Use of Budgeting as a Managerial Technique: Relevance and Challenges

Managerial
Accounting

ABSTRACT
The report is all about use of budgeting as managerial technique to manage resources. In
this, one journal article that is “The development of budgets and their use for purposes of control
in Japanese Aviation” is selected to evaluating relevance and challenges of budgeting systems.
Budgeting process involves stages to create budgets for departments. The purpose of budgeting
process is setting targets, developing budgeting control and achieving huge possibility of
outcomes. Top Down approach and Bottom Up approach are key budgeting practices that are
used by managers of entity while preparing budgets. Contemporary companies are recommended
to adopt flexible budgeting system, value proposition system and so forth for the purose of
planning future and controlling variances.

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Discussion of budgeting process.................................................................................................1
Based on Journal article, discussing on whether budgeting process satisfies the purpose of
planning, controlling along with evaluating performance...........................................................3
Identification and explanation of practice adopted by the company in the Journal article and
explanation of behavioural implications of the practices............................................................4
Based on literature findings, critical evaluation of the comment that “Traditional budgeting
practices are constraint to creativity and time as well as energy spent on budget information is
better spent elsewhere”................................................................................................................5
Based on literature findings, recommendation for contemporary organisations for the purpose
of planning and control................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Managerial accounting is described as the practice to recognise, measure, analyse, record,
interpret and translate financial information and data to managers related to pursuit of business
objectives (Cornaggia, Krishnan and Wang, 2017). It engrosses various accounting facets that
aims to improve quality or data that is to be provided to management team for business operation
metrics. Using the accounting, managers uses all provision concerned with accounting
information for the purpose of better inform themselves prior to making organisational decisions
as it aids performances to control practices and functions. The report is all about journal article
that is “The development of budgets and their use for purposes of control in Japanese Aviation”.
It includes discussion on purposes of budgeting process. Further it includes discussion about
whether budgeting process satisfied purposes of planning, controlling together with evaluating
performances on the basis of journal article. The practices that are adopted by companies as in
the article are identified and explained in the report. It also includes critical evaluation of a
comment and some recommendations for using budgeting to contemporary business for planning
addition to controlling purpose.
MAIN BODY
Discussion of budgeting process
Budget is a plan for future of organisation. Budgeting process is termed to the practices
adopted by managers of the company to create and approve particular budget for departments.
All companies whether small or large, prepares budget by using some processes that assist in
keeping proper track of incomes and expenditures (Sgueo, 2016). It begins with deciding on
financial objectives as per which budget will be based. It is very crucial for all business firms as
without effective budget, managers can never track or record information about the amount
earned and spent.
Discussion on budgeting process
As per the journal article, the key processes that are followed by managers of the Japan
Airways and Japan Air Transport related to budgeting process include various steps. The first
step is updating budget assumption. According to the managers of Japan Airways and Japan
Air Transport, it is seen that budgets are prepared on some assumptions. Moreover, the
assumptions can be about sales trends, environmental condition and so forth. Prior to embarking
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