APA FORMAT REQUIREDMUST BE PLAGIARISM FREE- REPORT NEEDED4 ARTICLES Attached-MUST INCLUDE ALL THE ARTICLES IN REVIEW SHEETReference Article Review Attached for your ReferencePages Required- 3-4 excluding Cover Page and referencesTopic And Articles Attached (TOPIC-Capital Budgeting/ Budgeting and Planning)GUIDELINEArticle Review Sheet GuidelinesResearch article critiques/reviews are utilized to assist the student in understanding the format of research articles and to better understand the research problem and results of the study/article. Proper APA in-text citation must be used. When critiquing/reviewing the article, please answer the following questions in your own words unless stated otherwise:1) Title/Abstract:a. State the title of this study.b. Paraphrase the key aspects of the Abstract.2) Introduction:a. Describe the general area to be studied.b. Identify a more specific problem within the general area of study.c. Describe why the problem is important to study and what is known about the problem.d. State the specific purpose of the study and the research questions.3) Literature Review:a. List the topics/headings of the Literature Review.b. How many different sources were cited in the Literature Review?c. Briefly summarize the Literature Review.4) Data Analysis:a. What methodology was used; qualitative, quantitative, mixed?b. Summarize the analysis.5) Results/Conclusion:a. Did the data analysis prove or disprove the research questions? Describe.b. Summarize the results of the studyc. Describe any theoretical or practical consequences of the results.d. Describe the limitations of the study.6) How can the results and conclusions presented in this study be applied to your particular topic?7) Please provide the reference for this article in proper APA format:


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Budgeting and Managerial Accounting
Budgeting and Managerial Accounting
Budgeting and Managerial Accounting
Budgeting is utilized all through a broad scope of organizations and is a noteworthy
accounting research topic. To advance the benefits discussion and the budgeting drawbacks,
future research on budgeting will profit from a comprehensive review of theories utilized by past
budgeting researchers. This paper pinpoints the major hypothetical perspectives and explicit
speculations used in the research just as the primary factors used and the methodologies. Even
though we locate no cohesive budgeting theory, we distinguish the significance of a unified
thought process to the budgeting research and offer perceptions for future work in the region.
Research on budgeting has a very long history in management accounting. Regardless of
its permanency, the study comes up short on a comprehensive or cohesive theory (Gibran &
Sekwat; 2009). The research grounded in theory gives opportunities for examining complex
issues while offering a corroborated and detailed explanation for the effects and causes of
empirical results. In other words, a progression of relationships is established by the theory
amongst concepts which might not be appropriately defined, permitting for insights into practical
outcomes and actions. Given the budgeting uses across the organizations and industries and the
multiple needs, the absence of an extensive hypothesis is not astounding.
The primary purpose of this study is to enlighten the researchers’ about the theoretic
advances which are made the budgeting research from different viewing points (Covaleski et al.,
2013). In this research, it also offers an account of the theories that have been adopted and have
been applied in the study of budgeting to date. Reliable with preceding literature, three major
Budgeting and Managerial Accounting
hypothetical perspectives are drawn, sociology, economics, and psychology, as a starting stage
for sorting out these theories
Secondly, it classifies and identifies explicit hypotheses in every perspective. It then
distinguishes studies which deviate from these outdated classifications and those which do not
cite a particular theory in developing expectations and predictions that surround the relationship
amid non-budgeting and budgeting constructs. Lastly, it also classifies studies which are found to
expand on the past models or other writing yet that does not refer to an explicit theory. In giving
both a comprehensive analysis of specific hypothesis, it offers insights into the studies which
examine the budgeting research from both innovative and traditional perspectives. This study
helps researchers to familiarize themselves with the theory which can direct their research in the
future and distinguish domains which have been understudied in their present disciplines of
Literature Review
The researchers acknowledged a list of seventeen journals targeted to help in guiding the
articles selected for inclusion in their review of budgeting hypothesis. These journals included
the commonly documented top 5 journals for accounting and twelve other most highly tiered
peer-reviewed journals for accounting which had published budgeting studies. In every
publication, they searched all ABI fields and databases of ProQuest utilizing the wildcard search
team budget that yielded 651 articles, of which 249 articles were categorized in the study. A total
of 355 articles were used in the broad search term, which researched the issues of budgeting and
not explicit to the research on budgeting.
