Budgeting as a Means of Manangment Control System: The Case of Ethiopian Privaet Banks
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Date
2022-12-07
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A.A.U
Abstract
Management control systems (MCS) include techniques and mechanisms which organizations use to pursue objectives, accomplish goals and successfully pursue strategies. One of the Management control systems techniques and mechanisms is budget. Budget help to integrate, motivate, support in decision making, communicate objectives, give feedback and so much more in the organization. The researcher studied on budgeting as a means of management control system: The Case of Ethiopian private bank. The objective of the study was to study whether budget serves as means of management control system in Ethiopian private banks. The descriptive research design was used. The data was collected using structured questionnaire from 122 respondents of the staff of 12 private commercial banks of Ethiopia. The data was analyzed using SPSS. The study overviews the overall budgeting process in light of Management control systems of the bank. The study revealed that Budgeting system of the banks have problems/challenges in aligned with its strategic objective, and helps to fine Tune the long term plan to annual plan, the budget indicates performance parameters in a clearly measurable way, Budgeting process insisted the communication & learning process of different business units, Budgeting not focus on cross-functional core processes rather than isolated departmental and business unit performance, there are multidimensional performance measurement systems, that Budgeted performance linked with rewards and compensation system of the banks, the budget target did not fully comply with some of the attribute that help to use for motivational purpose. Finally, the study recommended the banks strategies should influences the adoption and implementation of budgeting system of the banks, Business unit should be accountable which they have no direct Control to empower them to influence the behaviors of other with direct control, The budget should be interactive and flexible tool that are able to cope with new environmental scenarios which stimulating the employee commitment.