BUDGETING 221
mechanisms in budgetary processes for reducing the level and amount of
conflict. (pp. 29 – 30)Covaleski and Dirsmith (1988) described the budgetary process between a state
university and its state government and argued that budgeting systems help to
represent vested interests in political processes and maintain existing power rela-
tionships. Other aspects of power relate to shifts in the dominant coalition within
organizations. Covaleskiet al.(1993) presented a case study of the introduction
of diagnostic-related costing in hospitals in which case-mix accounting systems
‘appear also to determine power by redistributing that power from physician to
administrator’ (p. 73).
In a UK university, Ezzamel (1994) studied the budgeting system and how it
was involved in power relations at two levels. First, it provided a vehicle through
which the proposed reallocation of funds was translated, communicated and given
initial visibility. Second, it provided a basis for much of the discourse that took
place between the various constituencies.
Prestonet al.(1992) described the process of management budgeting in the
UK hospital system, showing how budgeting was ‘fabricated’ – put together
in a fragile manner – and, in the process of its design and implementation, new
possibilities for decision-making and definitions of responsibility emerged. Preston
et al.emphasized how people:
attempt to enmesh accounting innovations within the functioning of organi-
zations and the processes by which new patterns of language, meaning and
significance emerge through the fabrication of accounting and budgeting
systems. (p. 562)They concluded:
[r]esistance and scepticism occurs from the outset and is a central element
in the fabrication process...resistance not only impedes and constrains
the process, but also shapes it in specific ways designed to overcome the
scepticism. (p. 589)A final word in relation to budgeting concerns risk. Collier and Berry (2002)
identified risk as being managed in four different domains: financial, operational,
political and personal. These were the result of the unique circumstances, history
and technology in different organizations that had led to different ideas about
risk. These domains of risk revealed how participants in the budgeting process
influenced the content of the budget through their unique perspectives.
The research distinguished the content ofbudgets from the process of budgeting.
It contrasted three types of budget. In the risk-modelled process, there is an explicit
use of formal probability models to assess the effect of different consequences
over a range of different assumptions. In the risk-considered process, informal
sensitivity (or what-if) analysis is used to produce (for example) high, medium and
low consequences of different assumptions. The risk excluded budget manages
risk outside the budget process, and the budget relies on a single expectation of