Article Critique about an assessment on budgetary controls in the developing economy PDF

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UNIVERSITY OF SAN JOSE- RECOLETOSMagallanes Street, 6000, Cebu City, PhilippinesARTICLE CRITIQUETITLE: AN ASSESSMENT OF BUDGETING AND BUDGETARY CONTROLSAMONG SMALL AND MEDIUM-SIZED ENTERPRISES: EVIDENCEFROM A DEVELOPING ECONOMYACCTG 501 l Accounting Research Methods (3140)Department : Accounting and...

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UNIVERSITY OF SAN JOSE- RECOLETOS Magallanes Street, 6000, Cebu City, Philippines

ARTICLE CRITIQUE TITLE: AN ASSESSMENT OF BUDGETING AND BUDGETARY CONTROLS AMONG SMALL AND MEDIUM-SIZED ENTERPRISES: EVIDENCE FROM A DEVELOPING ECONOMY

ACCTG 501 l Accounting Research Methods (3140) Department Degree Program A.Y. and Semester Name Instructor

: Accounting and Finance : Bachelor of Science in Management Accounting - 4 : 2021-2022, 1st Semester : Eab D. Rondina : Miss Sarah Balisacan, CPA

Article Critique Budgets are important to SMEs because they provide future-oriented information which facilitates monitoring and control of business performance (Hallsworth, 2015, p.1). They do so by highlighting areas in which actual performance deviates from the budgeted (planned) performance, so that an appropriate corrective action can be taken (Akande & Oluwaseun, 2014, p. 62). In their March 2021 article "An assessment of budgeting and budgetary controls among SMEs: Evidence from a developing economy", Mamorena Lucia Matsoso, Moses Nyathi, and Franklin A. Nakpodia examined evidence from a developing economy on budgeting and budgetary controls among SMEs. The article assesses the effectiveness and perception of budgeting and budgetary control systems among SMEs since the ability to plan, manage, and oversee small and medium-sized enterprises (SMEs) is crucial to achieving corporate objectives. Matsoso, Nyathi, and Nakpodia (2021) obtained data from 170 manufacturing SMEs in Cape Town, South Africa, using the goal-setting theory (GST) and a technique that allows for surveys. The findings of the study show that important SME stakeholders have a good opinion of the value of budgeting and budgetary constraints, which improves the implementation of budgeting. Furthermore, research results have implications for decisionmakers of SMEs, as they will be made aware of the various types of budgets and budgeting methods that are being used by other SMEs. The decision makers will also be enlightened on various uses of budgets, the perceived effectiveness of budgets and the factors that inhibit SMEs from using these tools. Despite the fact that this study focuses on manufacturing SMEs, the manufacturing budget appears to be the least used budgeting technique among these businesses. This study not only fills a vacuum in the literature on budgeting, but it also offers significant insights into how SMEs use budgets. These insights might help the government create strategies to reduce the high failure rates of these organizations in the future. The findings may also aid SMEs in assessing and reviewing their own budgeting practices in order to maximize the advantages gained from these tools while avoiding the obstacles that may prevent them from adopting budgets in the first place. The most prevalent budget used is the cash budget system. This is unsurprising given the importance of cash management to SMEs’ survival in South Africa (Aren and Sibindi, 2014; Enow and Kamala, 2016). However, while the participants were chosen from SMEs in the manufacturing sector, it's worth noting that the manufacturing budget is the least used budgeting system. Meaning that Matsoso, Nyathi, and Nakpodia (2021) did not fortunately perfectly acquire the perfect respondents for

their research. The data hint that SMEs seldom use manufacturing budgets even though study respondents were operators from SMEs in the manufacturing sector. Although this study's findings were significant, they were not without limitations. One is, due to the lack of availability of SME managers, the researchers were unable to reach the desired sample size. The nonparticipation of 215 managers and discardment of 15 returned questionnaires hampered the researchers' initial data projections. These unwanted occurrences were apparently material enough to generalize findings to the larger SMErelated participants and will possibly address their challenge of acquiring the best participants or respondents of their research paper. Also, one of the research methods used by the researchers, which is the goal-setting theory (GST) was in some part not appropriately used for the reason that it has yet to adequately integrate factors in weak institutional environments and was somehow suggested to be context irrelevant. Notwithstanding, GST still served as a theoretical anchor for studies investigating emerging phenomena (e.g. budgeting) in developing economies. One of the leading causes of Small and Medium Enterprise(SMEs) failure has been identified as inability to budget. The goal of this study is to find out how budgets are used by SMEs in Cape Town. The study's goal is to find out what sorts of budgets are utilized, what budgeting methods are used, why budgets are used, how effective budgets are regarded, and what variables influence budgeting. Budgets were also found to be beneficial, but a lack of top management backing and skilled staff were the primary obstacles preventing SMEs from adopting them. Matsoso, Nyathi, and Nakpodia (2021) shared an encouraging results of an assessment of budgeting and budgetary controls among SMEs designed for the SME stakeholders, whose initiatives to promote SMEs are widely perceived to be ineffective, that they may also draw on the findings of this research to inform its future intervention strategies, particularly relating to creating awareness on the benefits of budgets. This could be done via training meant to encourage top management buy-in on the importance of budgets in order to increase the uptake of a variety of budgets and budgeting methods which should enhance the survival rate of these entities. Overall, the research paper was successfully carried out. Matsoso, Nyathi, and Nakpodia (2021) could somehow bring it to the top if they were to exactly choose the best participants of their research since it is very necessary for the infallibility of the study and paper corners with no contrast.

Reference: Mamorena Lucia Matsoso, Moses Nyathi, & Franklin A. Nakpodia. (2021). An assessment of budgeting and budgetary controls among SMEs: Evidence from a developing economy. Journal of Accounting in Emerging Economies Authors: , 2–27. https://doi.org/10.1108/JAEE-04-2020-0082...