Introduction

Issues related to management accounting produce a lot of debates because every enterprise has its own specifics. The subject of debates is organizational-functional structure of management and the methods of managerial impact on the solution of functional tasks of the organizations, technical, economic particularities of production influencing organization of management accounting (Gomes et al, 2011). These issues are quite relevant for the enterprises of electrical engineering industry as well (Riahi-Belkaoui, 2004).

In order to make right managerial decision every enterprise must constantly monitor its current state (Danilina and Mingaleva, 2013). But the accounting systems used by companies in electrical engineering industry (EEI) can not always submit necessary for management information.

With the purpose of defining problems of management accounting at EEI enterprises the authors interviewed 11 directors of the companies (with gross revenue over 1 billion roubles) producing isolation materials which are located in Perm territory, Central and Central-West region, Western Siberia, in the Urals. The authors developed a questionnaire to find out how well such tools of management accounting as budgeting, calculation, internal reporting are used at enterprises. The results of interview are given in Table 1.

Table 1: Results of interview of directors of EEI enterprises.

So, the results of interview allowed to identify the range of problems, such as: lack of qualified specialists, absence at most enterprises of accounting of the costs organized by the centers of financial reporting, documenting with significant time lag, absence of motivation of division managers for reduction of costs, the problem of organization of analytical accounting of non-complete production and absolutely undeveloped mechanism of budgeting and control over realization of plans.

Therefore, we can conclude that quality of management accounting of EEI organizations does not correspond to the requirements of modern management.

These faults can be improved partially by single automatized control system at the enterprise, with the use of financial structure of the enterprise and organization of the centers of financial responsibility. Besides that key function is performed by development, installation and introduction of budgeting system as one of the most efficient tool for enterprises management.

Method

With the positions of the system approach we have developed a method of budgeting based on systematizing the factors determining features of construction of budgeting system at factories producing electrical products. A method of budgeting eliminates the duplication of functions of the company’s employees. It provides operational budgeting and implementation of the basic principles of planning (comprehensiveness, completeness, transparency, flexibility). More of this it allows to effectively manage the costs of the organization. Thus the special attention paid to the financial structure of the organization as a fundamental component in the allocation of responsibility centers and further budgeting at different levels (Mukhina, 2013).

Budgeting takes an important role in the management accounting system. Subject to the limitations that distinguish budgeting system (type of activity, strategic objectives, the size of the organization and management system, the information needs of managers, the volume of demand for products, production capacity, availability of raw materials, availability of qualified personnel), we have developed a method of budgeting that allows following. First of all, it provides complexity of system (budgets are developed at all levels of the hierarchy). Besides it realizes the principles of completeness and flexibility of the budgets, demand transparency through detailed expenditure and income. It allows the Plan-fact analysis of variance to identify evaluation budget discipline, definition of the scope of authority and responsibility to establish the head of each division of the indicators that they may be monitored.

Theory

Issues of theory and practice of budgeting were considered in detail by R. Ackoff (Akoff, 1985) who identified key types of orientation in planning, R. Breily and S. Meierce (Breily and Meiers, 2008) – they formulated principles of corporative finances and others.

Let us analyze the approaches to the definition of budgeting of various (Table 2).

Table 2: The essence of the term “budgeting”

Budgeting of EEI, in authors’ opinion, must be considered as a tool of information management system of an organization on the base of achievement of aims and plans of the company by which the control and analysis of organization’s activity are made.

In the course of studying the problems of financial planning Russian researchers proposed several approaches to the classification of the budget. Some authors have focused on the preparation of some types of budgets, other authors give priority to other types of budgets. Thus, according to Alexeeva M.M. each organization should develop a few basic types of current financial budgets: material budget, the procurement, labor budget, administrative budget (Alekseeva and Lapaeva, 2012).

Bukhalkov M.I. focuses on a budget of income and expenses as the main financial document of the organization (Bukhalkov, 2000).

Vakhrushina M.A. emphasizes the need for general and local budgets. According to Vakhrushina’s opinion the general budget is a budget covering the overall operations of the organization, combining estimates and plans of the various business units, which are private budgets (Vakhrushina, 2007).

Karpova T.P. argues that the most attention in the development of budgets should be given to forecasting of revenues and profits. At the same time Karpova T.P. identifies the following cost items: materials, wages of production workers, production overheads, shop costs, selling costs, administrative costs (Karpova, 2004).

Sheremet A.D. has the following views on the classification of the budget. The total budget consists of two main budgets. The operational budget includes the profit and loss account, which is made on the basis of sales budget, production budget, reserves  budget, expenditures budget. Financial budget includes capital expenditure budget, budget of money resources of organization, forecast of balance sheet, forecast of profit and loss account (Sheremet and Saifulin, 2006).

We think that the most attention in the preparation of plans should be given to the budget of cash flow. It reflects the inflow and outflow of funds in the context of the current, investing and financing activities, as development of the financial strategy of the company and the identification of funding sources are partly based on this type of budget, to identify funding sources (Mingaleva et al., 2009).

Afanasiev A.(Afanasyev, 2007), identifies the following factors distinguish the budgeting system of the enterprise from others:

• Type of activity;
• Limitations affecting the activity (volume of demand for the products of industry, production capacity, availability of raw materials, availability of qualified personnel);
• Strategic objectives;
• Size of organization and control system;
• The information needs of managers.

These factors determine the aspects of building enterprise budgets.

We consider that the priorities in the development of management plans will be the procurement budget, the budget of direct costs (direct material costs budget, budget of direct labor costs), the budget of the overhead costs.

Results

The authors propose the following stages in building of budgeting system at the EEI enterprises: analysis of existing system of planning at the enterprises; formation of financial structure of enterprises; creation of budgets interaction scheme; distribution of budgets among centers of financial responsibility; finding key indicators of efficient realization of budget; control and analysis of budget realization.

