How can a company avoid lying by employees when preparing a budget?
A) reward good budget forecasts
B) reward good performance against the budget
C) reward good budget forecasts and reward good performance against the budget
D) reward good recipes for cooking the books

Question

Quizplus · Accepted Answer

By rewarding both good budget forecasts and good performance against the budget, employees are incentivized to produce realistic and honest forecasts and are motivated to achieve their targets without resorting to dishonest methods. Rewarding good recipes for cooking the books (D) is unethical and encourages dishonest behavior, thus only exacerbating the problem. Rewarding only good performance against the budget (B) could lead employees to inflate their forecasts or manipulate numbers to meet the targets, without considering the ethical implications or long-term consequences. Finally, not providing any incentives (A) is likely to demotivate employees, reduce their engagement and satisfaction, and possibly result in inaccurate budgets out of disinterest.

How Can a Company Avoid Lying by Employees When Preparing