M5A1: Discussion—Working with Budgets.

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Budgets affect just about every department and every person within an organization. This tremendous impact causes people to act differently to make sure the budgets are met. One common way of doing this is to pad budgets. However, this makes the prepared budget less useful, as it is not an accurate representation of the company. A company can ensure the accuracy of budgets by involving employees throughout the organization in creating the budgets. This process, referred to as participative budgeting, makes employees feel more involved, and they are likely to be more willing to stick to and follow the budget.   Budgeting can be a very time-consuming task, but it is necessary if a company is to maintain business for the long term. Most companies have a budget director who is in charge of budgeting to keep everything organized. Organizations will also have a budget committee made up of senior executives who help advise the budget director. It helps to have people who are familiar with budgeting involved, as this makes the process run smoother.