Business, 19.02.2020 23:27 kbkbkbkb7611
Patricia Eklund, controller in the division of social services for the state, recognizes the importance of
the budgetary process for planning, control, and motivational purposes. She believes that a properly
implemented participative budgetary process for planning purposes and an evaluation procedure will
motivate the managers to improve productivity within their particular departments. Based upon this
philosophy, Eklund has implemented the following budgetary procedures.
• An appropriation target figure is given to each department manager. This amount is the maximum
funding that each department can expect to receive in the next year.
• Department managers develop their individual budgets within the following spending constraints as
directed by the controller's staff.
◦ Expenditure requests cannot exceed the appropriation target.
◦ All fixed expenditures should be included in the budget. Fixed expenditures would include
such items as contracts and salaries at current levels.
◦ All government projects directed by higher authority should be included in the budget in
their entirety.
• The controller's staff consolidates the budget requests from the various departments into a master
budget submission for the entire division.
• Upon final budget approval by the legislature, the controller's staff allocates the appropriation to the
various departments on instructions from the division manager. However, a specified percentage of
each department's appropriation is held back in anticipation of potential budget cuts and special funding
needs. The amount and use of this contingency fund is left to the discretion of the division manager.
• Each department is allowed to adjust its budget when necessary to operate within the reduced
appropriation level. However, as stated in the original directive, specific projects authorized by
higher authority must remain intact.
• The final budget is used as the basis of control. Excessive expenditures by account for each department
are highlighted on a monthly basis. Department managers are expected to account for all
expenditures over budget. Fiscal responsibility is an important factor in the overall performance
evaluation of department managers.
Eklund believes her policy of allowing the department managers to participate in the budgetary
process and then holding them accountable for their performance is essential, especially during times
of limited resources. She further believes that the department managers will be positively motivated to
increase the efficiency and effectiveness of their departments because they have provided input into the
initial budgetary process and are required to justify any unfavorable performances.
Required:
1. Describe several operational and behavioral benefits that are generally attributed to a participative
budgetary process.
2. Identify at least four deficiencies in Patricia Eklund's participative policy for planning and performance
evaluation purposes. For each deficiency identified, recommend how it can be corrected.
Answers: 1
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