Budgeting and responsibility accounting

This chapter focuses on responsibility accounting and budgeting. The underlying theme of these two topics is organisational control. Responsibility accounting involves sub-dividing an organisation into units of accountability. It is fundamental to control, as it involves holding managers accountable for the performance of their respective units. Closely associated with responsibility accounting is budgeting. This is because budgeting involves allocating resources to an organisation’s sub-units. In addition, the budget highlights benchmarks that are used when appraising a unit manager’s performance.