Professional Documents
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Budgeting
Budgeting
BUDGETING
BUDGETING
A BUDGET IS A PLAN EXPRESSED IN MONETARY TERMS
COVERING A FUTURE TIME PERIOD (TYPICALLY A YEAR
BROKEN DOWN INTO MONTHS)
Developing
Identify Business detailed sales
Objectives budget Board Approval
• Lowe and Shaw (1968) identified three sources of forecasting error: unpredicted changes in the
environment; inaccurate assessment of the effects of predicted changes; and forecasting bias.
• Otley and Berry (1979) argued that quite mild deviations from ‘expectation budgets’ at the unit
level can produce severe distortions when budgets are aggregated to the organizational level.
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