JURNAL ASET (AKUNTANSI RISET), 12 (2), 2020, 346-356 346 | Jurnal ASET (Akuntansi Riset) Vol.12 | No.2 | 2020 Participative Budgeting, Employee Motivation and Budgetary Slack in Private Sector in Indonesia Yenni Carolina Accounting Department, Maranatha Christian University, Bandung – Indonesia Abstract. The role of the budget is basically as a planning and controlling tool for an organization. One thing that organizations need to avoid in budgeting is the emergence of budgetary slack practices. This study was conducted to evaluate and analyze budgeting practices in the private sector, especially in the banking sector with the aim of analyzing the effect of participatory budgeting on employee motivation and analyzing the effect of employee motivation on budget slack. The data collection technique used was a questionnaire. The questionnaire is filled out by supervisors or managers at banks in Bandung. The questionnaires that can be processed are 33 questionnaires. The data analysis technique used is Structural Equation Modeling-PLS (SmartPLS 3.0). The results of hypothesis testing that have been done show that participatory budgeting has a positive effect on employee motivation and employee motivation has a negative effect on budget slack. Keywords: budgetary slack , employee motivation, participative budgeting Corresponding author. yenzcarolina@gmail.com How to cite this article. Carolina, Y. (2020). Participative Budgeting, Employee Motivation and Budgetary Slack in Private Sector in Indonesia. Jurnal ASET (Akuntansi Riset). Program Studi Akuntansi. Fakultas Pendidikan Ekonomi dan Bisnis Universitas Pendidikan Indonesia, 12 (2), 346–356. Retrieved from https://ejournal.upi.edu/index.php/aset/article/view/25264 History of article. Received: Juni 2020, Revision: Desember 2020, Published: Desember 2020 Online ISSN: 2541-0342. Print ISSN: 2086-2563. DOI : https://doi.org/10.17509/jaset.v12i2.25264 Copyright©2020. Jurnal ASET (Akuntansi Riset) Program Studi Akuntansi FPEB UPI . INTRODUCTION Planning is important for an organization, without planning, it will be easy for companies to get lost or waste resources that can be used for other things (Coveney & Cokins, 2014). Planning needs to be done to direct the company's resources and activities to achieve goals. Planning is realized in the form of strategy and budget. The budgeting process is an integral part of the management control system (Walker & Johnson, 1999). A budget is a quantitative short-term company plan (Atkinson, Kaplan, & Matsumura, 2012). A budget is considered to have value if management perceives that budget can help achieve the company's goals. Managers use the information from the budget for many purposes, one of which is to motivate employees (Walker & Johnson, 1999). The budgeting process involves many parties, from top management to the operational level. Participative Budget is the level of participation and the effect of a person in the process of making a budget (Kahar, Rohman, & Chariri, 2016). The impact might bring up negative and positive behaviors. Positive behavior usually appears because managers or employees feel motivated by the budget used as a basis for performance appraisal so that managers or employees can further improve their performance. On the other hand, managers or employees can also behave negatively (dysfunctional) by creating budgetary slack. Budget processes carried out by companies in Indonesia can affect the economy considering that the budget is used as a tool for evaluating company performance and decision making (Anthony & Govindarajan, 2007). In reality, problems often happen in budgeting, one of which occurs in government related to the use of Local Government Budget. (Kumolo, 2019) as the Minister of Home Affairs said that the expenditure of budget realization was not the same as the allocation that had been made, there were still many allocations from programs that had not yet been developed and the lack of accountability for the use of the Local Government Budget. The extreme turbulent economic situation and the "high regulated" banking industry has the effect of