The Changing Role Of The Management Accountant

MANAGEMENT ACCOUNTING

Budgeting
 Management Process.
 Snapshot of income and
expenses.
 Complex and tedious.
 Facilitates recognition of
deviations.
 Formed for particular
accounting period.

Features of budgets
 Income and expenses
projections.
 Tracking of cash items.
 Coordination in
departments.
 Regular reviews.
 Achievement of
organisational goals.

Non technical elements in
budget and budgetary control
 Political influences
 Budget Ploys
 Widow Dressing or satisficing the
needs of stakeholders

Political Influences in the Budget
 Inconsistent use of accounting
judgements and estimates.
 Subjective representation
 Discretion of top management
 Lower payment of taxes by
understatement of profits.

Satisficing Stakeholders
 Budgets prepared for regulatory depiction
purpose only.
 Shifts in the budget as per the deviations,
instead of corrective actions of under
performance.
 Profitable activities used to hide the
unprofitable segments.
 Justification of the non payment of
dividends.

Budget Ploys
 Practice involved by junior managers
 Ensure the allocation of desired resources to
departments.
 Hide the deviations
 Later escalation of the costs and gradual
sanctioning of funds.

CONCLUSION
 Budgetary control is vital exercise,
but often internally and externally
influenced.
 Main objective of budgets is often
undermined.