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Human Factors in Budgeting

Learn the necessary human factors in budgeting.

In this article, you will learn the essential human factors in budgeting.

Human Factors in Budgeting

The success of a budget program depends on three important factors:

  1. Top management must be enthusiastic and
    committed
    to the budgeting process.
  2. Top management must not use the budget to
    pressure employees or blame them when something goes wrong.
  3. Highly achievable budget targets are usually preferred when managers are rewarded based on meeting budget targets.

The Budget Committee

A standing committee responsible for overall policy matters relating to the budget; coordinating the preparation of the budget; resolving disputes related to the budget; and approving the final budget

Choosing the Budget Period

Linear timeline from 2018-2021 with an arrow pointing in between 2018 and 2019 with the title "operating Budget"

Operating budgets usually cover a one-year period corresponding to a company’s fiscal year. Many companies divide their annual budget into four quarters.

A continuous (or ‘rolling’) budget is a 12-month budget that rolls forward one month (or quarter) as the current month (or quarter) ends.

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