Case Study - Budgeting
The Financial Controller of Sunny Limited reported the followingcomment on the practice of participation in the setting of budgetsin his company.
‘We bring in the Supervisors of budget areas, we tell them thatwe want their frank opinion but most of them just sit there andjust nod their heads. We know they are not coming out with exactlyhow they feel. I guess budgets scare them.’
Required:
Suggest reasons why managers may be reluctant to participatefully in setting budgets and suggest also unwanted side effectswhich may arise from the imposition of budgets by seniormanagement.
