FBLT041 Accounting and Financial Management

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Accounting and Financial Management



  • The technical and behavioral aspect of budgeting has the beneficial property as the organization has positive impact due to proper understanding and coordination.
  • Technical aspects is one of the most important factors that needs to be considered while determining the success of budgetary control system.
  • In addition to technical side of budget, behavioral aspects integral part of process of budgetary control.
  • Budgetary control success is dependent upon the appreciation of interpersonal relationships between different hierarchal levels.
  • Researchers are giving more focus on behavioral changes for supporting the prices of budgeting with the growing complexity in the organizations.
  • Action and attitude of employees are involved in behavior management and employee’s behavior has ultimate impact on budgetary control success.
  • Budgeting can have implications on human behaviors and they impact the performance of organization.
  • Success of budgeting system is needs to be measured by the extent to which sufficient motivations are provided to individuals.
  • . Behavioral aspects are suggestively important to budgeting and management accountants are responsible to work closely with the behavioral scientists.

Arguments in favor:

  • Considering behaviors of employees is indispensable for short-term and long-term vision of company regarding their budgeting of various projects.
  • Organizations are focusing on the behavioral aspect of budgeting with growing complexities in budgetary process.
  • A successful budgetary process is contributed by consideration of behavioral aspects.
  • For achieving goal and congruence in organization in respect of budgetary control process, then it is essential to consider the behavioral aspects to budgeting.
  • Changes in the behavior of employees are necessary to control the process of budgeting in organization.
  • Technical aspect of budget can be achieved only by the proper use of people and this ability of organization is achieved by focusing in the behavioral component.
  • It has been discovered that technical design is less important and the on related behavior influence the individuals.

Arguments against:

  • Technical aspect is one of the important factor for determining the success of budget control system.
  • Technical aspects can benefit all the firms if there is a proper coordination among the budgets employment.
  • There can be dysfunctional behavior and this needs to be minimized and it can be done only when the technic; aspects are properly considered.
  • Organization gives more emphasis on technical aspects rather than behavioral aspect and they are regarded very essential for the budgetary process.


Paragraph 1: Introduction

The introduction parts demonstrate the understanding of the question topic and three is a need to define the key concepts. This part will explain the budgetary control system and its importance in the success of business. The importance of management for determining the success of budgetary process in organization will be depicted in this part. Main argument of the topic that is whether the behavioral aspect is more important than technical aspect in the success of budgetary control system. Therefore, this part depicts the importance of behavioral aspects in the consideration of budgetary control success.

Paragraph 2:

In this part, several sort of discussion will be done of the concerned topic. Various factors determining the success of budgetary control needs to be explained. The importance of both technical and behavioral aspects to the control system of organization s are highlighted. Technical and behavioral component are explained by highlighting their relevance in the preparation of budgetary control system.  Employee’s commitment in application of budgetary control system are noted in this particular paragraph.

Paragraph 3:

This paragraph deals with the explanation of budgetary issues faced by the organizations in the event of obtaining goal congruence. Some of the factor that motivate the employees in appropriate employing the techniques of budgeting that is in the best interest of company are also demonstrated.

Paragraph 4:

In this paragraph, explanations of human behavior diversity in relation to different organizational theories are discussed. Importance of participation and their relevance in taking part in the process of budgeting is highlighted along with their importance. Ways of improving and motivating the employees and changing their attitude toward their budgetary involvement are demonstrated.

Paragraph 5:

This particular Paragraph depicts and examined the behavioral process of budgeting. Relationship between the commitments comes with mixed view and performance of employees in budgetary process.

Paragraph 6:

There are various reasons for behavior issues in budgetary process and this is explained in this particular paragraph. Issues are explained in context of various programs employed by company. This paragraph has various sub paragraphs that explains the behavioral issues in relation to different contexts.

Paragraph 7:

In this paragraph, discussion about various factors that influence the behavior of employees and individual in organization are demonstrated. Contribution of various aspects to the preparation of budgeting and their importance in the budgetary control success are discussed.

