Budgets: We have home budgets but unless you are that different, I can't make it work. In your business or in your personal life, how have you seen Budgets workout.

How and why?

Respond to two class members regarding something in their response that surprised you or for which you want to share with them a similar experience and have a reference or citation for it, include it.

Five,
Core Value: Integrity
In the light of the Core Value of Integrity, consider management’s responsibility when it comes to estimates in the creation of budgets. Describe the incentives management has to misrepresent these estimates. Discuss controls/ procedures that may be put in place to prevent misrepresentation of these estimates.

1, In ethics, integrity is regarded as the honesty and truthfulness or accuracy of one's action. Managers should be honest and objective when creating budgets. The misstatements in budgets may mislead the top management about the true profit potential of the company, which leads to inefficient resource planning and allocation and poor coordination of activities across different parts of the company. When the difference between budget amounts and actual results are used to evaluate performances, management may underestimate budget revenues, or overestimate budget costs to make budget targets more easily achievable. This behavior results in budgetary slack. Another incentive management has to misrepresent the estimates is related to bonus. Some plant managers understate the productivity potential of their plant to increase the likelihood of meeting next year's production bonus targets.

To prevent such misrepresentation of these estimates, companies may use budgets primarily for planning purpose, but not evaluation purpose. To prevent manager from understating the productivity, companies can base part of the manager's bonus on his plant's