Comprehensive budget management system with Chinese characteristics


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Research Proposal

The problems and countermeasures in the process of developing the comprehensive budget management system with Chinese characteristics

5th January 2014

Word Count: 2026 Words

Brief Content



Background literature……………………………………………………………. .4

Research methodology……………………………………………………………..6

Discussion and Analysis…………………………………………………………….7



Reference ……………………………………………………………………..11


As an advanced management mode with budget as an instrument, comprehensive budget management is widely applied abroad. But the native corporations get into many problems in the process of the practical application. The article will talk about the problems and countermeasures in the process of developing the comprehensive budget management system with Chinese characteristics.

Key words—budget; comprehensive budget management; Chinese characteristics


After china joined the WTO, it brings new hope and opportunities for the native enterprises. In order to manage and control effectively enterprises and avoiding the companies will be hard to grow stably and coordinately, so managers urgently need a scientific and effective management method for project and guide the enterprises’ business activities. With the introduction of a comprehensive budget management from the western accounting theory, and carried out a theoretical research and practical applications. The comprehensive budget is a kind of management method that linked the concept of enterprise, Development goals and the Strategy and operation of the enterprise together (Huang Yan, 2010).

Comprehensive budget management is one of successful business experience accumulated in developed countries, but many problems arise in the practical application of native enterprises. The reasons, one side is caused by the corporate management infrastructure, the budget’s publicity and attention and so on. The other hand is the result of the concept of budget management is still not clear, and failed to follow the scientific rational approach in the budget process.

The research of this subject will use the theory and practice of Western comprehensive budget management for reference; and doing a more deeply and systematic research for comprehensive budget management with the actual situation of Chinese enterprises’ business environment. The aim of the research is talk about the Problems and Countermeasures during the process of building a comprehensive budget management system to adapt the requirement of Chinese enterprises.

Background literature:

Budget derived from the French word ‘Bougette’, it means Leather Bag or briefcase. In the nineteenth century, the British Chancellor of Exchequer has a habit that he often opens his briefcase in the front of lawmakers, when he proposed the tax demand of the next year. Therefore, the meaning of the Chancellor of Exchequer’s briefcase means the tax budgeted amount in the next year. In the 1870s, the word ‘Budget’ formally appears on the Chancellor of the Exchequer official documents which is the original source of the budget.

Comprehensive budget management is a method of internal control, this method since the last century, 20 years in the U.S., General Electric, DuPont, General Motors and other companies after being elected, quickly became a large industrial and commercial enterprise standard operating procedures, from the initial The plan, coordinated Development of both to the current control, motivation, evaluation and other functions for the implementation of an integrated business strategy, management system, comprehensive budget management has been at the core of internal controls.

During the planned economy period, based on the native budget system, the enterprse production, sale and all are included in the financial budget, operating under the national system of planned economy. Although the enterprise budget management has developed in recent years, but this budget mechanism become integrated with the financial budget, the enterprise budget is just the components of the state financial budget management. The enterprise budget has not formed an independent and complete budget management system.

After the 1950s, some native companies began to implement quota management. In the 1960s, some corporate promoted the management accounting in a team. In the 1980s, the responsibility accounting system, the economic responsibility system, Total Quality Management, Market forecast and Target management was launched. These management methods have played a positive role for corporate governance.

After china joined in the World Trade Organization, the native economy is merging into the world economic system and international competition, so the comprehensive budget management is given unprecedented concern. Although, the theory of comprehensive budget management was widely recognized and it was used into the practical Application stage, but there are many problems in the practical application process.

In the journal of "Liaoning economy", Haiying Ding (2008) points out that some companies think the budget planning belongs to the pure financial behavior and relying solely on the financial department to make the budget planning. The behavior is a kind of “made behind closed doors”. He believes that the implementation of budget management lacked the authority and seriousness; adjusting the budget process is not standardized or going through the motions, resulting in the poor implementation of the budget management.

In the journal of "Digest of Management Science", Xinhua Song and Man-Chi (2005) consider that turn the comprehensive budget of the finance department into the overall budget of the entire personnel by the change of concept. Enterprises should set up a dedicated budget and management committee (BMC) to ensure democratic and reasonable budget from organizational aspects.

According to the journal of "financial sector", Yuling Wang (2010) believes that Enterprises should establish a strong overall budget management organization to manage and implement the comprehensive budget management. Scientific evaluation system will ensure the effective implementation of comprehensive budget management.

All in all, it is a big challenges that to achieve the desired enhancement of enterprise's management level and strengthen their internal control of the purpose for Chinese enterprises.

Research methodology:

Quantitative analysis is used in research by find the answers to questions that can be measured. Qualitative research is based on the assumption that economic actors, being human beings, are susceptible to acting on factors that may not directly correlate with facts.

Qualitative analysis and quantitative analysis should be unified, balance each other; Qualitative analysis is the basic premise of quantitative analysis, quantitative analysis is blind and no value without qualitative analysis; Quantitative analysis makes qualitative analysis is more scientific and accurate, and it can make qualitative analysis to get broad and deep conclusion. This article will combine qualitative analysis and quantitative analysis to analysis the problems and countermeasures in the process of developing the comprehensive budget management system. In this research, I will use online survey, telephone interviewing and sample interviewing methods to collect the date and theory for support the view points.

