management accounting theory assignment

Jack Riley, controller in the division of social services for the state, recognizes the importance of the budgetary process for planning, control, and motivational purposes. He believes that a properly implemented participative budgetary process for planning purposes and an evaluation procedure will motivate the managers to improve productivity within their particular departments. Based upon this philosophy, Riley has implemented the following budgetary procedures.

· An appropriation target figure is given to each department manager. This amount is the maximum funding that each department can expect to receive in the next year.

· Department managers develop their individual budgets within the following spending constraints as directed by the controller’s staff.

· Expenditure requests cannot exceed the appropriation target.

· All fixed expenditures should be included in the budget. Fixed expenditures would include such items as contracts and salaries at current levels.

· All government projects directed by higher authority should be included in the budget in their entirety.

· The controller’s staff consolidates the budget requests from the various departments into a master budget submission for the entire division.

· Upon final budget approval by the legislature, the controller’s staff allocates the appropriation to the various departments on instructions from the division manager. However, a specified percentage of each department’s appropriation is held back in anticipation of budget cuts and special funding needs. The amount and use of this contingency fund is left to the discretion of the division manager.

· Each department is allowed to adjust its budget when necessary to operate within the reduced appropriation level. However, as stated in the original directive, specific projects authorized by higher authority must remain intact.

· The final budget is used as the basis of control. Excessive expenditures by account for each department are highlighted on a monthly basis. Department managers are expected to account for all expenditures over budget. Fiscal responsibility is an important factor in the overall performance evaluation of department managers.

Riley believes his policy of allowing the department managers to participate in the budgetary process and then holding them accountable for their performance is essential, especially during times of limited resources. He further believes that the department managers will be positively motivated to increase the efficiency and effectiveness of their departments because they have provided input into the initial budgetary process and are required to justify any unfavorable performances.

Required:

- Identify at least four deficiencies in Jack Riley’s participative policy for planning and performance evaluation purposes. For each deficiency identified, recommend how it can be corrected.

Word count: 700 words

Referencing Style

APA Referencing

The APA style of referencing was developed by the American Psychological Association.

Style guidelines are contained in the " Publication Manual of the American Psychological

Association", currently in its 6th edition.

Berger, P. L. (1964). Some general observations on the problem of work. In P. L. Berger

(Ed.), The Human Shape of Work (pp. 234-267). New York: Macmillan.

Hodge, R. W., & Treiman, D. J. (1968). Class identification in the United States. American

Journal of Sociology, 73(5), 535-547. doi: 10.1086/224528

Lofland, J. (1966). Doomsday Cult (1st ed.). Englewood Cliff, N.J.: Prentice -Hall.

Harvard Referencing

The Harvard style of referencing is often referred to as the "author -date" style.

Berger, P. L. (1964), ‘Some general observations on the problem of work’, in: P. L. Berger

(ed), The Human Shape of Work , Macmillan, New York, pp. 234 -267.

Festinger, L., Riecken, H. W. & Schachter, S. (1956), When Prophecy Fails, University of

Minnesota Press, Minneapolis.

Goffman, E. (1961), Asylums :Essays on the Social Situation of Mental Patients and Other

Inmates, Anchor Books, Garden City, N.Y.

Hodge, R. W. & Treiman, D. J. (1968), ‘Class identification in the United States’, American

Journal of Sociology, vol 73, no. 4, pp.535-547.

MLA Referencing

Produced by the Modern Languages Association, the " MLA style manual and guide to

scholarly publishing", is currently in its 3rd edition (2008).

Berger, Peter L. "Some General Observations on the Problem of Work." The Human Shape of

Work. Ed. Peter L Berger. New York: Macmillan, 1964. 234 -67. Print.

Festinger, Leon, Riecken, Henry, W and Schachter, Stanley. When Prophecy Fails.

Minneapolis: University of Minnesota Press, 1956. Print.

Festinger, Leon, Gerard, Harold B, Hymovitch, Bernard, Kelley, Harold H and Raven, Bert.

The Influence Process in the P resence of Extreme Deviates. Human Relations 5.4 (1952):

327-346. Web.

Goffman, Erving. Asylums : Essays on the Social Situation of Mental Patients and Other

Inmates. Garden City, N.Y: Anchor Books, 1961. Print.