The behavioural aspects of the budgeting process are also examined. Finally, the public sector budgeting process is analysed, focussing on the need to tackle Beyond Budgeting issues in the 21st century whereby organisations budget without a budget. In the literature review, it was found that there was no perfect means of ensuring a successful budgeting process but there was general agreement in many areas of how the process might successfully assist. As with most concepts, there were mixed opinions on some issues such as benefits of participation as opposed to non-participation. What was common is the view that the budgeting process in particular and management control systems in general cannot afford to ignore the impact of behaviour on these processes.
Key words: Beyond Budgeting; behavioural aspects; budget and human behaviour; budgeting process; and public sector/service budgets
The Nature of Budgeting
Almost every enterprise, regardless of size, complexity or sector, relies heavily on budgets and budgetary systems to achieve strategic goals. The success and importance of budgeting relates to the identification of organisational goals, allocation of responsibilities for achieving these goals, and consequently its execution (Shah 2007; Robinson 2007; Drake and Fabozzi 2010). It is one of the most successful and useful management accounting techniques that can reap handsome rewards if properly understood and implemented.
The process of budgeting involves setting strategic goals and objectives and developing forecasts for revenues, costs, production, cash flows and other important factors (Jr. Bierman 2010; and Bonner 2008). By putting together a financing and investment strategy in place, this will allow those responsible for financing of the company to determine what investment can be made and how these investments will be financed. In other words, budgeting pulls together decisions regarding capital budgeting, capital structure, and working capital. (Drake and Fabozzi 2010: 115). The end result of the process is the production of the formal document referred to as a budget.