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Hi tutor, could you please explain what the differences in difficulties are, between of changing a budgetary system and of changing a budget?
What I know currently:
– resistance by employees (employees might have built budgetary slack into current budget)
– training of management
– costs of implementation (changing a budget / budgetary system? Requires the entire budgeting procedures to be rewritten on the budget manual)
– loss of control ( managers might be unable to provide good and meaningful data to the new budget)
– lack of accounting information required to prepare new budget ( eg. ABB requires ABC)Thank you!
What you have written is fine with regard to changing a budgetary system.
With regard to changing a budget (that has already been prepared) then it is likely to be less difficult and you are looking for things such as:
– demotivation for employees because their targets are changed
– ensuring that changes are co-ordinated (changing one functional budget will affect others)
– the possibility of extra work being created because changing the budget may affect how the work is to be done
– if a change is requested by one of the managers, then ensuring that the change is justified (and not just the manager realising he/she cannot meet the existing targets)
– and, of course, the time (and therefore cost) of the work involved in changing.
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