Variance Reporting and the Delegation of Blame: A Case Study

The traditional functionalist analysis of the motivational properties of budgetary controls and variance reports has identified a umber of dysfunctional features of typical systems, but has failed to explain why these persist. Through an examination of the case of a simple labour cost reporting system, it is suggested that part of the reason is that, for senior managers, accounting control systems serve to delegate the blame for organisational problems. The features of a system which enables this to be easily accomplished are, in some respects, the precise opposite of those which are generally considered ideal from the motivational point of view.