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The biggest limitation of traditional budgeting system is that it focuses primarily on expenses, paying little attention to the results obtained as a result of the expenses incurred. Thus in the above example, the marketing manager may fail to cash on an opportunity to sell more by increasing the travelling of his sales-persons because that will lead to the travel expenditure exceeding the budget.

The emphasis on input cost to the inclusion of the consideration of results obtained makes budgeting quite meaningless when the level of operations are very much fluctuating. For example, production cost in any company are closely linked to the level of production. Therefore, a rigid budget, that fails to take into consideration the level of production can become quite inappropriate as planing or controlling tool.

Another common problem of budgeting system is related to the way budgets are finalised. In many organizations the budgets are often prepared on the basis of past performance rather than the future requirements. This tends to create a false feeling of planned working, when in reality the organization is only drifting along with the flow of past trends.

There have been many attempts to overcome the limitations of budgeting systems by introducing many innovations such as flexible budgeting, zero based budgeting, and performance budgeting.

Rickards (2006) believes the main purpose of budgets is to
help implement a firm’s strategy, not just controlling and planning. The changes in the economic environment and business processes led to evolutions in budgeting. From the initial cash budgets to more modern techniques of zero based budgeting (ZBB) and activity based budgeting (ABB).From the initial cash budgets to more modern techniques of zero based budgeting (ZBB) and activity based budgeting (ABB).

III. Criticisms of Traditional Budgeting
The traditional budgeting methods are considered too time consuming and unresponsive to external changes. According to a research by Neely et al. (2003) the budget creation uses 20% of management time. Following on from this, Bartram (2006) found that even the leanest and most efficient companies take 79 days to organise their budgets, whilst 210 days are spent in the worst practice companies. This is a considerable amount to time for a firm to spend on an activity that arguably adds no value to the business. The budget culture has restricted the ability for a firm to reshape into a modern business because the budgets reign and contain management behaviours into old

paradigms (Hope and Fraser, 1997). In today’s environment the traditional systems of frequently found to be an obstacle to innovation and enterprise by management (Daum, .

Budgets lack strategic focus and value creation,
instead the aim is always cost reductions. The bureaucratic style restricts flexibility which in turn impacts a firm’s creative instincts. Annual budgeting is too infrequent therefore feeding into the unresponsive argument. Employees may not react well to having controls forced onto them thus having the potential to de-motivate. Also the top down style of budgets strengthens vertical command structures, which can lack adaptability and responsiveness. Working to budgets can cause dysfunctional behaviour as managers are often under pressure to meet targets, this behaviour is also known as budget games

Beyond Budgeting promotes the most ideal characteristics of a budgeting system; flexibility, coordination and responsiveness (Pilkington & Crowther, 2007). It is not just another system of tools; it requires a complete overhaul of the organisations culture and a shift in the management style Hope & Fraser (2003) believe the limitations of traditional budgetary systems require businesses to abandon budgeting altogether and instead focus on financial and non financial measures. The process should look to external benchmarks and competitors rather than internally set targets....
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