Budget Slack And Countermeasures In Xi'An Eastern Enterprise

Budget management first emerged in the west,so far the theory and application of budget management in many countries have matured.In the early 1990 s,budget management has be introduced into China and has been practiced for more than 20 years.As a effective management system,it's an effective way to manage and evaluate enterprise performance,which has been widely used in the whole management of enterprise.Compared with general business,the budget slack problem in state-owned business is much worse due to its property and politics features,and its special complicated hierarchical organization.As my study object,Xi'An eastern enterprise is a large state-owned enterprise under the Chinese Ordnance Industry Enterprise Group Company.At the beginning of the implementation of budget management,the enterprise did achieve some results such as the reduction of business risk and financial risk;the enhancement of cooperation and communication between each department;the establishment of standard business performance evaluation;the reinforcement of internal control.But at the same time,there are also many problems which cause the budget management didn't fully enhance the enterprise,and the budget slack is one of the worst problem,which is shown as the methodology is out of date;the budget of second level units is shrunk;the budget information is false and the budget assessment doesn't do well.Budget slack is a widespread problem in modern enterprises,which causes series bad economic results,departs budget management away from budget object,and affects long-term survival and future development.Those reasons which cause budget slack is the key point for enterprises to prevent budget slack,and this paper will also start from those reasons.This paper will review those Chinese and foreign research results on budget slack and analyze those three reasons causing budget slack: asymmetric information between the managements,uncertainty of external environment and ratchet effect.Based on Principal-agent Theory,Contingency Theory Behavioral Science,and combine the whole budgeting process of Xi'An eastern enterprise,this paper will also investigate the reasons of budget slack and discuss countermeasures by studying the successful implementation of budget management Chinese Ordnance Industry Enterprise Group Company to reverse loss and profit,In 2000,Xi'An eastern enterprise started targeted reform by analyzing the reasons of budget slack,they did many significant trials to control budget slack and achieve some success from four aspects;to improve enterprisebudget conscious;to improve budget management system;to improve budgeting accuracy and to enhance efforts to control budget.