Question

What are the hindrances to effective budgeting?

Answer 1

Hindrances to effective budgeting are as follows-

A. Budget is mostly related to the futuristic performance of the company and future can never be estimated accurately in advance so there is less accuracy regarding budgeting so it does not lead to effective budgeting.

B. There are also lack of flexibility and Rigid decision making.

C. There is a lot of time required in discounting various events in the future and it will be highly costly nature so it does not lead to effective budget.

D. There are lack of well defined rules which can be attainable and this led to lapse of entire budgeting system.

E. There is also the nature of various managers on the outcome for the failure of the budget and hence there is a lesser scope for correctiveness.

F. there is also difference in approach regarding allocation of the expenses due to which it can never be accurated in advance.

G. there are difference in planning and implementation due to which budgeting fail.