Ineffective cost budgeting process at Phuc Dat land joint stock company

Abstract

As the economy dramatically grows up, companies are competing fiercely to survive and contribute to that development. Generating revenue is always an important issue in business plans that every entrepreneur pays much attention to aim at maximizing profits. However, nowadays, cost management also plays an important role in the business and budget has become a necessary activity of any organization for the purpose of well-controlled expenses to maximize its benefits. Without a proper budget, a business can hardly keep track of how much it has earned and how much it has spent to meet its shareholders’ expectations related to profits and the organization’s goals. This thesis aims to explore the causes of significant variance between budget and actual financial results in 2015, 2016 and the late completion of budget in 2017 at Phuc Dat Land Joint Stock Company (“the Company”). In-depth interviews were conducted to generate the understandings from highly responsible positions about budgeting at the Company and figure out the central problem related to Budgeting. The findings of this study revealed that ineffective cost budgeting process tends to play a significant issue in the matter of budget engagement and leads to the difficulties in finalizing budget on target timeline. The findings are discussed in details in the research along with some recommendations for the company and management to improve the budgeting process and cost management ability to get better results which directly affects departments’ performances evaluation and the whole company’s in general.