Abstract
Effective budgeting makes significant contributions towards enhancing the efficiency of execution of organizational functions, implying that improper budget can jeopardize the achievement of the goals and objectives of the organization. In addition, excellent budgeting processes should match the business needs of the organization. The basic implication that can be derived from this is that an effective systematic budgeting process is influenced by the core concepts of planning and control, which can help in value creation for the organization. In addition, excellent budgeting functions as a framework for organizational planning and control and resource allocation, whereby the organizational goals and objectives are represented quantitatively in financial terms. The paper aimed at critically evaluating the following assertions: 1) an excellent budget process is the ability to convert objectives and goal into data. 2) Finding the resources to implement the budget calls for extensive use of human resources and involves correct perceptions of individual roles and communication plays an important role. The paper also discussed the differences between communication flows when the budgeting process is imposed or participatory. It was summed up that an excellent budget plays an integral in the achievement of organizational goals and adjectives, which implies that excellent budgeting has the ability of transforming the organizational goals and objectives into data. It was also established that the effective implementation of the budget requires the extensive deployment of human resources, which is attained through correct perceptions of the individual roles and the role that communication plays in the formation of an excellent budget.

Table of Contents
Introduction 4
An excellent budget process is the ability to convert objectives and goal into data 5
Goals 5
Performance objectives and budgeting 5
Integration and coordination during the budgeting process 6
Finding the resources to implement the budget calls for extensive use of human resources and involves correct perceptions of individual roles and communication plays an important role 8
The differences between the communication flows when the budgeting process is imposed or participatory 11
Conclusion 13
References 14

The test of an excellent budget is the ability to convert objectives and goals into data
Introduction
A budget is defined as the quantitative allocation of organizational resources for particular operations and plans for a forthcoming time. They usually serve as the financial blueprint for the company basing on its goals and objectives. The success of the budget is evaluated in terms of its facilitation of the realization of the established goals and objectives during the budgeting process (Brigham & Ehrhardt, 2011). Effective budgeting makes significant contributions towards enhancing the efficiency of execution of organizational functions, implying that improper budget can jeopardize the achievement of the goals and objectives of the organization. In addition, excellent budgeting processes should match the business needs of the organization. The basic implication that can be derived from this is that an effective systematic budgeting process is influenced by the core concepts of planning and control, which can help in value creation for the organization. In addition, excellent budgeting functions as a framework for organizational planning and control, whereby the organizational goals and objectives are represented quantitatively in financial terms. The formulated plans are used in the course of the business period, whereby the actual outcomes are compared with the anticipated results outlined in the budget (Deegan & Unerman, 2005). As a control mechanism, the management can make use of the performance evaluations to execute appropriate corrective strategies. The role of excellent budgeting is best understood in the context of the five core functions of management including planning, staffing, organizing, controlling and directing. Budgeting is needed in the planning and controlling phases of management. In the light of this view, finding the resources required to implement the budget requires the extensive use of human resources and entails correct perceptions of individual roles an communication plays an important role in the budgeting operations, whether it is imposed or participatory. The main purpose of this paper is to evaluate the above statement and discusses the differences between the communication flaws and when the budgeting process is imposed or participatory (Eddie & Peter, 2007).
An excellent budget process is the ability to convert objectives and goal into data
Budgeting, just like planning, is future oriented. This means that a plan indicates what the goals and objectives of the organization at some point in the future. Organizations usually have some variables that it should control, which may include the financial resources, the production methods, human resources and organizational assets. Forecasts and planning are an important aspect of the planning process that takes into consideration the external factors affecting the business operations, which the organization has no control of. Such variables include actions undertaken by the government, the spending habits of the consumers, the interest rates and the strategies adopted by the competitors (Gibson, 2010). Owing to the fact that the management of the organization is not in a capacity to influence the external factors, its planning and budgeting should be confined within the controllable variables. This implies that planning entails what the organization is going to do in relation to the variables that it has the capacity to control. The management of an organization can use excellent budgeting to aid the planning process (Gibson, 2010).
Goals
The establishment of goals is an initial step in the planning and budgeting process. The organizational goals are diverse and can include increasing profitability and returns on investment, competitive advantage, increasing the market share and so on. There are different levels of goals that an organization can adopt including the general goals, which are considered to be directional and can include strategies for growth, adopting a low cost strategy and quality leadership. Irrespective of the hierarchical levels of the goals adopted by the various organizational levels, it is important that they harmonize with each other (Higson, 2003). Excellent budgeting should aim at ensuring the goals adopted by the organization are attained in the long term; this is due to the fact budgeting facilitates effective resource allocation to the organizational goals that are of priority depending on the hierarchy of the goals at the various levels within the organization (Higson, 2003).
