ABSTRACT
There is a regular flow of written information within every budget system. This has been one of the objects of an earlier study by Simon et al. The conclusions of this earlier study deal with the use of figures by line management. They also deal with decentralization of account structures. My results confirm Simon’s results about the importance of person-to-person relationships for the use of figures, but more of the relationships within the line than of those between staff and line. My study also confirms the importance of decentralization of account structures. It investigates the practical advantages and disadvantages of ‘full profit centers’ vs. ‘expense centers’, and the importance of the choice of the types of budget and cost variances that are reported.
Feedback information can be classified along different lines; two such classifications are given. Actual knowledge of figures by line interviewees was measured and their scores can be shown to be correlated with other aspects of the budget system. The people who are more recent in their job and younger have the best ready knowledge of performance and standards data. There appears to be much over-information in actual practice, which diminishes the impact of more important data. The question of whether foremen should receive financial information is considered. Finally, this chapter shows what was found with 200regard to the accuracy, understandability and timeliness of feedback information. All these factors can, if missing, spoil an information system, but only the person-to-person communication that goes with it can make it succeed.
