Analysis and Evaluation of the Budgeting System: Evidence from Iran

Abstract

Purpose - This paper aims to study the budgeting system in a lighting manufacturing company in Iranian automotive industry. The paper also aims to suggest effective methods to improve the budgeting system. Design/methodology/approach - The paper implemented a case study method and used the interviews to collect the data (i.e. primary data). Findings - The paper found that the current system being used for budgeting is not efficient due to the major variances between actual and planned budget. Research limitations/implications - The paper has implemented a case study method. Nevertheless, it provides evidence on the status of the budgeting systems that IC information is useful for decision making purposes. Future research on this issue may use a questionnaire method to include more samples. Practical implications - The finding of the paper reveals important weakness that the budgeting system has. This finding can be considered very useful as it highlights that the system is suffered from the efficiency issue. Thus companies try to improve the system by implementing some effective methods such as formation of a budget committee, preparation of the cash budget, in order to increase the efficiency of the system. Originality/value - The paper can be considered as the first empirical study to evaluate the budgeting system in the lighting manufacturing company in the Iranian automotive industry. Paper type - Research paper.