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1. Budget estimates sometimes prove to be grossly inaccurate. This renders the budgetary control system totally ineffective.
2. Budgets are of little help in handling the here-and-now problems that supervisors have. They are useful only in analyzing the past and charting the future.
3. Budgets are mostly inflexible and rigid and do not respond to internal or external environmental changes. The standards once fixed are allowed to continue for several years.
4. Since budgets are used to evaluate results, inefficient employees do not wholeheartedly cooperate with the system.
5. A budgetary control program may sometimes become very cumbersome and unduly expensive.
6. A good manager is discouraged from taking initiative and undertaking activities for which provision has not been made in the budget, even though they are useful for the enterprise. On the other hand, a bad manager can hide his inefficiency behind the budget. This is because the budgets have a way of growing from precedent. An amount once spent becomes a floor for future budgets. Managers ask much more than they need.
Kavungya answered the question on March 27, 2019 at 05:46
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