Perceived Purposes of Budgets in Organizations in a Developing Country

Abstract

The main objective of this paper is to explore the perceptions which Ghanaian managers have of the purposes which budgets serve in organizations. The paper draws upon previous research concerning the link between budgets and decision-making in the developing world. The findings of these studies suggest that budgets are minimally used and inadequately understood. The data employed in this paper is of a qualitative nature drawn from four large-scale organizations by way of discussions, semi-structured interviews plus documentary evidence. The paradox of the findings is that whilst most managers perceived the major roles of budgets to be planning and control, in fact, budgets are largely ignored. Among the reasons stated for this include the high inflation in the country, lack of money in the organizations, managers' lack of adequate accounting knowledge, and untimely and inappropriate presentation of budget variance reports. The paper concludes with some consideration of the ways in which the budget can be a more effective management tool.

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