Budgets (8) Flashcards
What must be considered when changing budgetary systems?
Resistance by employees
Loss of control
Costs of implementation
Training
Lack of accounting information
What is resistance by employees?
New control systems threaten existing power relationships. Employees are familiar with current system
What is loss of control?
Senior management may take time to adapt to the new system and understand implications of results
What is costs of implementation?
Careful implementation has cost implications
What is training?
Need to prepare and implement budgets under new system, managers will need to be fully trained
What is lack of accounting information?
Organisation may not have systems to obtain and analyse necessary info for preparing the new style budget
Characteristics of uncertainty in budgeting process (C)
Customers
Competitors
Characteristics of uncertainty in budgeting process (P)
Products/services
Characteristics of uncertainty in budgeting process (I)
Inflation and movements in interest and exchange rates
Characteristics of uncertainty in budgeting process (M)
Materials
Machines
Characteristics of uncertainty in budgeting process (E)
Employees
Characteristics of uncertainty in budgeting process (U)
Unrest or disaster
What is meant by customers/
May decide to buy less than forecast, or they may buy more
What is meant by products/services?
Organisations need to respond to customer’s rapidly changing requirements
What is meant by inflation?
Exchange rate fluctuations can affect cost of imported materialsm and price that foreign customers have to pay likely affect demand
