Describe the essential features of budgetary control. Budgetary Control 2022-10-30

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Budgetary control is a management technique that involves setting financial targets for an organization and then comparing actual performance against those targets. It is a key tool used by organizations to plan and monitor their financial performance, and it is essential for maintaining financial stability and achieving long-term goals.

There are several essential features of budgetary control that are worth highlighting.

First, it involves the preparation of a budget. A budget is a detailed financial plan that outlines the expected expenses and revenues for a specific period of time, such as a fiscal year. It is a crucial tool for forecasting future financial performance and helps organizations allocate resources effectively. Budgeting requires careful planning and analysis to ensure that the budget is realistic and achievable.

Second, it involves the comparison of actual performance against the budget. This comparison helps organizations identify deviations from the budget and take corrective action if necessary. For example, if actual expenses are higher than expected, the organization may need to find ways to reduce costs or increase revenue. This continuous monitoring and evaluation of financial performance is essential for making informed decisions and achieving financial goals.

Third, it involves the implementation of corrective action. If there are significant deviations from the budget, it is important for organizations to take timely and effective corrective action. This may involve revising the budget, implementing cost-cutting measures, or taking other steps to get back on track. By doing so, organizations can maintain financial stability and achieve their long-term goals.

Fourth, it involves effective communication and collaboration. Budgetary control requires the involvement of all levels of the organization, from top management to front-line employees. It is important for everyone to be aware of the budget and their role in achieving it, and for there to be effective communication and collaboration across all levels of the organization.

In summary, budgetary control is an essential management technique that involves setting financial targets, comparing actual performance against those targets, implementing corrective action as needed, and effective communication and collaboration. It is a crucial tool for maintaining financial stability and achieving long-term goals.

Is a budgetary control? Explained by FAQ Blog

describe the essential features of budgetary control

Objectives of Budgetary Control: Budgetary control systems have been introduced for three main purposes. Some of the advantages of budgetary control are: 1. In this case the expenditures constitute the poverty removal programmes. Economy: The planning of expenditure will be systematic and there will be economy in spending. It compels management to maintain adequate statistics. The formulation and administration of budgets isolate problems of communication, of fixing responsibility and of working relationship.

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Budgetary Control

describe the essential features of budgetary control

Activities: Determining the variety of activities that should be undertaken for achievement of the objectives. All departmental executives should be aware of their authority and responsibility. Organizations prepare these functional budgets based on the functions of management. It includes the various activities upon which pubĀ­lic authorities propose to spend revenues. The appraisal performance of different parts of the organization becomes easy when different centres are established. Proper reporting to management is essential and reversely down the line instructions are passed how to struggle with the deficiencies and shortcomings. In seasonal industries, a shorter budget period, say, one seasonal cycle, or 6 months, or a quarter, will be found more useful.

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Budgetary Control: Definition, Features, Objectives, Importance, and Elements [Notes with PDF]

describe the essential features of budgetary control

What are the Objectives of Budgetary Control? Seminars and workshops on budget and budgetary control will be conducted to inform all concerned about the benefits of budget control, theoretical knowledge, etc. If the account is in deficit, the department must find another source of funds. To fix the responsibilities in different departments. Hence, it will be difficult for small concerns to adopt it. The Budget Opened, attacking the policy of Walpole while Chancellor of the Exchequer and likening him to a clown opening his bag of tricks and deceptions. The concept of budgetary control however is not just confined to analyzing the budgeted and actual figures, it is a wide concept that encompasses coordinating both the costs and work done.

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What is the Budgetary Control?

describe the essential features of budgetary control

Most university departments, for example, have yearly chest allocations for general equipment. PB helps the Government to compare alternative programmes and allocate resources to those programmes which will yield the maximum returns of fund invested. In cash budĀ­get, the different types of revenues earned by the government irreĀ­spective of source are treated as budgetary receipts and different fur s spent by the government are considered as budgetary expenditure. The authority and responsibility of each individual in the organisation should be clearly defined in the organisation structure. For higher level of management less detailed reports are prepared with more coverage.

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Essentials of Budgetary Control

describe the essential features of budgetary control

If this cycle covers say two or three years, the long-term budget would cover that period, while the short-term budgets would, perhaps be prepared on a monthly basis for control purposes. The best examples are national defense, law and order, foreign policy etc. Planning: Individual and group actions can be guided only when predetermined targets are there on screen. The individual managers, work for their individual interest as well as for the benefit of the organisation as a whole. Buck point out that, as a financial plan, the budget should possess certain essential features. Limitations of Responsibility Accounting: 1. Veterans benefits and services, and 13.


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Budgetary Control: 13 Essentials of Effective Budgetary Control

describe the essential features of budgetary control

Cash Budget: It is a forecast of cash required for successful and smooth operation of activities. The benefits derived for the concern will ultimately extend to industry and then to national economy. It is important to note here that the budget does not automatically function as a control mechanism. Types of budget Various budget types have been developed to cover different financial statements and managerial information areas. If production is done in various departments, separate budgets can be prepared for different departments and one master budget can also be prepared.

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Budgetary Control : Meaning, Objectives and Essentials

describe the essential features of budgetary control

Budgets are necessary to highlight the financial implications of plans, to define the resources required to achieve these plans and to provide a means of measuring, viewing and controlling the obtained results, in comparison with the plans. Modern Classification of Budget : Modern governments perform multi-various transactions. Clear Cut Objectives The success of 5. It is prepared and approved prior to a defined period of time. Account 3: Transaction in Commodities and services and transĀ­fers: Capital account of government Administration and departmental commercial undertakings.

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Budgetary Control: Characteristics and Objectives of Budgetary Control

describe the essential features of budgetary control

Current Budget A Budget, which is established for use over a short period of time and is related to the current conditions, is called Current Budget. Distinction between Performance Budgeting and Programme Budgeting: Performance Budgeting: 1. A budget can be set only by seasoned executives of an organisation. For this purpose, expenses incurred in past years should be analysed. Therefore, resources are allocated properly.

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Essential elements for effective Budgetary Control

describe the essential features of budgetary control

Budgets must be accurate, acceptable and prepared with full participation of managers of different responsibility centres. Budget Education A budget can be implemented very successfully with the active participation of line managers and their sub-ordinates. To begin, a budget must be developed. Types of Budget The budgets can be classified asā€” i fixed and flexible budgets, and ii short term and long term budgets. If the expected changes are not likely to be continuous, updating of budget is not required.


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