though seems straightforward, is very complicated on its own. It has covered a
long passage of time since the emergence of bookkeeping,
now Traditionally budget means formulating a plan and strategy of allocation of
resources that one desire to spend in the coming future.  It basically specifies when and how the
estimated amount is to be spent for pre-determined objective during the given
set of time. And since its emergence, the budget
has played a vital role in the emergence and success of an organization. an efficient budgetary control
system assists the managers to execute various managerial functions, whereas if the same has not been compiled and
executed, the way it has been, can lead
the same organization to touch the rock
bottom. But with the advancement of computer-based
information technology, the budget has
seen its ever-new zenith.


Budget, its history, and its evolution

very definition and origin are different
according to different authors. In general, for layman budget is ‘it’s making
sure that you’re spending less than you’re earning and planning for both the
short and long term’ ( Fontinelle,
The concept of the budget came in view in
around 1580’s during the rule of Queen Elizabeth
1, in England, but the concept of annual budget was appeared in the early 18th
century  (, 2007).
An effective budget aims to direct an organization
to achieve its targeted objectives.  It
allows the allocation of the current assets to be handled and managed proficiently.
Whereas if the predetermined budget is either over-allocated
or under allocated, can rather have an adverse
effect on an organization which may force
the management to abandon their project, (Cunningham,
2015, p. 3). budgetary under-arrangement may bring about activities being given
the thumbs up which generally would not have been accepted or would have been
given preference. This causes troubles when, unavoidably, the additional assets
must be found at a later stage. The setback brings about rare financial
resources being redirected from other, maybe additionally meriting open
activities. Over arrangement then again is inefficient, and brings about paying
excessively. Thus, other goals and targets may or must be dropped. No theory or
concept can be perfect, there will always be some shortcoming but a potential
gain for other, so new approaches are always attempted due to this reason which
in further helps to make budgeting more reliable for all. Along the way to the
development of budgeting, a new concept called beyond budgeting has been
emerged. The management often uses the budgets to determine the strength and weakness
of their managers as it’s their managers who on their behalf helps them to
attain. The concept of beyond budgeting was first introduced in 1998, by Jeremy
Hope and Robin Fraser, they in, cooperation called ‘Beyond Budgeting and Round
Table, incorporated their ideas and published their paper in 2003 (Heupel
& Schmitz, 2015).
Beyond Budgeting is an innovative technique whipped out from the accounting
management, which tends to refine and boost the execution of budgeted target. budgets
depend on the vital activity design and give the best gauge for short-and long-term
goals. Target
setting is an essential piece of planning and setting up of budgets and the
reward structure is regularly in view of the achievement of spending targets.

Budgeting performs
two very vital functions i.e. planning and control (Garrison, Noreen, &
Brewer, 2018, p. 363). According to Garrison and rest, managers formulate various
goals and targets and then further prepare budgets to attain them. They also
collect the feedback from all the varied and feasible sources to ensure that
the formulated plan cum budget is implemented accurately as well as with the contingency
for any modification for any future uncertainties.

Issue and debate

Irrespective of the
viability and Importance of budgets in the management of an organization, the
practice and use of budget is a very heated issue. As mentioned in, (Garrison,
Noreen, & Brewer, 2018), a survey was conducted in which 152
officials of the corporations, were asked whether they prepare budgets or not,
if yes then what kind.  That study
revealed an astonishing data, a majority of them were still preparing  annual budgets and among them only one fifth
have a contingency plan for any unforeseen market conditions, it also revealed
that around half of all the participants of the survey, the data which is used
in the preparation of budget becomes out of date within 4-5 months of setting
up the annual budget (Merchant, 2013). This survey raised
many questions all at once, should the budgets be made?, Why should budgets be
made it’s not resourceful?, If yes, then how should be made? And the answer to
all problem lies in the last question itself.

The limitations of
budgeting in management accounting were thoroughly mentioned by Alino &
Schneider (2012). They cited many of various research that the unethical and
self egoistic stereotypes spark off a ‘faultline’ in different departments of
the same organisation, which hinders the group development which further disarray
the management from its budgeted goals, all due to the snag of human mind’s
shortcoming like ego, lethargicness, anxiety and many others (Alino & Schneider, 2012, pp. 4-9). The recent decades have seen a sudden rise in several firms and
corporations which had adopted much-convoluted
methods in response to a much higher
change in the technological expansion (Frow, Marginson,
& Ogden, 2009, pp. 1-18). Further, the management prepares the budget
annually which can even rust a galvanized willed manager (Frow, Marginson, & Ogden, 2009).

Even with all these drawbacks it’s still vital cum mandatory to formulate
budgets for efficient management control. Instead of using the obsolete method
of annual budgeting and traditional budgeting, the organisations must make
budget in accordance with the principle of the beyond budgeting. Heupel and Schmitz
both advocated the concept of beyond budgeting (Hope & Fraser, 2003)d.Beyond budgeting,
in contrast with the traditional budgeting which upholds its locus on internal
market, instead follow principles which allow the distribution of resources in
an extremely dynamic economic context (Heupela & Schmitz, 2015, pp. 2-8)



Better Budgeting

Beyond Budgeting









Internal market or

Resource allocation

plans (budget)

plans (budget)

self coordination under defined





Targets and performance

absolute figures, internal

relative figures,

relative figures,



benchmark orientation

benchmark orientation

Incentive System

coupling between budget

uncoupling budget

uncoupling budget achievement

achievement and incentives

achievement and incentives

and incentives


Link to cooperate strategy


existing- central

existing- decentral

External control

high level

low level


Reference period of

3 years

1 year, continuing 1-2 years

no operational planning

operational planning

kpi based planning



Reference period of

accounting year







Implementation effort

low level

medium level

very high level

System intention

allocation of resources

enhanced allocation of

adaptive management model







controlling in case of

Managerial functions


control, strategy

variations, strategy









raising employees potentials to

First goal of organization

convince costumers and create

shareholder value

shareholder value


sustainable value





Table source: (Heupela & Schmitz, 2015)

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