Learning Engagement Discussion Paper Assignment help

Learning Engagement Discussion Paper Assignment help

 
Description



Learning Engagement #5



Learning Engagement, Week 5:



How does budgeting help management coordinate and plan business activities?



What are some potential negative outcomes in the organization because of budgeting?




PROFESSOR'S GUIDANCE FOR THIS WEEK'S LE:
Budget development is one of the single most time-consuming efforts a company can undertake. A well-developed budget can result in an efficient, likely profitable company. Budgets help management to understand spending habits/costs and determine appropriate sales levels to meet profit demands. It helps you to identify areas of waste and take steps to improve. It also helps you to rationalize the actual results of operations and engages management throughout the fiscal period.




While it can help companies to manage and control their resources, it is a time-consuming effort. In one organization that ended 12/31, we would begin budget discussions as early as May. That doesn’t give you much of a historical perspective to begin thinking about projecting to the next fiscal cycle. In this weeks’ readings, we see that there is not just ‘one’ budget, but many that build components of the Master Budget. Each ‘sub-budget’ builds upon one aspect of the company operations and together, they merge to create the final master budget of the organization.



Some entities such as non-profit organizations or governments are required to pass their budget prior to the next year so it can also be a very stressful time to manage the collaboration process.



1. Please make sure that you read the relevant chapter from the textbook



2. Watch the YouTube videos for this week and additional course material provide



3. Ensure that you can communicate your point of view clearly and without ambiguity. Provide one example to strengthen your point of view in the main discussion.



by Thanyathorn Lapthitisate



A budget refers to a formal document used by businesses or organizations to track income and expenses in a detailed manner to make informed operational decisions. It is tool companies use for planning, coordinating, and controlling their financial resources (Kwadade-Cudjoe, 2020). A budget is developed to help an organization plan and coordinate activities to achieve the organization's objectives. An acceptable budget would allow the business or organization to monitor, coordinate, and control its overall performance and success spending. This discussion will explore how budgeting helps management coordinate and plan business operations and the potential adverse outcomes in the business as a result of budgeting.



Budgeting helps the management coordinate and plan business operations in several ways. Budgeting plays a significant role in articulating the financial impacts of organizational plans, defining the needed resources to accomplish the goals, and providing the means for measuring, evaluating, and controlling the outcomes (Nazarova et al., 2016). A budget helps the organization forecast expenses and income and identify possible cash flow problems that can occur. Budgeting is undertaken to enable the business to communicate its plans to the employees and will allow them to coordinate activities across the workplace. Budgeting allows management to establish financial controls by highlighting when and where the business should restrict spending and where to increase spending to achieve the objectives and goals of the company. Budgeting drives the management to forecast, evaluate trends, and develop the needed strategies or plan of action that will be important for coordinating and communicating to employees (Nazarova et al., 2016). In addition, it helps coordinate and plan business activities by driving critical business-related decisions such as buying new equipment, increasing employees, or decreasing unwanted expenses.



However, budgeting can have potential adverse outcomes for the organization. The negative effects of budgeting may include the time required for the budgeting process. According to Kwadade-Cudjoe (2020), most managers criticize the budgeting process because it is very time-consuming, especially in workplace environments that are poorly organized. Participative budgeting processes require more time because all the stakeholders within the business must be engaged. Another possible negative outcome of budgeting for an organization is that experienced managers can use the process to include budgetary slack by intentionally decreasing approximated revenue and increasing expenses. This will help them achieve desirable variances against the acceptable budget, which can be a severe problem for the business. In addition, the budgeting process only considers numeric outcomes, which focuses the business management's attention on the quantitative aspect of the organization. This may significantly impact the quality of products or services and customer satisfaction because they cannot be considered within the budget due to their qualitative nature. Another potential negative outcome of budgeting is that it may result in rigid decision-making. The management primarily focuses on budget formulation during the end of the fiscal year. There is no procedure to revisit the budget for the rest of the year.



Reference:



Kwadade-Cudjoe, F. (2020). Budgeting and Budgetary Control are time consuming tasks for any organization: Examination of how the preparation, operation and implementation phases are carried out to the benefit and achievement of a succesful organization. Archives of Business Research, 8(8). https://doi:org/10.14738/abr.88.8908



Nazarova et al. (2016). Budgeting Systems in Strategic Management Accounting . Indian Journal of Science and Technology, 9(5). https://doi:10.17485/ijst/2016/v9i5/87602



556 words



by Paul Oranga




How does budgeting help management coordinate and plan business activities?




Budgeting is the process of planning future business actions and expressing them as formal plans to help achieve coordination and express strategic plans of activities or events in measurable terms, the budget helps Managers in ensuring activities of employees and departments contributes to the company’s overall goals. Budgets are useful in controlling operations.



Budgeting help management to understand spending habits/costs and determine appropriate sales levels to meet profit demands, they do helps management in planning and controlling to identify areas of waste and take steps to improve and rationalize the actual results of operations and engages management throughout the fiscal period.




Planning: this support management to plan and focus on opportunities for future.
Controlling: this support management in identifying problems and take corrective actions- if necessary, hence they evaluate operations performance by comparing actual against budgeted plan.
Coordinating: this helps management to coordinate activities so that all employees and departments understand and work toward the company’s overall goals.
Communicating: good written budgets effectively communicate management’s action plans to all employees thus when plans are not written down, they are uncertainty and lead to confusion among employees.
Motivating: Budget plans can be used to motivate employees through performance outputs and goals for employees to attain or even exceed.




The budgetary process involves four steps:




develop the budget from planned objectives,
compare actual results to budgeted amounts and analyze differences,
Take corrective and strategic actions, and
establish new objectives and a new budget.





What are some potential negative outcomes in the organization because of budgeting?




In Most circumstances budget planning is a time-consuming effort a company can undertake, the potential negative outcomes of budgeting include:




Pressure to meet results can cause employees to engage in unethical behavior or commit fraud.
Employees may understate sales budgets and overstate expense budgets to allow cushion called budgetary slack.
Employees might spend their budgeted amounts, even on unnecessary items, to ensure their budget is not reduced next period.