You are required to conduct a literature search and discussion in this assignment. You are to choose a peer reviewed journal article (from any country) on the: -Use of Budgeting as a management...

USE OF BUDGETING AS A MANAGEMENT TECHNIQUE FOR MANAGING RESOURCES
ABSTRACT
This assignment focuses on explaining the budgeting process along with the purpose that budgeting serves in an organization as a management accounting tool. The budgeting process has an important impact on the cost management of any organization and has to estimate in a most accurate and appropriate basis with true and practical assumptions. The budgeting process gives the management an overview of the entire working process and helps the organization achieve target goals timely. There can be many budgeting approaches which may vary in different organization. Budgeting primarily helps in the planning of the process of organization in which it will operate and then helps to control those processes if they vary from the organizational goals. The budgeting process has evolved with time giving the traditional approach and a modern approach. In recent years the budgeting process is organized in such a way that it has become part of the regular business process bringing the concept of ‘beyond budgeting’.
    Serial Number
    Contents
    Page Number
    1.
    Introduction
    1
    2.
    Budgeting Process
    2-4
    3.
    Purpose of the Budgeting process
    5-6
    4.
    Practices in preparing budget
    7
    5.
    Relevance of Traditional Budgeting
    8
    6.
    Recommendation
    9
    7.
    Conclusion
    10
    8.
    Referencing
    11
INTRODUCTION
Budgeting means the process that involves planning for the optimum utilization of resources. Herein the management plans a budget that gives a proper estimate of the resources available with the organization and how would the organization maximize its output from the given resources. The budgeting process gives a rough idea about how the management could distribute its resources in the best processes so that the result from each process is the best and there is minimal wastage of resources. Budgeting process lays down a path that the management could walk upon if the planned circumstances do not deviate. Budget estimates the earnings and the expenses of an organization in the future years making appropriate assumptions and re-evaluating the plan from time to time and incorporating the changes accordingly.
When an organization prepares a budget and the result of it is a balanced budget, it means that the organization will gain from that planning of budget if everything goes as per the budget but if the result is a deficit budget it means that the organization may incur losses if the same budget is followed. Therefore budgeting helps the management to predict the working of an enterprise based on certain assumptions and modify the plans accordingly for best results. The budget also helps the organization to maintain and manage the efficiency of the resources and measure it. If the efficiency it not optimum, the organization may change the budget accordingly. The budgetary process can be used at a personal level as well as in the organizations and corporate.
BUDGETING PROCESS
The preparation of the budget is a process that is collectively done by every level of workers in the organization and which is implemented by the top management. The entire organization is divided into small units and then the budget is made using one single unit independently and hence after the preparation of budgets for all the units in the organization, the budget is finalized for the entire organization that is aimed to achieve the corporate goals. The managers of each single unit projects the sales, the cost of production or process, cost of overheads and the requirement of any capital expenditure. The operating earnings and returns are calculated for the assessment of the return from investment in that project.
The budget of each independent single unit is reviewed by the management and then approved. The projections made are to be based on realistic assumptions and if the same require any changes, it can be done by the management for the optimum utilization of resources. With the help of a budget, the organization can evaluate potential threats and dangers before actually facing them. The organization is therefore prepared for the dangers from before and can avoid the dangers or plan for those threats (De Waal, A., Hermkens‐Janssen, M. and Van De Ven, A., 2011). During an evaluation of the budget, various options are also checked from which the option resulting in the best performance is selected. During the actual functioning of the process, if that option for some non-controlling reasons fails, the management already has the list of best alternatives available with them and the functioning can continue without much breakage.
The budget also ensures that the financial, as well as the production goals, are also achieved, and according to that the resources are utilized. The budget ensures that the expenditure incurred is not beyond the specified limits and helps the management as well as the workers to keep track of the same. The steps involved in a budgeting process are mentioned below:
1. Assumptions: The budget is forecasting the revenues and expenditures for the forthcoming period. Hence it is based on certain assumptions that the budget team has to assume to go ahead with the process. The assumptions could be based on the trends in the sales and operating expenses, or the business environment, or the economic conditions. These assumptions should be realistic and not too vague to be true.
2. Available resources: The management preparing the budget should know the exact resources that available with the organization so that an adequate budget can be prepared. If the organization has only limited resources for the project, the management should not go ahead with that...