Question

Case Study - Budgeting

The Financial Controller of Sunny Limited reported the following comment on the practice of participation in the setting of budgets in his company.

‘We bring in the Supervisors of budget areas, we tell them that we want their frank opinion but most of them just sit there and just nod their heads. We know they are not coming out with exactly how they feel. I guess budgets scare them.’

Required:

Suggest reasons why managers may be reluctant to participate fully in setting budgets and suggest also unwanted side effects which may arise from the imposition of budgets by senior management.

Answer 1