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JEL Classification: M41; M19
Keywords: budgeting; planning; business environment; Czech firms
Abstract
Research background: Budgeting was developed during the Great Depression as a managerial tool to help enterprises survive a critical period characterized by fluctuations in macroeconomic indicators. Now, after more than eighty years, budgeting is criticized for the same reason why it was created - for lack of adaptability to unexpected changes in the business environment. Based on these facts, the presented study focuses on the specifics of budgeting in the current business environment.
Purpose of the article: The aim of the work is to explore selected aspects of budgeting process in Czech firms, and to assess how the budgetary process is influenced by the progression of the business environment.
Methods: To achieve presented target, the authors designed the questionnaire survey submitted to employees of companies in the Czech Republic.
Findings & Value added: The first part of this paper displays the state of knowledge on budgeting, the following part presents results of the survey. The study identified several trends, especially in the use of budgeting in Czech firms, characteristics of budgets in these subjects and evaluation of the sustainability of a company's environment.
Introduction
The theoretical basis of budgeting was described in monographs by many well-known scholars (Drury, 2000; Garrison et al., 2014; Weygandt et al., 2009). According to Popesko and Papadaki (2016), budgeting is a typical activity of economic departments in various types of enterprises. Horngren et al. (2012) and Král (2010) define a traditional budget as a quantitative (financial) expression of a proposed plan by management for a specified period. It confirms a finding by Ostergren and Stensaker (2011), who claim that budgeting is often connected with the planning process. Drury (2015) considers budget as a clear indication of what is expected to be achieved during the budgeting period.
Budgeting was developed during the Great Depression to help enterprises survive a critical period characterized by a decrease in domestic consumption, deflation and profit margin reduction (Berland et al., 2009). Only a few years later, these expectations became a reality, and budgeting became the most frequently used controlling systems (Fernandez & Rodriguez, 2011). The current situation can be described as paradoxical. A tool which was created because of the lack of...