Budgeting and Managerial Accounting
The remaining part of the article is as follows: the third part describes the methodology of
the research and the framework for the paper analyses this includes the survey methodology and
the experimental methodology. The fourth part the outlines the summary of the analysis and
lastly discusses it concludes the paper.
Data Analysis
Quantitative research was used in the methodology. These methodologies include:

Analytical, Archival and Experimental methodologies

Survey Methodology.
Archival, Analytical, and Experimental Methodologies
In this methodology, seventeen articles were recognized as having no major hypothetical point of
view or explicit hypothesis in the methodologies of experimental, archival, and analytical
(Arnold, 2015). Variables that were introduced were used to examine characteristics variations of
the agent or user budget or context characteristics (for example, the Machiavellianism and
control locus). For instance, the use of an approach that is literature based to analyze the impacts
of a multi-period versus the single-period setting in participative budgeting (Fisher et al., 2006).
A single-period setting was previously studied in connection to the settings of the negotiated
budget. In this study, one does not depend on a particular hypothesis but cites literature from
psychology, and prior research on budgeting in accounting to help in introducing a multi-period
setting to a set of negotiated budgets.
Budgeting and Managerial Accounting
Survey Methodology
Thirty-five papers don’t distinguish a noteworthy hypothetical point of view or explicit
hypothesis and use overview techniques to conduct the budget research (Arnold, 2015).
Numerous papers which utilize the methods of survey depend on extant literature to develop
research expectations or predictions and questions. The paper generally expands on previous
literature of examining variations or considering discrepancies in the findings that are relative to
the existing research. For instance, in the Accounting Review published by Brownell in the year
1991 analyses how the evaluative styles are influenced by control locus in the setting of a
Summary of the Literature Review
Given the comprehensive budget literature review that has been performed, the plethora
of the hypothesis applied all through the literature of budgeting has been identified. (Ahrens &
Ferry. 2015). Though most of the hypothesis can be categorized into three major hypothetical
perspectives, the explicit assumption is complex and diverse. As the researchers apply theories
from all the processes, required science field, and backgrounds, a cohesive budgeting hypothesis
still is not in existence. Notwithstanding a lack of a method which is unifying, the research
grounded as per a systematic approach results to study groups, as well as theoretical perspectives
which underpin the major management area of research in accounting.
Data analysis proved the research questions. The hypothesis establishes a progression of
relationships amid concepts which might or might not be adequately defined, permitting for
insights into pragmatic outcomes and actions. The theory also limits the range of what has been
Budgeting and Managerial Accounting
studied, introduces incongruent or competing constructs, assumptions, and definitions as well as
research methodologies of constraint. In resolving the limitations of existing literature,
theoretical insights were provided to help the research distinguish the weaknesses in existing
theory and analysis, which might result in enhancements in the study.
Researchers and managers have significantly departed from the original budgeting
concept by, offering a basis to help assign spending to once activity over the other. With this
withdrawal, it is not astounding that they used a variety of hypothesis in explaining the budgeting
role in a firm. The researchers have found that budgeting is utilized for a variety of purposes
which incorporates, controlling behaviors, planning, motivating the managers, and measuring of
failure or success. Analyzing the usual model’s form might offer insights into how budgeting
influences behaviors. Therefore, further theories development is encouraged to help in
explaining numerous budgeting uses.
Budgeting and Managerial Accounting
Ahrens, T., and L. Ferry. 2015. Newcastle city council and the grassroots: Accountability and
Budgeting under austerity. Accounting, Auditing, and Accountability Journal 28 (6):
Amans, P., A. Mazars-Chapelon, and F. Villesèque-Dubus. 2015. Budgeting in institutional
complexity: The case of performing arts organizations. Management Accounting
Research 27: 47–66.
Arnold, M. C., 2015. The effect of superiors’ exogenous constraints on budget negotiations. The
Accounting Review 90 (1): 31–57.
Covaleski, M. A., M. W. Dirsmith, and J. M. Weiss. 2013. The social construction, challenge,
and Transformation of a budgetary regime: The endogenization of welfare regulation by
institutional entrepreneurs. Accounting, Organizations, and Society 38 (5): 333–64.
