Practice questions: Behavioural Budgeting
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Practice questions: Behavioural Budgeting

Practice questions: Behavioural Budgeting


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One purpose of management accounting is to influence managers’ behaviour so that their resulting actions will yield a maximum benefit to the employing organisation. In the context of this objective, you are required to discuss:

  • How budgets can cause behavioural conflict.
  • How this behavioural conflict may be overcome.
  • The importance of the feedback of information; and
  • The purpose of goal congruence.



The Budget is said to be a pressure device, used by management to force ‘lazy’ employees to work harder. The intention of such pressure is to improve performance, but the unfavourable reactions of subordinates against it seems to be at the core of the budget problem (Argyris).

Discuss this in relation to the statement that ‘Budgets are devices for oppressing subordinates’.



Management Accounting is till regarded as a technical subject, requiring technical skills, with behavioural and social aspects having some relevance as ‘trimmings on top of a rather substantial accounting edifice’. (Hopwood, Accounting and Human Behaviour, 1974).

Discuss this in relation to how far you think that accounting systems should consider behavioural aspects.



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