Performance objectives and budgeting
Performance objectives are considered as targets adopted by the organization. It is important to note that performance objectives are measurable, action-oriented and specific, implying that they have a time dimension. Excellent budgeting can help the management of an organization to formalize its goals and the performance objectives in financial terms for a given time duration (Horngren, 2003). Excellent budgeting processes require the organizational management to outline its plans within a common denominator. For example, the plans adopted by the marketing department will be incorporated to a sales budget and a budget for the marketing expense, which are established at the same time (Bogsnes, 2008).
Integration and coordination during the budgeting process
It is vital to take into consideration the fact that excellent budgeting coordinates all the business operations. This implies that effective budgeting serves to integrate the revenue plans, the expenditure plans, financial and asset requirements. This implies that budgeting serves to integrate all the plans of the various functional units within the organization. Coordination and integration are an important aspect of budgeting that facilitates the achievement of the organizational goals and objectives (Brigham & Ehrhardt, 2011). Effective coordination among the various functional units within the organization can help in bring their plans to correspondence with the objectives of the organization. It is for this reason that an effective budgeting process can be used to convert the established goals and objectives into real data and outcomes for the organization. This is attained by harmonizing the goals and objectives of various functional units with the organization with its overall goals (Horngren, 2003).
Excellent budgeting process entails a documentation of the assumptions and the specific plans in the budget, which a core requirement during the budgeting process. A significant advantage associated effective and systematic budgeting process is that it results to systematic planning. Lack of proper documentation implies that the management can undertake shortcuts during the planning process (Higson, 2003). In addition, documentation serves as a justification of the budget; which is usually done in a manner to reflect the organizational requirements to facilitate the achievement of the objectives of the organization. It can therefore be argued that through documentation and justification of budget, the organizational goals and objectives can be transformed into actual outcomes that are measurable (Horngren, 2003).
Excellent budgeting process also facilitates the control function of organizational management. Controlling mainly entails monitoring and evaluating the plan implementation, after which corrective action can be adopted. Owing to the fact that budgets are financial representation of the organizational plans, there are directly connected to the control function of organizational management (Jeremy & Robin, 2003). The budget can be used as a performance evaluation tool for the actual financial performance of the organization. This is achieved by a comparison of the actual performance with the budget provisions in order to measure the level of deviations, which may be used as an indicator for corrective actions, which can be modified in accordance with the goals and objectives of the organization. This is based on the view that excellent budgeting provides the management of the organization with a framework for analysis and interpreting the outcomes in order to adopt reactive strategies (Maher, 2005). It is important to take into consideration the fact effective budgeting is not a form of forecasting. Forecasting mainly entails the prediction of the outcomes of the events, which is in contrary to budgeting, which entails planning for the outcome and adopting control strategies in order to capitalize on the chances for the attainment of the desired outcomes. The effectiveness of budgeting processes requires the coordination and involvement of all management levels in order to ensure the realization of the potential benefits associated with coordination and controlling (Maher, 2005).
Excellent budgeting also makes significant contributions to the attainment of the organizational goals by providing a framework for effective strategic planning, which mainly entails planning for the future direction of the firm basing on the present state of affairs. The role of effective budgeting is that it facilitates the establishment of realistic goals for the business in accordance to the business environment (Warren & Reeve, 2011). Strategic management involves the transformation of organizational resources into elements that can enhance the performance of the organization, mostly in their external business environments. Some of the effective approaches to strategic management include the specification of the organizations vision and mission, development of well-planned policies and effective allocation of resources in order to facilitate the realization of the stipulated goals and objectives of the firm. Organizations are in dire need of strategic planning primarily because of the unpredictable trend of the global market place. Effective budgeting enhances the precision of strategy formation. . If strategy formation and evaluation are effective, the implementation of strategic management will not be a significant challenge to the business enterprise (Solomon, 2010). Strategy formation typically entails option generation, which involves the establishment possible plan of approaches. Strategic formation is a sequential process, which begins by conducting a situation analysis for the organization, an evaluation of the status for the business enterprise. Having carried an analysis, objectives are set in accordance with the long term and short term business requirements (Sid & Eric, 2003). Vision statements are also drafted, financial goals and strategic business objectives are set up. It is important that the proposed objectives put into consideration the results of situational analysis, as a result, facilitate the establishment of strategic plan. The strategic plan should outline the process of the realization of the proposed objectives. Effective budgeting also facilitates the process of strategic implementation of the plan, which entails the putting of the proposed strategic plan into action. Strategic planning depends on strategic evaluation, after the choice of effective plan of approach that clearly outlines the goals and objectives of the contemporary strategic management ( Harvard Business School, 2005).
