12 Pages Posted: 27 Jul 2011
Date Written: July 27, 2011
The budget document has been one of the key and basic documents for every organization for the purposes of planning, evaluation, coordination and controlling the operations of the organization. At the beginning of every accounting/financial year organizations spends time and money in preparing this document. However within the financial year organizations are hugely affected by events both favorable and unfavorable (that is opportunities and threats) which they have no control over. The external factors include technology, social, cultural, economic, legal, natural disasters etc. There is a continuous change in these external factors each minute and one can hardly predict the future. The business world is very dynamic. The spillage of oil, Enron scandal, the 2011 uprising in the Arab world leading to major constitutional and legislative changes etc. could hardly be predicted by anybody. For example the Enron Scandal led to the Sarbanes Oxley law regulating accounting firms in US and many nations have adopted some provisions in the Act.
The purpose of this paper is to provide an insight into the relevance of beyond budgeting principles in relation to the Ghanaian culture in this dynamic and fast paced business world. Every management tool must operate within a certain cultural domain and its success to a greater extent depends on the compatibility between the management tool and the prevailing culture. Is it worthwhile for organizations to try to predict expected revenues and expenditure (budget) for their financial year using traditional models such as incremental or zero - based budgeting techniques, when one event can even collapse the existence of that very organization? In the absence of budgets, what should organizations do?
Keywords: budget, beyond budgeting, culture
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