University Budgeting: Technical and Political Process Report

This report, prepared for ACC2005 Management Accounting, examines the multifaceted nature of budgeting within organizations. It differentiates between the technical perspective, which focuses on financial planning, resource allocation, and budget control as a means of achieving organizational goals, and the political perspective, which considers budgeting as a process influenced by various stakeholders and their competing interests. The technical aspect involves detailed processes like setting goals, defining costs, and creating budgets, while the political aspect considers how budgeting reflects government policies and public accountability. The report highlights the importance of budgeting for efficient business operations, resource allocation, and performance evaluation. It concludes by emphasizing the distinct characteristics and implications of both technical and political budgeting processes, offering a comprehensive understanding of how budgets function in diverse contexts.

Running Head: MANAGEMENT ACCOUNTING
MANAGEMENT ACCOUNTING
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Budgeting as Technical Process.............................................................................................2
Budgeting as Political Process...............................................................................................4
Conclusion..................................................................................................................................5
Reference....................................................................................................................................7

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Introduction
Budgeting is the plan, which outlines the operational as well as financial plan of the
organization. A budget helps business for resources allocation, formulation of the plans as
well as evaluation of the performances. It is the essential part of the business plan for running
the business efficiently. The revenue and the expense are forecasted over the specified future
period, with the help of budget. The budgeting process can be technical process and it can be
political process. The technical perspective of budgeting involves preparation of the budget
by the business organizations for different plans of actions. However, the political budgeting
process is based on the funds that are meant for separate accounts for the different purposes
(Anessi-Pessina et al. 2016). Hence, this assignment includes the discussion regarding
budgeting as the technical as well as the political process.
Discussion
Budgeting is the process of creation of the plan for spending the money. It is defined
as the process of preparing the detailed projections of the future amounts. The major purposes
of the budgeting are for the planning, resource allocations, coordination, control as well as
motivations. This tool of management is important for the decision-making, forecasting of the
income and expenditure as well as monitoring of the business performance (Baiocchi and
Ganuza 2014).
Budgeting as Technical Process
Budgeting is considered to be most frequently as the technical perspectives. It is
described as the financial plan as well as the planning and control system. Budget is the
overall comprehensive or the blue print of the actions as well as operations that are expressed
in the financial terms. However, budgeting is the process of preparing the budget. It is the
functions, which is used for the planning as well as coordination and for the maintenance of

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the management control of organization. Therefore, there are two aspects of the budgeting,
which includes budget planning and the other is budget control. Budget planning is the
process, which identifies the required inputs and the concept of budgeting is the process,
which identifies the required inputs. Budgeting is the most important system because it is the
continuous process that is undertaken throughout the year (Berman 2015).
Budgeting as the technical process involves identification of the costs as well as
linking it to the goals. It starts with the process of setting up of the goals, defining the costs
and level of the expenditures that are compatible with these particular targets or costs and
lastly, budget is created. The premises of the budgeting are based on the fact that budgeting
system is the central mechanism of the control in the organization. In the era, where there is
intense competition in the industry, company tries to maintain their position with the help of
continuous development of the product and cutting down costs. The traditional budgeting is
no longer able for meet the need of contemporary organizations (Chohan and Jacobs 2018).
Budgeting involves implementation of the business plan for development of product,
expansion of business or other reasons for achieving strategic goals of the strategic plan of
the business. It is the detailed processes with the several intricate steps that lead achieving the
desired results. Budgeting as the technical process includes updating the budget assumptions,
noting the available funding, set the costing points, creating the budget packages, obtaining
the revenue forecast, obtain the departmental budgets, validate the compensations, update the
model of budgets, review the budgets, obtain the approval as well as issue the budget
(Chohan 2016). Moreover, the robust framework of budget helps in building around the
master budget that consist of operating budgets, cash budgets as well as capital expenditure
budgets. After these budgets are combined then it helps in generating the budgeted balance-
sheet, profit and loss statement and the statement of cash flow. Most of the organizations sets
out budgets as well as undertake the variance analysis on the monthly basis. The organization

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goes through the series of the stages from planning stage to the final implementation of the
budget (De Oliveira 2017).
Budgeting as Political Process
The budgeting as the political process includes linking of the task that has to be
performed with amount of the resources required for accomplishing those tasks by ensuring
that the money will be available for the maintaining the streets, wage war, providing the
housing and many more. There are most of the budgets, which are technical such as
estimation of cost of the new project or the new business plan and many more. However, the
public budgeting is entirely different from the technical as well as managerial process (Hong
2015). In the arena of the politics, budgeting is considered to be the most important process.
It helps in reflecting the specific decisions of government policy that includes government
openness to interested groups as well as accountability of the government towards public at
large. The budgeting of government decisions is different than the technical decisions by the
other parties (Röcke 2014).
The public budgets are having the political implications. The programmes of the
government involves the choices of the resources and sometimes it is consist of combinations
of the resources, each resources is having different characteristics such as certain programs of
the federal farm is consists of direct payments of cash plus the loans at the market below rate
of interests. The budgeting of government is concerned with the procedures for managing the
trade-off between the large spending categories (Schick 2014).
The process of the political budgeting is consists of various characteristics but it
differs from the personal as well as business or technical budgeting. There are various
participants in the political budgeting, who is having different priorities as well as different
levels of the power over outcome. However, in case of technical process of budgeting, there

