Coursework assignment: write a 2,500 word essay on the following topic: "The budget has historically played center stage in most organizations' systems of management control (Otley, XXXXXXXXXXHowever,...

Introduction
The paper discusses the role of budgeting in an organization. It analyzes if there is a
requirement of budgeting for organizations in the current scenario or not. Many companies in the
current scenario starve towards the need of focusing greater time on the improvement of quality
as development of customer satisfaction strategies in their operational units. This has led to the
development of the trend of Continuous Process Improvement in an organization wherein
companies starve to improve their operational processes and reducing fixed and variable
expenses.
Budgeting and Forecasting
The concepts of accounting are the base of the process of budgeting and forecasting in a
company. The Budget plan of a company typically outlines its financial and operational goals. It
acts as a strategic action plan for the company, which helps the company in its allocation of
various resources in a streamlined way, further evaluating its performance as well as formulation
of different plans. Budgeting in an organization is considered as an action plan which is
implemented necessarily for controlling different aspects of an operating enterprise for a defined
time period.
Budgets form an all-important aid in the planning process on an organization because budget
planning forces the management of an organization towards thinking ahead as well as looking
before the horizon. It bounds them to into certain kind of compliance measures for the benefit of
the organization. Budgets are really important in an organization and failure to set and
implement a proper budget along with building control procedures in an organization can
negative impact. Budgets are important for the following:
1. Budgeting process in an organization reduces uncertainty in the cash-flow and
operational process by allowing the key management and executives towards mapping
out the future plans of the company and course of action required for the same. Failure in
development and implementation of a budget can certainly lead to uncertainty position in
the organization. This situation can risk an organization towards facing future challenges
with confidence.
2. As budgets include cost definition and measures, they increase coordination as well as
better planning among the various departments of a company as budgetary control in an
organization forces management to think in a constructive manner as a group. Failure
towards development of accurate budget in a company can easily result in a situation
where all the different departments in the organization will tend to function in an un-
planned and non-coordinated manner, which would certainly fail in an attempt towards
implementation of the planning process systematically. Building an improper Budget can
also lead to the risk of company’s management in the coordinating tasks of business
towards various economic trends.
3. Budgets act as an important measure towards identifying weaknesses related to
inefficient performance in an organization. Budgets can be benchmarks against the
performance of various departments of the organization. Therefore, failure in making
accurate budget can risk the company’s top brass trace key discrepancies within different
activities of the operations along with taking accurate remedial measures required at that
time.
4. Inaccurate and Improper Budgets within the organization can hamper the power and
ability of the organization’s key management towards analyzing the expenses as well as
keep them under a check, therefore preventing any waste of monitory resources in the
company.
5. Failure of implementing an accurate budget in an organization can certainly lead towards
the non-establishment of various performance standards related to the operational
activities and can also lead to inaccurate adoption of various costing techniques.
6. Implementation of Budgets in an organization helps in identification of deviations from
the pre-planned courses of action. Implementation of an accurate budget can help
management forecast the numbers and it can later on analyze the reasons for the
deviations and implementation of various remedial measures.
7. Budgets help an organization towards establishment of effective internal controls and
standards of performance. Inaccurate budgets in an organization can give a false picture
of operating performance of the company against the standards which restricts the human
resource of the company towards analyzing their strengths and weaknesses.
Therefore it can be argued that budgeting is an action plan in an organization that is
implemented specifically to control different aspects of the operational performance of a firm for
a defined period of time. Information aspect is really important for development of a sound
budget in a company. Forecasts by the management, financial reports of the company and
competitors and economic situation of the country and the industry forms the primary source of
information for budget preparation and implementation. Managerial forecasts in an organization
provide data related to the anticipated level of the activity, while financial reports helps in
providing data on the financial magnitude related to past as well current operational aspects of
the company.
Costing
Accounting is an important accountability factor for evaluating the costing and pricing of
products in an organization. Many companies in the current scenario starve towards the need of
focusing greater time on the improvement of quality as development...