Ethical Dilemma in Business

Name: AR

ADVANCED MANAGEMENT ACCOUNTS

ADVANCED MANAGEMENT ACCOUNTS

Question 1

Many people believe the budgeting process is wasteful and ineffective. They maintain that managers spend too much time focusing on budgeting mechanics and not enough on strategic issues. They believe that emphasis on the budgeting process causes managers to neglect more important matters, such as eliminating non value-adding activities that waste resources. Critics of the budgeting process also maintain that the information and formats that managers use in budgets fail to communicate the short-term business activities needed to achieve long-term goals.

Required:

Place yourself in the role of a company’s controller and prepare a memorandum to your company’s owner justifying the need for budgeting. Suggest ways to make the budgeting process, the budget information, and the budgets themselves efficient, effective, and meaningful.

MEMORANDUM

TO: Company Owner

FROM: Aleph Redwood

DATE: June 14, 2013

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SUBJECT: Budgeting and its relevance

According to Russell L. Ackoff in his book “A Concept of Corporate Planning”, budgeting has always been part of the activities of any business organization of any size, but formal budgeting in its present form, using modern budgeting disciplines, emerged in the 1950s as the numerical underpinning of corporate planning. A budget is a quantitative expression of a plan for a defined period of time. It may include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows. It expresses strategic plans of business units, organizations, activities or events in measurable terms. Budgeting on the other hand though time consuming, is the continuous cycle of planning and evaluation used by an entity in order to achieve the stated goals and objectives of the organization. It is also the process of allocating a finite amount of resources...