Fisher, J. G., J. R. Frederickson, and S. A. Peffer. 2006. Budget negotiations in multi-period
settings. Accounting, Organizations, and Society 31 (6): 511–28.
Gibran, J. M., and A. Sekwat. 2009. Continuing the search for a theory of public budgeting.
Journal of Public Budgeting, Accounting and Financial Management 21 (4): 617–44.
OECD Journal on Budgeting
Access the journal at:
Capital budgeting and procurement practices
Philippe Burger, Ian Hawkesworth
Please cite this article as:
Burger, Philippe and Ian Hawkesworth (2013), “Capital budgeting and
procurement practices”, OECD Journal on Budgeting, Vol. 13/1.
This work is published on the responsibility of the Secretary-General of the OECD. The
opinions expressed and arguments employed herein do not necessarily reflect the official views
of the Organisation or of the governments of its member countries.
This document and any map included herein are without prejudice to the status of or
sovereignty over any territory, to the delimitation of international frontiers and boundaries and to
the name of any territory, city or area.
OECD Journal on Budgeting
Volume 2013/1
© OECD 2013
Capital budgeting and procurement
Philippe Burger and Ian Hawkesworth*
Capital investment is a key function of government. However, for a number of
reasons it has proven difficult for governments to ensure that capital investment
represents value for money, is affordable, and is budgeted and accounted for in a
prudent and transparent manner. This article discusses these challenges facing
governments. Using the findings of a survey conducted among OECD countries and
enhanced engagement countries in 2012, this article provides an overview of what
governments are doing with respect to planning and prioritisation, procurement,
construction, operation and management, monitoring and evaluation, and
budgeting and accounting for capital projects. The article concludes with a number
of recommendations for capital budgeting and procurement.
JEL classification: H400, H540, H570
Keywords: Capital investment, capital budgeting, capital projects, value for money,
budgeting systems, accounting systems, transparency, procurement, public-private
partnerships, PPPs, TIP, traditional infrastructure procurement
* Ian Hawkesworth is Head of PPPs and Capital Budgeting in the Public Governance and Territorial
Development Directorate, OECD. Philippe Burger is Professor of Economics and Head of Department
at the University of the Free State, South Africa. This article was originally presented at the annual
meeting of the OECD Network of Senior Public-Private Partnership Officials, 15-16 April 2013
(www.oecd.org/gov/budget/ppp). The opinions expressed and arguments employed in this article do
not necessarily reflect the official views of the OECD or of the governments of its member countries.
1. Introduction
Capital investment is a key function of government. However, for a number of reasons
it has proven difficult for governments to ensure that capital investment represents value
for money, is affordable, and is budgeted and accounted for in a prudent and transparent
manner. This article discusses these challenges facing governments. Ideally, the way in
which a government budgets and accounts should be neutral and should not have an
impact on its capital procurement decisions. However, this is not always the case. Using
the findings of a survey conducted among OECD countries and enhanced engagement
countries in 2012, this article provides an overview of what governments are doing with
respect to planning and prioritisation, procurement, construction, operation and
management, monitoring and evaluation, and budgeting and accounting for capital
projects. The article concludes with a number of recommendations for capital budgeting
and procurement.
