Budgeting as a Craft
Budgeting is not a scientific activity” and is instead a craft. Why?
According to Kouhia (2012), a craft is a set of disciplines defined by product, technique, or material. Budgeting includes different processes aimed at achieving a specific outcome. Consequently, a scientific activity leads to the systematic knowledge of the material or physical world, mainly consisting of experimentation and observation. The budgeting process is well-defined and does not include experimentation. Chen et al. (2014) argue that budgeting includes specific considerations such as determining the baseline budget and budget cutbacks. A baseline budget is developed from a base budget, which is the amount of money funded for the selected budget year but may not be accurate for future years. Therefore, the baseline budget is an adjusted base budget based on selected conditions by removing money from expired programs and one-time expenditures, adjusting based on inflation, updating benefits and salaries, and annualizing partial-year funding. Budget cuts are differentiated into different categories, such as decremental cuts that center on small budget components that may be easy for organizations to absorb quickly. Budgeting is also a craft because it requires specific skills to create a good budget. One of the skills is financial analysis skills that are applied in interpreting financial information and forecasting the company’s revenue and income. The second skill is budget reporting skills. Creating a budget is not enough without properly communicating the information in the budget. Therefore, it is important to have budget reporting skills to determine the appropriate formats based on the audience. The third skill is attention to detail because budgeting includes dealing with sensitive financial data that could lead to financial loss if wrongly interpreted and reported. Budgeting also requires understanding finance rules to avoid litigations and fines that emerge from erroneous financial reporting.
References
Chen, G. G., Weikart, L. A., & Williams, D. W. (2014). Budget tools; Financial methods in the public sector. CQ Press.
Kouhia, A. (2012). Categorizing the meanings of craft: A multi-perspectival framework for eight interrelated meaning categories Anna. Techne Series A, 19(1).
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Budgeting as a Craft
The textbook says, “Budgeting is not a scientific activity” and is instead a craft. Why?
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