Question

What is meant by the term budgetary slack? Is it unethical? Can it be avoided?

Answer 1

	Budgetary slack : Budgetary is the practice of deliberately overestimating the expenses and underestimating revenues during the preparation of budget. The main intent behind managers creating budgetary slack is that they are expected to meet the budget goals. To achieve this, they tend to create slack when creating budget. It is considered unethical as it tamper the efficiency of a budget. It can be avoided by limited the number of managers participating in the preparation of budget. And unlinking promotions or bonuses for managers based on performance as per budget