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are one or few key actors, who may have similar views regarding the budget that has to be
achieved. The amount spent in the technical process of the budgeting is of the owners but in
case of political budgeting process, the elected officials spends the money of the citizens not
their own. It is because of the variety of the budgetary actors as well as demand; there exists
no single ser of the demands for following (Stillman 2016). The budget in the political
process involves negotiations of the consent among the representatives of the competing
interests as well as groups. The political official makes spending of their decisions for the
citizens. In the public budgeting, accountability plays important role. The budget document
shows that how the money of the public is spent. This document needs to be public rather
than technical budgets of the government, where these documents are kept confidential. The
political budgets are being planned in advance that is in beginning of the fiscal year as well as
they are intended for last the whole of the year or may be for two years. However, in between
the years, there are various economical changes in economy but the budget remains static.
This case is not with the technical budgeting process because these budgets are subject to
change with the change in the situations. These budgets are more flexible as it changes by
week to week and months to months as per the requirement and the situations. The technical
budget processes are less open to pressures from the outside forces, opinion of the public as
well as frequent changes in the elected politicians (Schick 2014). Moreover, the political
budgets are more incredibly constrained in comparison to those in private sector. In addition,
there includes rules about the purposes for which the revenue could be spent, limits and
balance requirements on borrowings as well as time frame, under which it has to be spent.
The capital projects might require approval of public referendums as well as growth of
taxation, which may be limited to inflation rate until and unless the citizens of the country
approve the higher rates in the referendum (Thompson and Gates 2017).

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Conclusion
Therefore, it is concluded from the analysis that the process of budgeting is crucial for
the business organization. The proper budgets helps the business for serving as the great
guide with the help of which the business can be able for overseeing the income stream as
identifying the potential dangers beforehand. Moreover, the common processes of the
technical process of budget includes the communication within executive management,
establishment of targets and the objectives, development of the detailed budget, revision as
well as compilation of the model of budget, review of budget committee and lastly approval.
Further, it has been analyzed that the political budgeting process is entirely different from the
technical perspective because in this the budget is prepared, keeping in mind the welfare of
the citizens as a whole. The politics of the budget process affect subsequent disseminations of
the resources of the public. Lastly, it can be said that the two approaches are entirely different
with each other.

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Reference
Anessi-Pessina, E., Barbera, C., Sicilia, M. and Steccolini, I., 2016. Public sector budgeting:
a European review of accounting and public management journals. Accounting, Auditing &
Accountability Journal, 29(3), pp.491-519.
Baiocchi, G. and Ganuza, E., 2014. Participatory budgeting as if emancipation
mattered. Politics & Society, 42(1), pp.29-50.
Berman, L., 2015. The Office of Management and Budget and the presidency, 1921-
1979 (Vol. 1438). Princeton University Press.
Chohan, U.W. and Jacobs, K., 2018. Public Value as Rhetoric: a budgeting
approach. International Journal of Public Administration, 41(15), pp.1217-1227.
Chohan, U.W., 2016. The idea of legislative budgeting in Iraq. International Journal of
Contemporary Iraqi Studies, 10(1-2), pp.89-103.
De Oliveira, O.P., 2017. International policy diffusion and participatory budgeting:
ambassadors of participation, international institutions and transnational networks.
Springer.
Hong, S., 2015. Citizen participation in budgeting: A trade‐off between knowledge and
inclusiveness?. Public Administration Review, 75(4), pp.572-582.
Röcke, A., 2014. Framing citizen participation: participatory budgeting in France, Germany
and the United Kingdom. Springer.
Schick, A., 2014. The metamorphoses of performance budgeting. OECD Journal on
Budgeting, 13(2), pp.49-79.

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Stillman II, R.J., 2016. The city manager: professional helping hand, or political hired hand?.
In Local Government Management: Current Issues and Best Practices (pp. 24-37).
Routledge.
Thompson, F. and Gates, B.L., 2017. Betting on the future with a cloudy crystal ball? How
financial theory can improve revenue forecasting and budgets in the states. In Debating
Public Administration (pp. 137-153). Routledge.