ACCA PM Syllabus D. Budgeting And Control - Factors which Influence behaviour - Notes ^{2 / 4}

The purpose of a budgetary control system is to assist management in planning and controlling the resources of their organisation by providing appropriate control information.

The information will only be valuable, however, if it is interpreted correctly and used purposefully by managers and employees.

The correct use of control information therefore depends not only on the content of the information itself, but also on the behaviour of its recipients.

Goal congruence exists when managers working in their best interests also act in harmony with the goals of the organisation as a whole.

Behavioural problems

1. The managers who set the budget or standards are often not the managers who are then made responsible for achieving budget targets.

2. The goals of the organisation as a whole, as expressed in a budget, may not coincide with the personal aspirations of individual managers. 

   This is known as dysfunctional behaviour.

3. When setting the budget, there may be budgetary slack (or bias). 

   Budget slack is a deliberate over-estimation of expenditure and/or under-estimation of revenues in the budgeting process. 

   This results in meaningless variances and a budget which has no use for control purposes.