| May 14, 2003 | Volume 3, Issue 20 |
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by Rick Brenner
When projects run over budget, managers face a temptation to use creative accounting to address the problem. The budget swap is one technique for making ends meet. It distorts organizational data, and it's just plain unethical.
he meeting ended. Will picked up his pad, stood up, tossed his paper cup into the wastebasket, and stepped through the doorway right behind Janet. But before he could get her attention, Ed got his.
"Will, just one thing to button up — can you stop by my office a minute?" Ed asked.
"Sure," Will replied.
It was a short walk to Ed's office. They stepped in. Ed closed the door quietly. "Just want to give you the charge numbers for this week and next," he began. He handed Will a slip of paper that had two account numbers on it.
"Here they are. Top one's for this week, the other's for next."
"OK," said Will. "That it?"
"Yep. See you."
Will opened the door, went around the corner to his own office, set his pad and the slip of paper on his desk and sat. Odd, he thought. Why the secrecy? And why split the work across two accounts, when it was exactly the same work? He wondered what was going on.
Knowing budgetary
deception techniques
helps you stay out of
the gray areaWill never did find out. Perhaps it was legitimate, but it might have been a "budget swap."
In organizations that track expended effort, people charge their time to various accounts, represented by charge numbers. When "actuals" deviate too far from projections, the manager is often considered to have erred. Managers of overspent (or underspent) accounts are tempted to move charges across accounts to compensate.
In effect, they "swap" money across accounts. Here are just a few forms swaps can take.
Managers who use budget swaps to conceal problems do real harm to their organizations. But they harm themselves, too, because of another, less visible swap — their budgets for their integrity.
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For more about budgetary deception in the wider context, check out M. Jensen, "Paying People to Lie: The Truth About the Budgeting Process."
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See also Ethics at Work for more related articles.
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