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Essays on Budgeting Regularly Receives Much Criticism - For Example It Has Been Described As The "Bane Of Essay

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Budgeting and Entrepreneurial Control SystemThis paper tries to answer the question of whether ‘budgeting is a boon or a bane. ’ This will be done by looking at the control system within which budgeting takes place. A control system in organizations largely influences its ability to recognize the financial, social and cultural modes of control within it so as to lay down in clear terms the role of the entrepreneur when it comes to deliberating social control over the employees concerned. This part of the paper will first of all outline the issues that have been dealt with by Paul M Collier in his Entrepreneurial Control and the Construction of a Relevant Accounting.

This will be applied to the case of budgeting. For starters, Collier has identified the role of the entrepreneur as regards the social control he exercises over the employees, as a crucial factor in the control system that influences the overall operations of the budgeting system. The success and credibility of this exercise of control on the entrepreneur’s part depends largely on the recognition of the importance of a set of beliefs and boundary systems that will decide what elements the control system will consist of as a package. This in turn has its pros and cons as far as affecting the management system is concerned.

A management control system essentially consists of various elements including the management accounting practices employed by a particular organization. In this regard, it is imperative to state that the control systems employed by the management are a result of evolution of various systems and beliefs over a period of many years. This is what formalizes and assists in the quantification of various information – financial and other.

In doing so, the management identifies various elements of the control system that have to do with the external information relating to markets, consumers, competitors and their decision making mechanisms. This helps the management take decisions of its own. According to Collier, the organization’s control mix and the strategic choices arising out of the implementation of this mix to real time operations in the organizations are the basis of the various frameworks under which the organization’s management control system operates.

While there are various frameworks for studying this management control system, this paper will describe the 10 year old longitudinal field study that can be applied to the budgeting system through the frameworks laid down by Simons (1995) and Ferreira and Otley (2005), where both deal with formal systems based approaches as opposed to the informal, social or cultural forms of control. Even though the disciplinary separation between comparative policies and social relations within the organization has been regularly challenged, in the traditional theories it continues to persist as a result of institutional inertia and hiring practices.

The traditional perspective describes control as a means of regulation and a means of setting certain standards for inspection. In this regard, the traditional perspective more often than not seeks to restrain rather than enable in order to manage and exercise control.

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