:
Donna Fyfe/Balraj Kistow/Inshan Allaham/Raul K. Raghunandan M.Sc. Students
Department of Management Studies
The University of the West Indies
St. Augustine Campus
Budgets are part of management control designed to promote the efficient use of resources and providing support for other critical functions. The extent to which any budget is successful is very much dependant on its acceptance and the attitudes of workers towards it. This paper focuses on the crucial role of the behavioural aspects of budgeting and how an understanding of its importance can contribute to a successful budgeting process. It describes the nature of budgeting and analyses the budgeting process in organisations. The paper shows why budgeting is important to firms and describes the impact budgeting has on human behaviour such as motivation and dysfunctional behaviour. The behavioural aspects of the budgeting process are also examined. Finally, the public sector budgeting process is analysed, focussing on the need to tackle Beyond Budgeting issues in the 21st century whereby organisations budget without a budget. In the literature review, it was found that there was no perfect means of ensuring a successful budgeting process but there was general agreement in many areas of how the process might successfully assist. As with most concepts, there were mixed opinions on some issues such as benefits of participation as opposed to non-participation. What was common is the view that the budgeting process in particular and management control systems in general cannot afford to ignore the impact of behaviour on these processes.
Key words: Beyond Budgeting;...
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