100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
Previously searched by you
Hope and Fraser (2003) argue that “budgeting, as most organizations practice it, should be abolished”. However, a study by Libby and Lindsay (2010) suggests “that budgeting systems continue to play a key role in firms’ control systems and that most compan$13.69
Add to cart
Hope and Fraser (2003) argue that “budgeting, as most organizations practice it, should be abolished”. However, a study by Libby and Lindsay (2010) suggests “that budgeting systems continue to play a key role in firms’ control systems and that most compan
INSTRUCTIONS: You MUST submit this document as your assignment. Other formats will not be accepted and
you will receive a mark of zero. Do not try to change the layout of this document as it will not be accepted.
Complete all details in Section 1 and start your assignment on Page 2. Ensure you enter your details in the
header on Page 2, they will appear on every page. Save the file as <StudentNo><ModuleCode> (e.g.
1123456BS1234). IMPORTANT: Save this file as a PDF.
Cardiff Business School
COURSEWORK COVER SHEET 2014/2015
Section 1 (to be completed by the student)
Student Name: Isobel Jones
Student Number: 1240186
Module Code: BS3517
Module Title: Management Accounting & Control
Hope and Fraser (2003) argue that “budgeting, as most organizations
practice it, should be abolished”. However, a study by Libby and
Lindsay (2010) suggests “that budgeting systems continue to play a
key role in firms’ control systems and that most companies have no
Coursework Title:
plans to abandon this practice”.Drawing on the literature, critically discuss
the claims made by proponents of beyond budgeting and analyse why, in
light of these criticisms, budgeting can,or should, remain central to
management control systems.
Submission Date 15.03.2015
date: 17.03.2015 document last (Updated Lecturer: Dr Nina Sharma
(before 16:00 on…) saved/printed: automatically)
Section 2 ( To be completed by the Lecturer) MARK AWARDED:
COMMENTS:
---
Number of words: 2216
Created by: sbsjj15 Document last opened: 15/03/2015 17:27:15 Version 2.3
, Isobel Jones 1240186 BS3517
The primary purpose of budgeting is defined as supporting management in successfully
implementing its strategies as well as in planning and controlling its operational measures (Rickards,
2006, p. 62); budgeting emerged in the 1920s within large industrial organisations as a cost
management tool, but by the 1970s it was also being used to govern the actions of employees (Hope
& Fraser, 2003, p. 111).
Budgets are criticised in a number of ways. They are seen as internal and inward facing; they cannot
be instrumental in achieving external effectiveness because they cannot signal changes in the
business environment (Ekholm & Wallin, 2000, p. 535). Growing awareness of the importance of the
external business environment on commercial success and the change in the effectiveness of product
markets (Ekholm & Wallin, 2000, p. 523) has led to a perception that more anticipation and
monitoring of externals are needed, together with empowerment of employees and less rigid
planning and control (Ekholm & Wallin, 2000, p. 521). This can be linked with Simons’ suggestion of
widening the narrow definition of ‘control’ to include three other ‘levers’ of control: belief systems,
boundary systems and interactive control systems (Simons, 1995, p. 81).
It is posited that businesses increasingly require tools to measure intangibles (knowledge, capabilities
and relationships) rather than tangible assets (Kaplan & Norton, 2000, p. 100). There is a tension
between the need to meet specific targets and the requirement for management to be more
innovative and flexible in a time of heightened market volatility and rapid technological change
(Frow, et al., 2010, p. 444). Consequently, there is a perceived need to move from a “command and
control” model of budgeting to that of a “facilitate and empower” model (Frow, et al., 2010, p. 444).
Critics of traditional budgeting attack it on several other fronts. Budgeting turns decisions into
gaming exercises by encouraging managers to lie and cheat (Jensen, 2001, p. 96). Managers game
both the realisation and the setting of targets (Jensen, 2003, p. 382). Hope and Fraser argue that
budgets contain “obsolete data” and that they embed foregone conclusions about the financial state
Page 2 of 10
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller izzyjones. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $13.69. You're not tied to anything after your purchase.