Because of the increasing complexity of the business environment and increasing decentralization of large organizations, there is need to adopt effective controlling and planning strategies. As a result, excellent budgeting comes in handy because they are based on the guiding principles of responsibility accounting and financial reporting. The organizational budget, together with the details plans serves to document the goals and objectives of the organization. The fundamental argument is that linking the budget to the strategic planning processes serves to enhance the organizational planning effort, which is core towards the attainment of the goals and objectives of the organization. Therefore, it can be summed up that an excellent budget process is the ability to convert objectives and goal into data (Shim & Siegel, 2011).
Finding the resources to implement the budget calls for extensive use of human resources and involves correct perceptions of individual roles and communication plays an important role
In order to implement an effective budget, firms need to be selective when allocating the responsibilities of the budgeting processes. This implies that the people responsible for the budgeting process should take into account he values, strategies and plans of the organization. In addition, cost efficiency and effectiveness is required and that the knowledge of the resources required to generate the revenue for the strategic plans should be effectively allocated (Gibson, 2010). These pre-requisites are essential when making the extensive use of human resources during the budgeting process during the planning, controlling and allocation of the organizational resources. The implication of this is that organizations should make use budgeting teams that are of an optimal size in order to eliminate the potential discrepancies when forming the budgets. Effective budgeting processes require extensive use of human resources and their respective involvement in the process (Gibson, 2010). For the budgeting process to be sound, it must meet the needs of the organization, maintain a consistency with the organizational structure and take into consideration the human resources. In addition, a sound budgeting process needs the integration and cooperation of the various organizational level including the top level management, the operational management and the support of the lower level staff within the organization (Gibson, 2010).
Apart from using the human resources during budget formation, it is also important that the budget should aim at exploiting the organizational resources including the financial and human resources. Owing to the fact that the budget establishes the vision for organizational growth, the success of its execution depends on the effectiveness of the personnel in charge of its execution. Furthermore, the budget is considered as a managerial tool for the organization that can be used in foreseeing its operations and the allocation of personnel and financial resources for the completion of the business operations outlined in the budget (Roman, 2003).
Extensive use of the human resource entails the role of the management in the explaining the budget. After the approval of the final budget for the organization for every functional department within the organizations and the budget for the entire organization, they are distributed to the departmental managers. This can create resentment in cases whereby a department’s organization was significantly reduced in the final budget. In order to eliminate potential cases of resentment, which can significantly affect the commitment that departmental managers have on the goals and objectives of the organization, the top management has the responsibility of explaining the budgetary decisions and their rationalization. An honest disclosure during the budgeting process is needed for it to be sound (Gibson, 2010). Assigning responsibility is also a vital phase of the budgeting process that requires the extensive use of human resources. An effective budgeting process requires that every member of the organization has a responsibility in achieving the financial goals outlined in the budget. This is not usually simple due to the fact that there is sharing of responsibility across the various functional units and organizational levels. Such constraints to effective budgeting can be eliminated through ensuring that there is accountability for the outcomes to the levels that makes the execution of the budget effective. Each personnel involved in the execution of the budget must be aware of the manager that he/she is supposed to report to ( Harvard Business School, 2005).
Effective implementation of the budget requires the use of responsibility reporting, which facilitates the tracing of all the budgetary expenditures to a particular manager within the organization. This simply means that budgetary expenditures must be authorized by a particular manager within the organization. Responsibility reporting is analogous to the view that performance objectives must be traceable to managers within the firm. Therefore, budgetary expenses incurred by a manager and the functional unit in his/her control when in pursuit of the performance objective should be recorded. Responsibility accounting fosters responsible spending, which is directly related to the organizational structure of the firm (Deegan & Unerman, 2005).
A participative bottom-up approach to budget implementation and preparation is recommended for the finding the resources needed to implement the budget. A participative bottom up approach ensures that there is extensive use of human resources. The bottom up budgeting process starts at the operating level and is determined by the goals and objectives of the functional units. However, the goals adopted by the functional units should make significant contributions towards the attainment of the overall goals and objectives of the larger organization (Sid & Eric, 2003). Departmental managers are usually more motivated when their participation is guaranteed in the budgetary process. A wider participation ensures that the budget receives support and the underlying goals that are to be accomplished after its implementation. Budgetary decisions have to be explained to the members of the organizations through communication. In addition, a participative approach enhances the accuracy of the budget estimates, which is a core requirement in the achievements of the goals and objectives of the firm. Managers who have operational responsibility for activities outlined in the budget have a better understanding of the outcomes that can be realized and their respective costs (Shim & Siegel, 2011). In addition, this eliminates the blames directed at unrealistic goals for not achieved the expectations of the budget when that have participated in the formation of the budget. Irrespective of the involvement of the lower level managers in the implementation of the budget, the top level management must still be involved in the budgeting process in order to integrate the goals of the various functional units and ensure that that they are consistent with the goals of the larger organization. Participative bottom-up approach is needed in cases the responsibility of the organizational unit managers require innovation. This is because the managers of the functional units have comprehensive knowledge of what should be achieved, the opportunities and challenges, the resources to be allocated and the problem areas that must be addressed (Gibson, 2010).
