Page 299 - F2 - MA Integrated Workbook STUDENT 2018-19

Budgeting

Behavioural aspects of budgeting

It is often accepted that participation in the budget setting process will
improve motivation, which in turn will improve the quality of budget
decisions and the efforts of individuals to achieve their budget targets.

2.1 Imposed style budgeting

An imposed ‘top down’ budget is set without permitting the ultimate budget holder to
have the opportunity to participate in the budgeting process.

2.2 Participative budgeting

A budgeting system in which all budget holders are given the opportunity to
participate in setting their own budgets.

Top down (imposed) Bottom up (participative)

Senior Senior
management management

Middle-line Middle-line
managers managers

Operational Operational
managers managers

 Quicker  Better decisions

 Better for goal congruence  Motivates

 Better co-ordination  Budgets are more
acceptable
 Avoid budgetary slack

291