Many managers believe that, if all amounts in their budgets are not spent during a period, they will lose allocations in future periods and that little or no recognition will resultfrom cost savings. The figure below indicates results of a survey of IMA members about the motivating factors behind budgeting issues.

Discuss the behavioral and ethical issues involved in a spend-it or-lose-it attitude. Include in your discussion the issue of negotiating budget allocation requests prior to the beginning of the period.LO1

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33% 17% 30% 20% Management encourages me to spend entire budget. (17%) If I don't spend my entire budget, next year's budget will be reduced. (33%) I would not be recognized for ending my budget period with a positive balance. (30%) If I ended the budget period with a significant balance, I would be considered a poor budget estimator. (20%)