Several reasons exist for a renewed focus on capital procurement. In recent years, a
rather large infrastructure gap developed in many countries, and in rapidly developing
economies infrastructure gaps are often restraining growth. Due to the effects of the
international financial crisis, many government budgets are under significant pressure,
causing some countries to curtail capital spending. With the combination of an increased
infrastructure gap and increased budgetary pressure comes the need to be more
discriminate in terms of which projects are selected. This calls for more robust capital
budgeting and procurement processes that ensure value for money, affordability and
sound budgetary treatment. In addition, some countries may face other fiscal pressures,
such as an ageing society (Penner, 2008:10), that create incentives to move transactions off
budget and off the public accounts by using public-private partnerships (PPPs) rather than
traditional infrastructure procurement (TIP). Another way to move investments off budget
is to procure via a state-owned enterprise (SOE) or government investment entity that is
classified in the public sector but outside of general government. In such cases, the
government very often also issues a guarantee on the debt issued by the SOE, which means
that the government still carries the main risk of the project while having less control over
it. Naturally, such actions do not solve long-term fiscal sustainability issues; they merely
undermine budget transparency and the relevance of budget documentation. That
governments succumb to such budgetary pressure is not new. Indeed, well before the
financial crises and using a rather comprehensive sample of countries around the world,
Hammami et al. (2006:4) show that governments with higher debt levels are more likely to
engage in PPPs. Governments can use a multiplicity of accounting devices that affect where
(i.e. on whose books) and when (in which fiscal year) transactions are recorded. A recent
paper by Irwin (2012), aptly titled “Accounting devices and fiscal illusion”, sets out the
dangers of how accounting devices can be used by governments to make government
finances look better than they actually are. Many of these devices involve capital
transactions. More often than not – since they involve the selection of procurement
methods – they really are more than mere accounting devices. They are in essence devices
that affect value for money, affordability and budget transparency.
Capital budgeting and procurement processes must be robust, and any possible
incentives that could undermine the pursuit of value for money should be minimised. Such
perverse incentives can be created by the choice of accounting rules and the definition of
the government headline budget balance. Strong oversight and review by institutions such
as the central budget authority or supreme audit institution may mitigate perverse
incentives and budget maximisation tendencies of line ministries. Furthermore, a weak
integration of the project planning and ex ante value-for-money assessment with the
budgeting process may cause projected and realised value for money to deviate.
Although value for money is a complex concept, one possible way it can be defined is
what the government judges to be an optimal combination of quality, features and price,
calculated over the whole of the project’s lifetime (for more detail, see Burger and
Hawkesworth, 2011: Appendix). Value for money entails economy, efficiency and
effectiveness, but also a political role for government to define the needs and demands of
citizens. Combining these in an assessment, the government must establish whether or
not a project represents positive value for money. Of course, the government may also
override a negative value-for-money finding and proceed with a project. However, by
frequently overriding negative value-for-money indicators that show that a project should
not proceed, there is also the possibility that the government can undermine the credibility
of using value-for-money assessments. In addition, poorly executed value-for-money tests
and very uncertain environments cause large deviations of realised value for money from
what was projected. These deviations also undermine the credibility of value-for-money
Various phases characterise the capital budgeting and procurement cycles. The
procurement cycle entails planning and prioritisation of capital projects and the
subsequent current expenditure and revenue flows that these projects generate. The
procurement cycle also includes the preparation of tenders, the vetting of bidders, contract
negotiations, awarding the contract, the construction phase, and the operational phase. In
the case of traditional infrastructure procurement, the asset might have been transferred
to the government following the completion of the construction phase, while in the case of
a PPP a private operator might operate the project and be responsible for maintenance,
management and service delivery. The government also needs to monitor and evaluate the
performance of the project, be it a traditionally procured project or a PPP.
This article seeks to establish what kind of capital budgeting practices countries follow
with respect to both PPPs and TIP projects. The former include projects where private
parties are responsible for the construction and provision of an asset delivering a
government service; the latter represent projects where the government itself carries most
of the risks with respect to the establishment and operation of the asset delivering the
government service (Burger and Hawkesworth, 2011). The article emphasises the
importance of a robust procurement cycle. If the procurement cycle lacks robustness, it
often causes the poor selection of projects, overruns of both costs and time, and poor
service delivery, and therefore results in poor value for money in general.
Based on the overview of what countries do, and drawing on the literature, the article
is organised in the following way. The volume of PPP investment and traditional
investment will be briefly touched upon (Section 3). While PPP investment is the smaller
part of total investment it appears at present to be the one that carries the most risks.
Therefore PPP investment volumes in particular merit attention. The performance of PPPs
is also much discussed. While the construction phase of PPPs is usually more successful
than that of TIP, there is still no clear general evidence with respect to whole-of-life cost.
A key issue for PPPs is the budgeting and accounting treatment (Section 4). Particular
budgeting and accounting systems may result in PPPs being categorised as either on or off
the public sector’s balance sheet and hence whether they affect the government’s headline
budget balance. If a country uses cash budgeting, the initial charge for capital investment
will mainly hit the bu …
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