Question: The typical budgetary control system in practice does not encourage goal congruence, contains budgetary slack, ignores the aspiration levels of participants and attempts to control

The typical budgetary control system in practice does not encourage goal congruence, contains budgetary slack, ignores the aspiration levels of participants and attempts to control operations by feedback, when feedforward is likely to be more effective; in summary the typical budgetary control system is likely to have dysfunctional effects. You are required to

(a) explain briefly each of the terms in italics; (6 marks)

(b) describe how the major dysfunctional effects of budgeting could be avoided. (11 marks) (Total 17 marks) CIMA

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