Budgeting Essay Example | Topics and Well Written Essays - 2500 words

Budgeting - Essay Example Initially, traditional budgeting acted as the only alternative for budgeting. But, in the recent phenomenon, budgeting has come up with several alternatives. It can be affirmed in this regard that traditional budgeting is often criticized as sufficient enough to support global companies in attaining their desired targets. In this regard, several budgeting processes, with new innovative ideas and broader perspectives, have been developed in order to deal with the changing business scenario (Finkler & et. al., 2008). With this concern, this paper intends to explain the problems along with the weaknesses of traditional budgeting and identifying possible strategies to overcome those problems or weaknesses. Moreover, the discussion in this paper would also emphasize the benefits that an organization can anticipate while making changes in the traditional budgeting procedure, applying the concept of ‘Beyond Budgeting’. A Brief Overview of Budgeting Budgeting is regarded as a pr ocess of making a financial plan, wherein efforts are made by the accountants or the business owners to meet the strategic goals of the organization facing minimum or no hindrances in terms of financial resource scarcity or misuse of financial resources. ... It has often been praised as a strategic tool that can broadly enhance the interrelation between the units and the departments to work together efficiently, which in turn reduces the chances of failure in sharing critical information. Budgeting process acts as a motivational aspect that again helps the managers as well as the employees to work more productively making better use of the resources available. It can be apparently viewed that most of the companies follow previous year budget plan in order to acquire a brief idea about how well they had performed and forecast a plan to overcome deficiencies in the upcoming future. This further advocates that the budgeting process needs to be formalized and quantified (Fontinelle, 2013). Failure in making proper budgeting will eventually lead towards the wastage of organizations’ scarce resources, time and manpower among others. The goals that are set by the budgeting process should therefore be realistic and idealistic in nature, t o assure greater benefits of the budget planning (Donovan, 2005). In this regard, several large scale companies may hire accountants or other professionals in order to outline the business budget, while in relation to the case of small companies, it is the owners or the officials belonging to the top management team, who are responsible for preparing budget plans (Donovan, 2005; Wallander, 1999). Problems and Weaknesses of Traditional Budgeting Cautiously planned approaches and continuous reviews of finances are few of the key concerns required to be followed in order to run a business. Budgeting, along with forecasting of financial statements, as included in the paradigm of accounting, play an imperative role in managing financial information in accordance with the