Unethical Budgeting

Unethical Budgeting

Introduction

In today's world the importance of planning and budgeting has increased to a very high level because of the fact that organizations require maintaining maximization of resource extraction with techniques of reducing the cost by implementing transparency in all the external as well as internal processes of the organization.

Profit planning and budgeting are the activities related to the internal and external processes of the organizations, developed to meet the level of efficiency in day-to-day operations as well as major expenditures and to help making financial decisions. Corporations develop their budgets using critical steps and planning to achieve economic activities. The steps included in the budgeting systems are planning, communication, allocation, controlling and evaluation of the resources.

The Corporations of today are developing new moves round the clock to achieve leading the market competition, one of these effects are of planning and budgeting which are giving positive results to many because of high-class budgeting activities and control systems. As some organizations are enjoying success because of their efforts in controlled budgeting systems, many organizations are suffering this cause because of inefficiency and lack of control.

Budgeting is the most important variable for an organization, providing with directions and efficient controls over various operations and monetary resources. If the company lacks in controlling of its budget it can suffer great deficiencies, losses, and diseconomies of scales, ending up in becoming a fail organization. These deficiencies are mainly because of the corrupt activities incorporated by the human resource of an organization who intends to do unlawful, illegal or unethical practices of budgeting providing sources of distress to the organization.

Discussion

The discussion criteria of this essay is not on how the budget works or what is the purpose behind budgeting in an organization but the real criteria is to understand the techniques of unethical budgeting in the organization and how these techniques and methods are used for wrong means and personal benefits.

Games of Unethical Budgeting

Organizations of today suffer greatly because of unethical budgeting practices in different forums and employees usually take part in such activities for personal benefits. Various methods of unethical budgeting are used to create monetary gains (Collins & Almer, 1999, pp.241). Employees of organizations are committed in such activities some times because of their greed to illegal earnings. It has also been seen that at times employees do these activities for their employer under pressure, later earning returns for that.

The employees and the management level people play different types of unethical games of budgeting. A common unethical practice in this regard is the padding of the budget or creating a budgetary slack. Employees or middle management intentionally set conservative targets or forecasting in the budget but later, the targets are achieved on excessive basis making them look as better achievers in the eyes of top management and helping them achieve high bonuses (Hobson, et.al, 2011, pp. 97). This format is used by some employees who make slack budgets and is considered as unethical means in a common ...