Assignment - Accounting and Finance for Managers Ms Pat...

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Accounting and Finance for Managers Ms. Pat Mould Why Corporate Budgeting Need to Be Fixed By Michael C.Jensen November 26, 2001 Corporate budgeting is a joke, and everyone knows it. It consumes a huge amount of executives' time, forcing them into endless rounds of dull meetings and tense negotiations. It encourages managers to lie and cheat, lowballing targets and inflating results, and it penalizes them for telling the truth. It turns business decisions into elaborate exercises in gaming. It sets colleague against colleague, creating distrust and ill will. And it distorts incentives, motivating people to act in ways that run counter to the best interests of their companies. , accessed 15 November 2005 Consider the above statement in the context of your own organization. Critically evaluate the budgetary process in your own organization, or one in which you have worked, and assess whether you think the process is valuable or not, and suggest ways in which it can be improved. You should underpin your work with relevant theories of budgetary process, and apply the theory to your organization of choice, in order to ascertain the strengths and weaknesses within the organization. This should lead you to recommendations and conclusion as to how the process may be improved. Evidence of wider reading and academic referencing is expected, and will affect marks awarded. Word limit: 2000 words Date of Submission: January, 25 2006 Page 1 of 10 University Registration Number: 200416705
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Accounting and Finance for Managers Ms. Pat Mould INTRODUCTION “It’s no secret that annual budgeting processes are time-consuming, add little value and prevent managers from responding quickly to changes in today’s business environment. ( Jeremy Hope. (2003). the Annual Performance Trap) . First, we would like to define the budget. As we, all know that they are many people or financial people define the budget as a term, mark J Randall as he said about the Budget, “A budget is the most fundamental and most effective financial management tool available to anyone”. (Mark J. Randall, Certified Financial Planner) It is extremely important to know how much money you have to spend, and where you are spending it. Some people might spend for investments, but there is an important distinction between creating a personal budget and deciding where to invest your extra income. “A budget is the first and most important step towards maximizing the power of your money”. "Though usually overlooked, setting up a good personal budget is the first step to any money management activity. Without it, you cannot control your finances and will always fall short of your goals." (Mark J. Randall, Certified Financial Planner) “To get money is difficult, to keep it more difficult but to spend it wisely most difficult of all” (Anonymous). Yes most difficult to spend it wisely, from that we know that the budget
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Assignment - Accounting and Finance for Managers Ms Pat...

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