Current trends in budgeting and planning: Czech empirical evidence

Budgeting and planning belongs to the traditional tools of management accounting which are essential for the successful control of the business organizations. In 2014 the Czech Republic celebrated the 25th anniversary of the new open-market economy, however even after this year we cannot say that the majority of Czech companies really do use these traditional tools of cost and managerial accounting. In recent decades we observe growing dissatisfaction with traditional budgeting concepts, based on annual bases and control functions. Traditional budgeting methods are very often criticised for the inflexibility and strong focus on resource allocation. Many research studies points at the necessity of adopting more sophisticated budgeting methods, which could contribute to better performance management and control of business organizations. Current trends lie in adopting flexible, decentralized budgeting systems, focused on the use of key performance indicators (KPI). The paper presents the initial results of the survey of Czech enterprise budgeting practices. The objective of the study was to compare the adoption level of modern budgeting methods in the Czech Republic and North America. The first part of the paper presents the current state of knowledge in the field of modern budgeting methods utilization and defines the general specifics of the Central European region. The main part of the study presents the results of the questionnaire survey of the Czech enterprises' budgeting practices performed by the authors. The final part of the paper discusses the differences between the Czech and North American companies. The objective of the study is also to identify strong tendencies in the Czech budgeting practices and analyse the related problems.