Paragraph 8:

This paragraph discusses about the issues considered when drafting and planning the budget. The need and requirement of budget in the event of their preparation as they are thought to be in the best interest of company. All the relevant and essential considerations of behavior are explained in this particular paragraph.

Paragraph 9:

This paragraph give the detail explanation of various parameters tends to influence the behavior of individual while budget preparation and their implementation. Factors generating negative behaviors among employees in relation to budgetary control is explained in this particular section. Some of the factors that discourage staff members and their negative attitude are explained in this section.

Paragraph 10: Conclusion

This part gives the detailed summary of the given topic. Consideration of whether behavioral aspect or technical aspect are important factor in contributing to the success of budgetary control is summarized by giving conclusion remarks. Main factors considering behavioral aspects in the success of budgetary control process are listed. Relevance of management accountant of any organization in helping the behavioral aspect in becoming an important contributor to the success of budgetary control is noted down in this particular section.


In order to have clear understanding of the task at fundamental level, the source by Ijbssnet.com. (2017) is the most useful source that is essential for grasping prior knowledge for discussion of the behavioral and technical aspects in the success of budgetary control of an organization.  Otley and Emmanuel (2013) is the book on accounting for management control and this provide some of the facets of the control system designs. This book provide the deeper knowledge and necessary basic for understanding the idea and concepts of budgetary control system. There are several other sources and all the understating of the requirement of the task are well bestowed by these sources. There are various key words used in the topic of discussion such as technical aspects, behavioral aspects, organizational theories and management behaviors. It can be said that although the book as a whole is not of extreme relevance to the topic but the chapter encompasses several organizational theories that are relevant to the topic of discussion. The relevant and recent case studies are used as examples for the study. Concerning the fundamental of the topics of budgetary control success, not much would have changed since the years for the purpose of analysis. The purpose of book is to provide the readers with a clear understanding of complex concepts of budgeting control. The book of accounting on management control gives the basic concept of budgetary control success and relevance in the study.

Ax and Greve (2017) is a research paper that discusses about the adoption of management accounting innovations. This particular paper has discussed about the various innovation in the budgetary control process that can be perceived as whether they are adding value the firms or not.

 Another source such as Tappura et al. 2015 is the article on the management accounting and depicts the current management accounting practice based on findings generated from literature review. It also discusses about the applicability of certain methods of management accounting for safety related decisions and its implementation in future practices.  Otley and Emmanuel (2013) book has shown to be an unbiased and trustworthy and suitable for using and employing in the formation of essay. There are multiple case studies that have been discussed in the book and this provides the basis for the discussion of behavioral and technical aspects to the budgetary control process. The combination of various relevant case studies and the detailed explanation of fundamental concepts of control system makes the book a source that is suitable for answering the questions that arises with the related topic.


One of the essential components of control system is budget and budget is sometimes associated with leadership by objective and it can be regarded as source of dissatisfaction and motivation as well. It is the concern of management of company about subordinates’ reaction towards budgetary control system. There are various types of situation when considering response of employees in event of budgetary preparing and execution. This will have direct band indirect impact on success of the budgetary procedures within an organization. Considering behaviours of employees in different situation is essential for short-term and long-term vision of company regarding their budgeting of various projects (Armitage et al. 2016).


For achieving strategic goal, every organization is heavily dependent in budgetary. Success of budgetary control system relates to allocating the responsibilities for achieving the set goals, organizational goal recognition and finally their execution. All types of organization can be benefitted if there if a proper coordination and understanding of behavioural and technical aspects to budgeting. Nonetheless, one of the most important factors that needs to be considered while determining the success of budgetary control system in the technical aspects. If the organization intends to achieve goal and performance congruence, it becomes essential to recognize both behavioural and technical aspects of budgeting (Angelakis et al. 2016). With the growing complexity in the organizations, researchers are giving more focus on behavioural changes for supporting the prices of budgeting.

