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Budget Management Analysis

Budget Management Analysis
Rowena Ombrosa
February 3, 2014
Budget Management Analysis
In today’s economic issues, budget management has always been a challenge. Budget management plays a significant role in every company’s success, in the business. Few decades ago, budgeting was not a concern of mostly healthcare executives. Now, it is always the opposite. Most healthcare businesses nowadays “develop and use budgets as an integral part of their overall management control process” (Cleverly, Song, Cleverly, 2011, p. 356). According to a recent survey of accounting firms, over 50% reported that mostly small businesses were found to have discrepancies in their accounting records. Budget as define by Cleverly et al. is an expression of a quantifiable plan of actions. Budgeting control is highly important to ensure that the company’s resources are efficiently and effectively used while accomplishing the goals of the business.
Cleverly et al. highly emphasized that effectiveness and efficiency will determine the failure or success of management control. An operation that is well-managed should be both efficient and effective at the same time. Between the two, efficiency is easier to measure because it just simply represents the relationships between the outputs and inputs. For example, if the hospital charges $1, 200 as cost per patient per day “it tells how many resources, or inputs, used to provide one day of care, the measure of output” (Cleverly, et al., 2011, p. 357). Effectiveness on this matter measures the relationships between the goals or objectives of the business and the outputs. For many, it does not mean that having enough resources to budget implies success of the company. According to Cohen and Eimicke (2002) lack of funding can pose a negative result in the business plan, but enough funding as well does not guarantee success in the budget management. Therefore, the resources management lies on the abilities and skills of the leaders…


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