Organizational communication plays an important role in finding the resources required for the implementation of the budget. The effectiveness of interdepartmental coordination and cooperation significantly depends on communication. In addition, communication serves to harmonize the goals and objectives of various departments to ensure that they concur with the goals and objectives of the entire organization. Organizational communication is also needed when fostering coordination among the various management levels within the organization. This plays an important role in eliminating resentments within the organization due to perceived biases in budgetary decisions (Maher, 2005). As such, the top management has the responsibility of outlining the budgetary decisions and the reasons for the choice of such decisions. It is arguably evident the effective implementation of the budget requires the extensive deployment of human resources, which is attained through correct perceptions of the individual roles and the role that communication plays in the formation of an excellent budget (Jeremy & Robin, 2003).
The differences between the communication flows when the budgeting process is imposed or participatory
There are two different approaches that organizations can deploy during the budgeting process. They include the participative bottom up and the authoritative top down approach whereby the budget is imposed (Deegan & Unerman, 2005). The participative budgeting process entails the involvement of the operational managers while the authoritative budgeting process is characterized by budgetary imposition on the lower level managers with their participation being restrained. It is important to note that the success of the budget is mainly determined by the manner in which the budget was developed. Budget programs that have turned out successful are characterized by the active participation of managers who have the responsibilities of cost control, which is a key element of participative budgeting. There is a probability that the authoritative budgets that are imposed will result to increased cases of resentments, which are significant barriers towards the attainment of cooperation and commitment that is needed to facilitate the achievement of the goals and objectives of the organization ( Harvard Business School, 2005).
Communication flows during budgeting are mainly determined by the amount of participation of the lower level managers in the budgeting process. The flow of budget data in the context of participative budgeting process starts from the lower levels of responsibility to the higher levels of management responsibility. Typical scenarios of budget data flow starts from supervisory levels of management, then to the middle management to the top management. Basically, each personnel having cost control responsibilities are supposed to develop their own budgetary estimates, after which they submit their budget estimations to the next higher management levels within the organization (Eddie & Peter, 2007). Reviews and consolidation of the budget data takes place as the budget data flows move up the higher levels of management. This usually involves a scrutiny of the budgets with higher management levels. Budget reviews serve to eliminate the potential occurrences of budget slacks, which will result to inefficiency and waste. In the context of participatory budgets, reviews are undertaken prior to the acceptance of the budgets by the top management. In addition, participative budgets ensure that all levels of the organization corporate when developing the budget. Owing to the fact that the top management is not familiar with the operational aspects of the organization, the budgeting process should rely on the data provided by the subordinates, with the top level management having a role of harmonizing the goals of the various functional units within the firm. Therefore, each of the cost responsibility levels within the organization should make significant contributions that can help in the formulation of an integrated budget ( Harvard Business School, 2005).
The top down budgetary approach is usually implemented during long term budget in circumstances whereby the organization is characterized by interdependence within the various functional units. A top down approach usually entails an imposed budgeting approach, whereby the budget data flows from the higher levels of management responsibility towards the lower levels of responsibilities. Under this approach, the different functional units are given specific performance objectives (Higson, 2003). There is a possibility that the budgets adopted by the functional units cannot ensure the achievement of the goals and objectives of the larger organization due to potential inconsistencies relating to the assumptions adopted by the different functional units. A drawback of this budgeting methodology is that the lower levels staff may not have the required to formulate effective budgets that are needed for every functional unit within the organization (Gibson, 2010). In addition, this approach to communication flows can significantly affect the motivation and commitment of managers due to the fact they are restrained from preparing the budget, rather their budgets are shaped by the budgetary requirements imposed by the top level management. This approach restrains creativity. It is vital for the budget to take into account the inputs of the affected operational managers, which are supposed to be integrated in the larger organizational budget.
Conclusion
This paper has discussed the role of excellent budgeting in transforming organizational goals and objectives into data and the differences between the communication flows in cases of imposed and participative budget. Effective budgeting makes significant contributions towards enhancing the efficiency of execution of organizational functions, implying that improper budget can jeopardize the achievement of the goals and objectives of the organization. In addition, excellent budgeting processes should match the business needs of the organization. The basic implication that can be derived from this is that an effective systematic budgeting process is influenced by the core concepts of planning and control, which can help in value creation for the organization. It is important to note that the success of the budget is mainly determined by the manner in which the budget was developed. Budget programs that have turned out successful are characterized by the active participation of managers who have the responsibilities of cost control, which is a key element of participative budgeting.

References
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