Budgeting technical component is related with Mathematical and algebraic computation of expense and costs of any project undertaken. Behavioural component on other hand emphasizes on ability to achieve budgeting technical aspect using people or employees in organization. It is argued that integral part of process of budgetary control syst5em involves social and behavioural aspects in addition to technical side of budget. Proper application and effective use of budget in organizations is highly dependent on the extent to which the commitments of employees are toward budgetary process ideals, so that such behaviours are encouraged according to the objectives of entities (Chenhal and Moers 2015). This depicts that capacity of organization are built on participation and empowerment of employees.

One of the behaviour issues facing success of budgetary control system is obtaining goal congruence. One of the relevant factors in this regard is to consider the involvement of employees in budgetary process as it can motivate employees and leads to improvement in their attitude towered budgetary control system. One of the motivating factors is rewarding employees if they achieve the budgetary standards set. The success of budgetary control systems is dependent on top management actions and their appreciation of interpersonal relationships between different hierarchal levels. Employees can be motivated and their attitudes toward budgetary control can be improved by management using budget process. Some of the factors determining the approach toward budgeting in any organization include management culture, style and their attitude.

Diversity in human behaviour is recognized through modern theories of organizational behaviours. As per the theory, it is likely that employees are likely to internalize the budgeting goal if they are involved and participate in the budgetary process. Managerial behaviour assessment has been inspired by some protagonist of some agency theory. Information of management is impacted by discretionary managerial behaviour. Meaningful participation in the process of budgeting are implicated by these modern theories of budgeting as employees are drawn into the decision making process of budgeting (Said 2016).

Examining budgetary process behavioural process:

Participation of employees in budgetary process needs to be adequate with difficulty of job level. In an uncertain and difficult environment, imposition of budget is readily accepted when job is considered easy. Participation chemistry may result in behavioural; responses that are considered desirable and this may lead to acceptance. Budgetary process participants needs to be oriented for purpose and benefits in total sense. This helps in minimizing dysfunctional behaviour and removing negative perceptions. Budgetees need to be communicated with long-term objectives of organizations within which operation of budget takes place. Relationship between Performance of employees in budgetary process and their commitment comes with mixed view. Management in some organization uses information about budgetary control for supporting employees and it is used by them constructively (Otley and Emmanuel 2013).

Action and attitude of employees are involved in behaviour management and employee’s behaviour has ultimate impact on budgetary control success.

Several reasons for behavioural issues in budgeting:

First issue is dissatisfaction related to procedure of budget. Budgetary procedures are typically performed by management control service that is difficult to make the modification. Existence of ambivalent nature of budgetary process is often binding. Another behaviour issue related to budgetary procedures are requirement of large number of tables by senior management of organization. Actual usefulness of the tables required is not taken into account by senior management (Mittendorf 2015). This lead to arising of discrepancies between actual and reality facts of management behavioural issues.

Another issue is related to program as for most of people obliging to programs proves to be constraint. Too much time is consumed and too much energy is wasted by individuals involved in preparing and developing budgets. This is so because it is believed by them sometimes it becomes difficult to devote required time in preparing budgets. It is considered an addition to their daily task.

Budget preparation period is another behavioural issue involve in budgetary control process. Analyzing the budget is regarded as long procedures and due to negotiations; the decisions related to budget are sometimes delayed. Therefore, if the management are able to control such behavioural issues involved in budget preparation and control system, then it would have great impact on success of budgetary control process (Ax and Greve 2017).

The above discussed problem does not lead to a satisfactory preparation of budgets. Another behavioural issues involves is consideration by management of organization that unfulfillment of budgetary provisions are regarded as failure and their attainment is success. Morale and motivation of employees are tending to be affected by this particular issue. Some employees have the obsession with idea that indicators of budget are only estimates and they have to respect budget. If the results of budget are monitored then this may result in arising of negative behaviour such as information falsification, data distortion by individual who are stimulating their objectives (Kaplan and Atkinson 2015).

