Towards a Methatheory of Budgeting

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Top-down budgeting is listed in Towards a Metatheory of Budgeting as a normative theory of budgeting. Normative theories are defined as complete theories of budgeting that incorporate the budget, appropriations, preparation, and decision events. Normative theories are not intended to describe what occurs in the budgeting process but prescribe considerations for future implementation as a best practice (Williams & Calabrese, 2011). However, with the evolution of organizational complexity, top-down budgeting has become a positive theory. Positive theories explain an observation of the budgeting process and attempt to analyze why that behavior exists as an aspect of organizational culture (Williams & Calabrese, 2011). Top-down budgeting is not a desired best practice and therefore not a normative theory, because the methodology does not include key stakeholders in decision making. Top-down budgeting is used as a way to save time, centralize decision making, and limit the amount of controls given to lower levels of the organization. As organizations become flatter and remove excessive layers of management to become more nimble, the centralization of budget decisions has evolved (George, 2012). The traditional top-down budgeting approach is dated. Under the category of positive theory, top-down budgeting is a descriptive theory that explains an aspect of the budgeting process. It is an observation of practice. In an evolved definition, decisions from leadership are not the end of a process. Instead, they are a factor considered in the decisions for a final budget and department goals.
Top-down budgeting is also explanatory, as there is a description to how and why the budgetary behavior exists. According to Business Knowledge Source, ...

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...g - An Instrument to Strengthen Budget Management* | ASIP Asociación Internacional de Presupuesto Público. Retrieved January 19, 2014, from http://www.asip.org.ar/en/content/top-down-budgeting-instrument-strengthen-budget-management

National Priorities Project. (n.d.). National Priorities Project. Retrieved February 27, 2014, from http://nationalpriorities.org/budget-basics/federal-budget-101/federal-budget-process/ Ryan, P. (2011, December 7). A Brief History of Budgeting in the Nation's Capital. The Federal
Budget Process. Retrieved February 25, 2014, from http://budget.house.gov/uploaded files/bphr

Kavanagh, S. C. (2011). Zero Base Budgeting Modern Experiences and Current Perspectives.
Chicago, Illinois: Government Finance Officers Association.

Williams, D., & Calabrese, T. (2013). Towards a Metatheory of Budgeting. Economists
International , 1, 178-207.

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