The Pros and cons of budgeting system within economic entities

• Author: Zamfir M.
• Pages: 183-192

Bulletin of the Transilvania University of Braşov

Series V: Economic Sciences • Vol. 8 (57) No. 1 - 2015

The pros and cons of budgeting system within

economic entities

Mariana ZAMFIR1

Abstract: The budget is a key instrument of management control. Today it is found that all

businesses or organizations, except perhaps some craft enterprises, establish a budget. The

purpose of this research is to find solutions for increasing the efficiency of budgetary system

within economic entities. The first part of the article highlights the advantages of

implementing budgets and budgetary control in enterprises. The analysis continues to

highlight their criticism. The last part of the article proposes measures and actions that

should be taken to limit the negative aspects and to achieve an efficient budget system, so

that the budget to be conceived as a management tool, integrating into a broader overview

performance assessment.

Key-words: budget, responsibility, forecasts, budget control.

1. Introduction

To manage a business, an enterprise, means to plan, organize, command, coordinate,

control. Planning is the first function of management and it is the process by which

the company objectives are set and also the means (resources, actions) by which the

objectives will be achieved. Forecasting is the essence of management and it

includes both assessment of the future and making predictions on it (Simionescu et

al, 2006, 120).

Some managers consider planning as the basic function of management

because by all managerial actions of organization, management and control, it is

seeking the enforcement of planning decisions. Budgeting is the last stage of the

planning process, following the operational planning, and it consists of detailing the

business objectives for the first year of the operational plan. Through the budget,

there are determined the work programs for a period of one year and there are

allocated the necessary resources for carrying out the programs.

Sometimes praised, sometimes criticized, the budget remains a major tool of

management control. The pros and cons are highlighted below.

1 Valahia University of Târgovişte, mery.radu@yahoo.com