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3.5 Limitation Of Budgeting

Inspite of the above advantages, budgeting has the following limitations:

a) Forecasting, planning or budgeting is not an exact science and a certain amount of judgement is present in any budgeting plan.

b) The basic requirement for the success of budgeting is the absolute support and enthusian provided by the top management. If it is lacking at any time, the whole system will collapse.

c) Budgeting should be followed up by effective control action, this is often lacking in many organisations, which defeats the very purpose of budgeting.

d) The installation of budgeting system is an elaborate process and it takes time.

e) It requires the experienced man-power, technical staff, analysis, control etc, hence, it is costly affair.

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