Scientific novelty of this approach lies in the development of methodological issues, the development of methods of budgeting, including a set of interrelated budgets related to management levels with a specific encoding information that allows operative analysis of deviations.

In the course of analysis of existing system of planning it is necessary to define aims and tasks of budgeting with due regard to strategic plans of the organization and assess existing planning system with the purpose of finding its disadvantages. Besides that the factors must be found which influence formation of budgeting system at the EEI enterprises.

After that the centers of financial responsibility must be found – structural divisions of the company, managers of which are responsible for their activity (Kuratko and Hodgetts, 2008). As a rule, organization’s aims must be transformed into the aims of structural divisions. The theory of management by the centers of financial responsibility is based on the following idea: every structural division must contribute into aggregate financial result of the enterprise.

For identification of responsibility centers on the base of organizational structure of the enterprise we propose the following variants:

1. Formation of responsibility center on the base of one structural division (for example, impregnation section, legal department etc.);
2. Formation of responsibility center by means of joining together of a number of structural divisions. This variant must be used if structural divisions have uniform items of costs or if the proportion of incomes or costs of the structural division is not big.
3. Formation of several responsibility centers from 1 structural division – this variant is necessary if structural divisions under control of 1 manager make different contribution into aggregate financial result of organization’s activity.

Proposed approach allows to define the scope of authorities and establish the responsibility of the head of every division for the indicators controlled by him.

We should remember that EEI entrprises deal with high diversity products, that’s why budgeting on different levels of company’s hierarchy becomes important.

In order to assess efficiency of responsibility centers a system of target indicators must be formed: choice of the model; identification of indicators and distribution of responsibility, creation of reporting by key indicators (Reddy, 2004). Such indicators are as follows: profitability, liquidity, turnover rate, financial stability, satisfaction of customers, efficiency of personnel’s work etc.

So, the most important indicators of assessment of organizations activity can be divided into several groups:

• economic indicators (profitability, liquidity, turnover rate, business activity, financial stability etc.).
• indicators showing satisfaction of customers (number of claims, share of the market).
• indicators of personnel’s efficiency (labour productivity, employee turnover, level of education of the staff).
• indicators of efficiency of business-processes (length of operation cycle, number of interruptions in supplies etc.)

Then identified indicators must be distributed among responsibility centers: indicators showing satisfaction of customers – to income centers, economic indicators – to functional centers of costs, business-processes efficiency indicators – production and functional centers of costs. Responsibility in regard to every group must be distributed among all levels of hierarchical structure.

Statist base

With the purpose to check efficiency of proposed by the authors and implemented in LLC NPK Energy, LLC Energosnab, LLC ETC Energocomplex, LLC « ELKACABLE», LLC «Polus-S” » method of budgeting a number of additional indicators were used (Mukhina, 2014).

To evaluate the effectiveness of this technique, we used a number of the following indicators:

• The coefficient of the purpose determination of structural units showing the ratio of the number of structural units the goals of which are described to the total number of units;
• The coefficient of the enrollment of functions as a ratio of the number of functions that are described in the documentation of the enterprise to the total number of actually functions.
• The duplication coefficient is the ratio of the number of the difference actually functions and duplicate functions to the number of functions, as reflected in the standard documentation.
• The coefficient of determination of financial responsibility of structural units determining the ratio of the number of posts for which determined the degree of responsibility to the total number of.
• The coefficient of determining the financial responsibility for budgets (articles) showing the ratio of the budgets. It determined center of financial accounting to the total number of budgets.
• The coefficient of the enrollment of budgets of the financial responsibility, that characterizes total number of the budgets for the entire complex financial responsibility centers, every financial responsibility centers should be secured at least one kind of budget.
• The coefficient fulfillment of the budget showing the ratio of the actual value of the budget to the planned, indicating the accuracy of financial planning.
• The reliability level of budgets reflecting the ratio of the number of adjusted budgets to the total number of budgets.
• The safety coefficient of budgets (articles) i-th financial responsibility centers is average value by dividing the number of the adjusted budget in relation to the centers of financial accounting.
• Indicators ofthe proportion of time coordination of budgets and time adjustments and corrections budgets.
• In addition, the evaluation was given by such factors as:
• The coefficient of “compression” of business budgeting process in time, coefficient “compression” business budgeting process in time, reflecting the ratio of the sum of products of time for operations and their number after the implementation of the methodology to the amount of time to carry out the works of transactions and their number before changes
• The quality factor of budget management. It allows to evaluate the quality of fulfillment of indicators for the allocation of resources, assess discipline budget planning.
• The adequacy coefficient (convenience) of budget management system as a quantitative assessment of the adequacy of the average budgets.
• Integrated indicator of the quality of the budgeting system, which characterizes the quality of the budgeting system in the parameters rate of change of terms of preparation of budgets, quality and convenience of budget management.

Conclusions

The results of analysis of some enterprises at Perm territory allow to conclude that proposed method is rather efficient. Deviation of most coefficients which characterize the development of budget regulations, discipline of financial planning, realization of the principles of budgeting are in standard limits. Authors’ method, apart from existing ones, allows:

• to provide complex character of the system (the budgets are being developed in different levels of hierarchy).
• to show all information about budget.
• to comply with the requirements to information transparency due to detailed specification of income and costs items.
• to realize flexibility principle due to operative formation of budgets and, if necessary, to adjust these data.
• To perform plan-fact analysis of deviations in order to assess discipline of budget.
• to identify the scope of authorities and establish responsibility of the head of every division for indicators controlled by him.

Therefore, we can argue that our method is rather efficient.

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