What the future implications of budgetary slack?

Budgetary slack, which involves intentionally underestimating revenues or overestimating expenses, can lead to short-term benefits such as meeting targets and securing resources. However, in the long run, it can distort financial planning, reduce accountability, and foster a culture of complacency among managers. This misalignment may ultimately hinder an organization's ability to adapt to changing market conditions and achieve strategic goals. Additionally, stakeholders may lose trust in the budgeting process, complicating future financial planning and decision-making.