According to the collection date, I will set up 3 kinds of modes. They are Activity Based Costing, Activity Based Management and Participational Budgeting.

Activity based costing (ABC) assigns manufacturing overhead costs to products in a more logical manner than the traditional approach of simply allocating costs on the basis of machine hours.

Activity-based management (ABM) is “a method of internal analysis that identifies business activities within a company and evaluates them based on the costs incurred by the activities and the value added by the activities” (Jim Wilkinson, 2013). Activity-based management focuses on managing activities to reduce costs and improve customer value.

Participative Budgeting (PB) is the situation in which budgets are designed and set after input from subordinate managers, instead of merely being imposed.

Discussion and Analysis:

Comprehensive budget as the overall planning for the future production and business activities, not only to effectively adjust the work of various departments, but also improve operating performance evaluation of various departments.

The implementation of comprehensive budget is the process of the overall corporate strategic goal break up into the several of departments' goals, so that all departments define their objectives and tasks. The compilation of comprehensive budget makes the department managers to realize the relationship between the departments and the overall corporate. The establishing of comprehensive budget management system is able to accurately measure the revenue, costs, expense index for the enterprise proprietors. In the unified operation volume level, comparing the budget value with the actual value though the methods of budget adjustment and flexible budget.

The implementation of comprehensive budget management is very effective that reducing business projects risk and financial risk, reducing project costs and improving economic efficiency of enterprises, but the effectiveness of the budget management implementation is not satisfactory. According to analysis cases and research, the reason involves some subjective and objective problems. This article will make a brief analysis for 4 questions.

(A) Do not have a clearly understanding for the comprehensive budget

Comprehensive budget has overall characteristics, although the enterprise managers put more emphasis on the implementation of the overall budget, but the most of the staff do not have a well understanding and recognizing for the connotation of the overall budget. Staff regards the implementation of the overall budget as a superior command. In addition, lacking of trust between enterprise and employees, so this make the specific budget was limited between senior managers. This kind of budget did not get all employee participation; it may be unreasonable and wastes human, physical and financial resources. It will not reach the target of comprehensive budget management, seriously influence the enterprise management level and hinder the growth & development of enterprises.

(B) The lack of effective overall budget organization

Scientific and rational overall budget organization is an important guarantee for the implementation of comprehensive budget, but many companies do not establish effective overall budget organization, and some corporate managers positioned the "overall budget” as the “Financial Budget ".

(C) The overlook of market research and forecasting

The vagaries of the current market situation, the native enterprises suffered from the impact of domestic and foreign market, the space of competition is getting smaller and smaller. Some companies do not have the attention to do a budget; some companies have fear emotions for the budget, this makes the budget planning to suffer a big limitation.

(D) The control and evaluation mechanism of comprehensive budget is not perfect

Carrying out the all-side budget management is necessary for budget restrictive and incentive. The budget target as a kind of standard of performance evaluation provides the useful gist. But there are many problems in the process of assessment, such as: the assessment content is not specific; the standard of assessment is arbitrary and so on.

In order to solve these problems, this article will put forward some countermeasures around the questions according to the current situation of Chinese enterprises.


In short, the implementation of a comprehensive budget management makes managers can manage business by the financial management method, the budget management throughout the whole process of economic activities. In accordance with the rules of market economy, the comprehensive budget management can adjust the long-term strategic goals; short-term business planning and develop timely business policy & strategy. Many problems appeared during the process of comprehensive budget, thus the article will do a research and talk about the problems and countermeasures in the process of developing the comprehensive budget management system with Chinese characteristics. I hope that the research will be useful for the development of comprehensive budget management at least on the most superficial level.





Comprehensive budget management Conduct the literature search


Conduct the literature search


Research the information from the website and library


Write a draft of literature review


Design the frame


Begin research methods, conduct case studies


Interview, prepare the questions


Choose the data collection method and collect data, then analysis these data and get the results


First Draft




Final Draft






  1. Huang Yan, “Research on Comprehensive Budget Management for Enterprises,” Enterprise Economy, 2010(9), pp. 42-44.
  2. Haiying Ding, “Analysis of the overall budget management,” Liaoning Economy, 2008(08).
  3. Xinhua Song and Man-Chi, “The Enterprise budget management and countermeasures ", Digest of Management Science, 2005(05).
  4. Yuling Wang, “The analysis and strategy of Enterprise comprehensive budget management problem”, Financial sector, 2010(14).
  5. Jim Wilkinson. (August 11, 2013). WikiCFO

Available at:

Accessed: 01/1/2014

  1. “Participative Budgeting in Mangerial Accounting”, StudyMode

Available at:

Accessed: 03/1/2014

  1. Comprehensivebudgetmanagementtoolsandenterprisemanagementlevel

Available at:

Accessed: 08/1/2014

  1. Cooper, D. R., & Schindler, P. S. (2006). Business Research Methods (th ed.). New York, NY: McGraw-Hill.

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