Size indicator of budget tends to influence the behaviour of individual. If the performance of budgetary control system are triggered, it is required than efforts of individual must be completed in the prescribed time. Concerning this, it is disclosed by many studies that staff motivation are not impacted by budget that have been set at level of performance that is regarded too high. Challenging target that are achieved by employing great deal of efforts are discouraging for staff members as their efforts will not be rewarded. Consideration of conflicting individuals may generate negative behaviours among employees (Shields 2015).

There are behavioural issue needs to be considered by organizations when planning and drafting a budgeting system. Reason is attributable to the fact that budgeting can have implications on human behaviours and performance can be affected by them. If the employees concentrate on the objectives that the budget set out that is considered organizationally desirable, leads to successful implementation of budgetary control system. Managers’ performance is also judged by when they adhere to activities and measures of budgetary control (Fullerton et al. 2013). When introducing control in the event of employing new budgetary system in organization, it is essential to consider behavioural aspects as they might lead to causing negative attitudes. Controlling such negative attitudes will help in modifying the budgetary control system in the best interest of company.

Budgetary process needs to consider some important considerations of behaviour. Participation of employees and managers will help in measuring benefits in terms of budgetee performance and their attitude. Budgetary control process will have desirable outcome if actions and behaviour of managers are watched (Guffey 2014).


Budgeting is regarded as one of the complex process in organization as it takes into account variety of factors. Some of the important factors that cannot be overlooked when considering the success of budgetary control process are participants personalities, nature of budget that are set, degree of uncertainty and approach to performance reporting. Most of the times, organization fails to recognize majority of issues related to budgeting are behavioural. Some of the facts leading to long-term effects of budgeting are due to dysfunctional behaviour that creates a pressure of mistrust, hostility and actions that is unfavourable. Therefore, success of every budgeting system needs to be measured by the extent to which sufficient motivations are provided to individuals. It must be realized by management accounting that human relations and accounting techniques are inextricably bound with each other. Behavioural aspects are significantly important to budgeting and it is the responsibility of management accountant to work closely with the behavioural scientists so that they are able to gain an understanding of role than behaviour of individual plays in successfully using the budget.


Angelakis, G., Theriou, N., Floropoulos, I. and Mandilas, A., 2015. Traditional and Currently Developed Management Accounting Practices –A Greek Study. International Journal of Economics & Business Administration (IJEBA), 3(3), pp.52-87.

Armitage, H.M., Webb, A. and Glynn, J., 2016. The Use of Management Accounting Techniques by Small and Medium?Sized Enterprises: A Field Study of Canadian and Australian Practice. Accounting Perspectives, 15(1), pp.31-69.

Ax, C. and Greve, J., 2017. Adoption of management accounting innovations: Organizational culture compatibility and perceived outcomes. Management Accounting Research, 34, pp.59-74.

Chenhall, R.H. and Moers, F., 2015. The role of innovation in the evolution of management accounting and its integration into management control. Accounting, Organizations and Society, 47, pp.1-13.

Fullerton, R.R., Kennedy, F.A. and Widener, S.K., 2013. Management accounting and control practices in a lean manufacturing environment. Accounting, Organizations and Society, 38(1), pp.50-71.

Guffey, D.M., 2014. Citation Analysis of Advances in Management Accounting: The First 20 Volumes. In Advances in Management Accounting (pp. 45-64). Emerald Group Publishing Limited.

Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.

Mittendorf, B., 2015. INTRODUCTION: Management Accounting Research: Knowledge Base, Themes, and Future Directions. Journal of Management Accounting Research, 27(1), pp.121-122.

Otley, D. and Emmanuel, K.M.C., 2013. Readings in accounting for management control. Springer.

Said, J., 2016. The Mediating Effects of Organizational Learning Orientation on the Relationship between Strategic Management Accounting Information Use and Organizational Performance. Asia-Pacific Management Accounting Journal, 5(2).

Shields, M.D., 2015. Established management accounting knowledge. Journal of Management Accounting Research, 27(1), pp.123-132.

Tappura, S., Sievänen, M., Heikkilä, J., Jussila, A. and Nenonen, N., 2015. A management accounting perspective on safety. Safety science, 71, pp.151-159.

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