The extent of the commitment of Saudi manufacturing firms to a budget and its impact on planning, controlling, and performance evaluation

Abstract

The purpose of this study is to ascertain the extent of the commitment of manufacturing firms listed on the Saudi Exchange that generate raw materials to a budget and its impact on planning, controlling, and performance evaluation, and the significance of having all administrative divisions participate in the preparation of budgets. Questionnaires were developed to gather data to answer the research questions. The results revealed that the firms included in the study apply and prepare budgets regularly to use them effectively to control the production process and evaluate the performance of departments. They also use budgets to plan revenues and expenses. A budget uses outputs to address current deviations and faults to prevent future occurrence and improve the efficiency of the manufacturing processes. Some obstacles partially limit the budget's use for controlling and evaluating performance in some Saudi manufacturing firms. It is recommended that companies have a department that solely focuses on budgets, as it was found that some firms prepare budgets through financial and administrative departments and don’t have a designated department for budgets.