Budgeting Systems in the Strategic Management Accounting

Budgeting Systems in the Strategic Management Accounting

Budgeting systems in the strategic management accounting

https://doi.org/10.17485/ijst/2016/v9i5/87602

Summary

The article reviews how to develop budgeting and identify problems in the budgeting process and effective solutions. Nazarova et al. (2016) define budgeting as the process of creating cost approximations for the business sectors in an organization. The process creates room for anticipating the future impacts of decisions that should be taken at the current moment and help in implementing solutions and monitoring execution. According to Nazarova et al. (2016), budgeting plays a vital role in preventing bankruptcy and the loss of financial stability. The authors argue that the lack of a proper accounting plan, budget control, and analysis results in budgeting issues such as failing to stick to a specific budget. They propose using a private, general, static, and flexible budget to avoid these issues. The article identifies the suitable phases of the budgeting process as a priority in operating budget development, budgeting objects, financial consolidation of operational budgets, the structure and composition of the information considered in budgeting, and the persons responsible for and involved in the budgeting process.

The authors recommend the steps that should be followed for effective budgeting include prioritizing the creation of functioning budgets based on the factors creating barriers to an organization’s business activity, determining the structure and composition of the information considered by the accounting, and the process for its communication and training within the organization, consolidating the operating budgets and determining the people involved in the accounting process and those accountable for it. They conclude that identifying investment resources and capital is a multifaceted task in management bookkeeping which is why all decisions on capital expenditure should be planned and incorporated into the organization’s general budget.

Reaction

The article provides useful information on how to conduct the budgeting process in organizations. It also reviews the challenges that may be encountered in the budgeting process and how to overcome them. I can apply the recommendations given by the authors on effective budgeting to complete the budgeting process effectively. I can also use recommended solutions to address budgeting problems and challenges to address the issues I may encounter in the budgeting process. The information on the stages of the budgeting process is also applicable in budgeting by ensuring that all activities in every stage are completed before moving to the next stage. I can apply this information to increase the effectiveness of my budgeting process by selecting appropriate budgeting objects, how to financially consolidate operational budgets, the information to consider in the budgeting process and how to arrange it and how to share responsibility among the people involved in the budgeting process.

References

Nazarova, V. L., Shtiller, M. V., Selezneva, I. V., Kohut, O. Y., & Seytkhamzina, G. Z. (2016). Budgeting systems in the strategic management accounting. Indian Journal of Science and Technology, 9(5). https://doi.org/10.17485/ijst/2016/v9i5/87602

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Assessment Description
Using the GCU Library, locate a journal article about budgeting. In the subject line of your post, include the name of the article that you read. Then, in your initial post, provide a link to the article and a summary followed by your reaction to the article. The summary should be approximately 250 words, and the reaction should be approximately 150 words.

Budgeting Systems in the Strategic Management Accounting

The summary should describe the major points of the article, and the reaction should demonstrate your interpretation of the article and how you can apply that knowledge. Do not choose an article that one of your classmates has already posted. To participate in a follow-up discussion, choose one of the articles that a classmate has posted and provide your own reaction to it. Note: It may be challenging to find a relevant article if you do not use the library.

Please include proper citations in your discussion post. Points will be deducted if proper citations are not used.