Problems of the Budgeting System

Problems of the Budgeting System

The major problems in developing a budgeting system are:

1. Getting the support and involvement of all levels of management.
2. Developing meaningful forecasts and plans, especially the sales plan.
3. Inducing all individuals to get involved in the budgeting process, and gaining their full participation.
4. Establishing realistic objectives, procedures and standards of desired performance.
5. Applying the budgeting systems in a flexible manner.
6. Maintaining effective follow-up procedures, and adapting the budgeting system to changing circumstances.