Essay on the factors that would suggest the use of imposed budgets
Introduction
This paper will look at what is required of an effective budgetary control mechanism and try to assess the advantages and disadvantages of using a system imposed from above, or externally, over a decentralized system controlled by lower level management as task level. Using an empirical case study from the international banking sector, it will be shown that too much managerial autonomy can lead to disaster not just for the manager concerned but also for the whole organization. In contrast the role of the World Bank and International Monetary Fund in imposing nation-state loan budgets will be critiqued to highlight the potential flaws of centralizing and dominating budget control management.
Effective budgetary control
Need to argue that imposed budgeting guarantees these four factors!!!!!
Henderson (2003) notes that regardless of the situation or workplace, in order to be effective it is crucial that budgetary control systems:
Account for money received and spent
Make sure that the organization’s financial policies are adhered to
Ensure that money is not wasted
Assist managers to run, and develop, services or departments
These controls have developed from the need to account for large sums of money but are equally applicable to any budgetary situation. However, from a managerial perspective they have often been criticised for being insensitive and restrictive at the lower levels of management. As the number of stakeholders increases so does the need to be fully accountable and therefore more controls are also needed. This is particularly noticeable in the public sector National Health Service. Here lower level management are extremely subservient to imposed and tight budgeting restrictions from a distantly senior level. This is arguably a result of the need to satisfy a multitude of stakeholder interests and a concern that empowering lower management with the autonomy to control their own budgets would fail to include the number of interested…
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Tags: assets, budgets, Management, Marginson
