Budgetary Control from Financial Books
Before proceeding to the budgetary control we should explain 1st budget. According to ICMA London Budget has been defining as, “A financial and/ or quantitative statement prepared and approved prior to a defined time of the policy to be pursed during that period for the purpose of attaining a given objective.”
Budgets mainly work for:
Preparing statement in terms of money or equivalent of money
It is for prior to a future period of time
The objectives to be attained and the policies to be adopted are laid down in advance.
Like it about the budgetary control ICMA London writes, “The establishment of budgets relating to responsibilities of executives to the requirement of a policy and continuous comparison of actual with budgeted results either to secure by individual action the objectives of that policy or to provide a basis for its revision.”
Now, we will define alls along with one – budget, budgeting and budgetary control:
About it we will look some references from MBA books of SMU, “Budget is the target or the objective of each section of an organization. Budgeting is the process of preparing the budgets. Budgetary control is the technique and process of fixing the targets, preparing the budgets and using them as an effective tool of planning and control.”
Most simply now we can define the objectives of budgetary control as:
Planning the policies
Coordinating activities
Controlling costs
Increases efficiency
Like this there involves some steps also in budgetary control are:
Preparation of organization chart
Establishment of budget centers
Appointment of budget committee
Preparation of Budget Manual
Determination of Budget Period
Determination of Key Factor or Budget Factor
After the huge discussion about budgetary control we can know about its some limitation also which are:
Its limitations show that it is changeable.
Budgets may kill managerial initiative.
About it people says that it is costly and time consuming. However, it is decisive chapter about accounting. For more details read continuously the financial blog, I will write the chapter with more examples.
