budget management
Budgetary Control
Meaning and Need for Budget
Everyone is familiar with the idea of a budget because it is essential in every walk of our life – national, domestic and business. A budget is prepared to have effective utilisation of funds and for the realisation of objectives as efficiently as possible. Budgeting is a powerful tool to the management for performing its functions (i.e., formulating plans, coordinating activities and controlling operations etc.) efficiently.
CIMA London defines budget as, “A plan quantified in monetary terms prepared and approved prior to a defined period of time usually showing planned income to be generated and / or expenditure to be incurred during that period and the capital to be employed to attain a given objective.”
Budgetary Control
Budgetary control is applied to a system of management and accounting control by which all operations and output are forecasted as far ahead as possible and actual results when known are compared with budget estimates. CIMA, London defines budgetary control as - The establishment of the budgets relating to the responsibilities of executives to the requirements of a policy and the continuous comparison of actual with budgeted result either to secure by individual action the objectives of that policy or to provide a firm basis for its revision.
Budget, Budgeting and Budgetary Control
Rowland and William in their book entitled Budgeting for Management Control has given the difference between budget, budgeting and budgetary control as follows:
“Budgets are the individual objectives of department, etc. whereas budgeting may be said to be the act of building budgets. Budgetary Control embraces all these and in addition includes the science of planning the budgets themselves and the utilisation of such budgets to effect an overall management tool for the business planning and control.”
Thus, a budget is a financial plan and budgetary control results from the administration of the financial plan.
Meaning and Need for Budget
Everyone is familiar with the idea of a budget because it is essential in every walk of our life – national, domestic and business. A budget is prepared to have effective utilisation of funds and for the realisation of objectives as efficiently as possible. Budgeting is a powerful tool to the management for performing its functions (i.e., formulating plans, coordinating activities and controlling operations etc.) efficiently.
CIMA London defines budget as, “A plan quantified in monetary terms prepared and approved prior to a defined period of time usually showing planned income to be generated and / or expenditure to be incurred during that period and the capital to be employed to attain a given objective.”
Budgetary Control
Budgetary control is applied to a system of management and accounting control by which all operations and output are forecasted as far ahead as possible and actual results when known are compared with budget estimates. CIMA, London defines budgetary control as - The establishment of the budgets relating to the responsibilities of executives to the requirements of a policy and the continuous comparison of actual with budgeted result either to secure by individual action the objectives of that policy or to provide a firm basis for its revision.
Budget, Budgeting and Budgetary Control
Rowland and William in their book entitled Budgeting for Management Control has given the difference between budget, budgeting and budgetary control as follows:
“Budgets are the individual objectives of department, etc. whereas budgeting may be said to be the act of building budgets. Budgetary Control embraces all these and in addition includes the science of planning the budgets themselves and the utilisation of such budgets to effect an overall management tool for the business planning and control.”
Thus, a budget is a financial plan and budgetary control results from the administration of the financial plan.