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Responsibility centres
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.
3.1 Imposed style
An imposed top/down budget is set without permitting the ultimate budget holder to
have the opportunity to participate in the budgeting process.
3.2 Participative budgets
A budgeting system in which all budget holders are given the opportunity to
participate in setting their own budgets.
Top down Bottom up
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
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