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A budget is a detailed plan of cash receipts and cash payments during a planning period which used by the business to guide management to made decisions for the future of the business.

Budgeting is an essential tool for management accounting for both planning and controlling future activity. According to the literature (Campbell, 1985; Horngren, Datar and Rajan, 2012) a traditional budget is a quantitative expression of a proposed plan of action by management for a specified period and an aid to coordinate what needs to be done to complement that plan. A traditional budgeting is usually a month by month revenue and expense forecast for the upcoming months, prepared approximately in the same time every year. Horvath and Sauter (2004) consider that the corporate budget was designed to serve three main purposes: (1) coordinate the organization’s financial activities and picture; (2) communicate financial expectations and (3) motivate managers to act in the company’s interest.As many changing factors such as economy and the business environment, many businesses have changed the traditional budgeting process to a more modern process which is more suitable for their business.

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First and foremost, the traditional budgeting process has been criticized as a cumbersome process which occupies considerable management time, especially in a poorly-organized environment where many iterations of the budget may be required. In the other hand, the time involved is lower if there is a well-designed budgeting procedure in place, employees are accustomed to the process, and the company uses budgeting software. The time requirement can be unusually large if there is a participative budgeting process in place, since such a system involves an unusually large number of employees. (Steven Bragg, 2010)For example, zero-based budgeting requires each cost elements to be specifically justified from zero based to come-out with the budgets for next year. In other words, more details would be needed to prepare a budget. The staffs need to take a lot of time in discussing, analyzing all the information to prepare a budget. When the business environment is constantly changing, the iterations of budgeting may be more complex. Moreover, when the staffs spend too much time in making a budget out, it may be a problem as the time can be used to complete other critical tasks.

Next, the traditional budgeting process is said to only concentrating mainly on short-term financial measurement. In fact, the traditional budgets are primarily concerned with the allocation of cash to specific activities, and the expected outcome of business transactions. They do not deal with more subjective issues, such as the quality of products or services provided to customers, which the customers most concerned about. Thus, the budgeting process does not support the needs of the customers.

The traditional budgeting process simply focuses on short-term and does not consider the future planning that is more than a year; therefore the managers may overlook some important aspect to take into the consideration when making a budget. Since the budget is not prepared completely, it may lead to a wrong or inappropriate decision making and have an adverse impact to the business. In this way, the business will face difficulty in continuing the business in the long term.

Therefore, positive changes need to be made in response to the criticisms to improve budgeting process. As the exercise of the budgeting process is time-consuming, the management can consider to amend another budgeting process. They may consider a new


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