Determinants of Budgetary Slack Creation: A Study in Malaysian Local Authorities

Tuan Zainun Tuan Mat,Fadzlina Mohd Fahmi,Sharifah Nazatul Faiza Syed Mustapha Nazri,Sharina Tajul Urus,Nur Shahirah Adilah Mohd Sairazi

doi:10.32861/jssr.spi1.173.183

Abstract

Local authorities are responsible in allocating the resources provided by Federal Government through budget allocation process. The effectiveness and efficiency of local authorities in utilising the resources is determined by the way they manage the public funds. It is important for the local authorities to have a high degree of accountability in order to gain public trust. Managerial behavioural issues such as budgetary slack could affect the effectiveness of the budgeting process. This study aims to examine the influence of budgetary practices, specifically budget participation, budget emphasis and budget control, on the budgetary slack creation in Malaysian Local Authorities. 200 questionnaires survey were randomly distributed in January 2017 to employees that involved in budget preparation from 99 local authorities located in Peninsular Malaysia, and 109 were responded (54.5%). Hypotheses for this study were analysed using simple linear regression. Results show that budget participation, budget emphasis and budget control influence budgetary slack creation among the Malaysian local authorities. This indicates that the propensity of the subordinates to create budgetary slack increases when subordinates have influenced and involved in the budget setting as well as the use of budget in evaluating performance. High involvement and control in budgeting process, provides opportunity to manipulate the budget. The findings in this study contribute to the public sector management accounting literature in the area of budget in Malaysian local authorities. This study could assist the local authorities to enhance their budgeting system and practices.

Highlights

When we started teaching case studies in Kazan State University, the teaching materials for more advanced students were still biased towards theoretical aspects of business and law
Students at the university have become more and more aware of the importance of English to their professional careers. They have come themselves to feel the necessity of developing their professional skills, and so have their teachers, who realise that the design of any curriculum has to be student-centred
Though the pattern of a ready made case study may be followed, it is tailor made for the class

Summary

Introduction

When we started teaching case studies in Kazan State University, the teaching materials for more advanced students were still biased towards theoretical aspects of business and law. Students at the university have become more and more aware of the importance of English to their professional careers They have come themselves to feel the necessity of developing their professional skills, and so have their teachers, who realise that the design of any curriculum has to be student-centred. It has to be determined primarily by the long-term needs of the students. Students graduating from the university have to be ready to go on to the stage in their lives, join the work force and function effectively in English Since they are going to be lawyers, managers, business people, executives and so on, they will need to use English effectively in their business transactions. They must absorb information quickly, read selectively, and make decisions under pressure

Methods

Results

Conclusion