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Abstract
Purpose - Aims to describe budgeting processes in health care, education, and insurance business.
Design/methodology/approach - A survey was undertaken, using an interview approach, to expose tactical budgeting matters and behaviors of some central Georgia businesses.
Findings - The study shows that budgets are used in different degrees and for different purposes across different industries.
Research limitations/implications - A more comprehensive, comparative study would be a worthwhile undertaking to provide an in-depth analysis of issues involved in the budgeting process across industries.
Practical implications - The study provides examples of practical steps involved in the budgeting process.
Originality/value - The study provides evidence of the extent to which theoretical concepts are applied in practice.
Keywords Budgetary control, Budgets, Hospitals, Colleges, Insurance companies
Paper type Research paper
Introduction
The firm's organizational architecture is comprised of several systems where decision rights, performance and measurement rewards are gauged and administered. Within the confines of the organizational architecture is the process of budgeting. Although budgets and their corresponding systems are accounting by nature, they also provide a measure to partition decision rights and control behavior, and are used more often than not as a managerial, rather than solely an accounting function (Zimmerman, 2003).
There are clearly established budgeting rules within the accounting industry. Typically, budgets are used to filter and analyze information throughout the organization, not necessarily to create more information for dissemination. The budgeting process utilizes what information is already available. The focus of budgets and the planning process are often based on the drivers of sales, profits and expenses, relying on historical performance and demand data to forecast future monetary requirements. It is an imprecise activity at best, yet an important action for the successful tactical operation of a business. On a strategic level, budgeting clarifies its competitive priorities, advantages and strategies for the future, employing cost forecasts and demand limits to quantitatively measure the feasibility of capital expansion projects (The Controller's Report, 2001).
For tactical purposes, budgets provide useful information tools and control mechanisms to company leaders, as well as partitioning decision rights with those holding specific knowledge about the operation. The advantages of budgeting (Zimmerman, 2003) include:
* coordination of sales and production;
* formulation of a profitable sales and production program;
*...