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:
- Top management must be enthusiastic and
committed to the budgeting process. - Top management must not use the budget to
pressure employees or blame them when something goes wrong. - 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
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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