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The legacy of budgetary reform has been dismal Promising options, rooted in economic values, seem to fall short when confronted with political realities. Nevertheless, the search continues. The authors argue [...]

The use of functional budgeting and inappropriate management techniques on development projects often cause problems such as low-quality products or results, runaway costs and poorly motivated work groups. Functional budgeting differs from project budgeting in terms of repetitiveness, basis, risk and type of budget. Managers should keep in mind these differences in development projects. Assuming that other management variables are under control, the appropriate budgeting approach ensures that projects are delivered on time and within budget.

Plenty of planners have been asked to do more with less--most notably, less money--but saving dollars isn't always about being frugal; sometimes it's about freeing up some cash to make [...]

Implementing a strategic budgeting system can save managers time and headaches We've survived Y2K with few glitches, implemented powerful Enterprise Resource Planning (ERP) systems, and have become one of the [...]

This month we'll create the Schedule of Cash Payments for the Direct Materials (DM) Budget. This entails creating a new table and a series of queries to load the table [...]

Technological innovations must be cost-justified by managerial accountants prior to making capital expenditures. The cost justification process (cost-benefit analysis) consists of two responsibilities for the accountant: developing budget guidelines, and ensuring expenditures fall within budgetary constraints. The capital budgeting and expenditure assessment process is explained from the standpoints of investment analysis and options approaches for accountants in manufacturing environments. Models are developed that classify benefits achievable from technological change according quantifiability. Among the many suggestions to accountants responsible for cost-justifying capital investments are: (1) existing production methods should be reviewed for possible improvement before purchasing new production systems, (2) management's (and engineering's) desire for strategic leadership within the industry should not be allowed to overrule financial responsibility, and (3) capital investment decision processes should involve staff supervisors and line managers to minimize purchases of unneeded systems.

A survey of 402 firms in nine industry categories indicates that successful firms: (1) encourage company-wide commitment to budgets, (2) identify connections between immediate, medium-term, and long-range budgetary objectives, (3) develop detailed procedures for budget preparation, and (4) analyze variances in the budget and correct them. The survey, sponsored by the National Association of Accountants, was conducted among firms categorized as successful according to price-to-earnings ratios, self-identified financial performance, self-identified budgetary effectiveness, and average returns on equity for the past five years. In addition to discussions of the four budget-related qualities the survey identified, ten steps to more effective budgeting are discussed: (1) commitment by senior management to the budgeting process, (2) establishment of realistic budgetary goals, (3) assignment of budgetary objectives within managers' responsibility ranges, (4) assessment of senior management's goals prior to preparing departmental budgets, (5) identification of how short-term objectives help to achieve long-range goals, (6) treatment of the budgeting process as a major company project, (7) standardization of the routine aspects of the budgeting process, (8) regular reviews of actual operating results in comparison to budget, (9) discipline of mid-level managers who play 'budget games,' and (10) periodic auditing of the budgeting process.

The shipping industry may take advantage of low interest rates and adequate money supply to avail of business financing schemes. There is however, caution from the banking industry that too many loans may increase the capacity of the shipping industry resulting in the inability of shippers to service their loans. Banks however, are taking steps to ensure that they finance only shippers with impressive portfolios to minimize risks.

Too often, capital budgeting emphasizes short-term paybacks that cause rejection of good capital investments. The process of capital budgeting is analyzed. The seven steps of the capital budgeting process are: (1) establishing investment objectives, (2) identifying possible investments, (3) analyzing the alternatives, (4) developing the budget, (5) approving investments to be made, (6) implementing the plan, and (7) auditing the post-implementation results of the capital budget. Capital budgeting should be considered in terms of the company's long-term planning and goals, if the budgets are to be effective.