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meaning of budgetary control

Definition of Budgetary Control:

The establishment of budgets relating the responsibilities of executives to the requirements of a policy, and the continuous comparison of actual with budgeted results, either to secure by individual action the objectives of that policy or to provide a firm basis of its revision.
Or in simple words, budgetary control is implementing budgets and making managers responsible for implementing it.

Essentials of Budgetary control:

1) Establishment of budgets for each function and section of the organization.

2) Continuous comparison of the actual performance with that of the budget so as to know the variations from budget and placing the responsibility of executives for failure to achieve the desires results as given in the budget.

3) Taking suitable remedial action to achieve the desires objective if there is a variation of the actual of the actual performance from the budgeted performance.

4) Revision of budgets in the light of changed circumstances.

Objective of Budgetary Control:
1) Planning:
A budget is a plan of the policy to be pursued during the defined period of time to attain a given objective. The budgetary control will force management of all levels to plan in time all the activities to be done during the future periods.

2) Co-ordination:
The budgetary control coordinates the various activities of the firm and secures C-operation of all concerned so that the common objective of the firm may be successfully achieved.

3) Control:
Control consists of the action necessary to ensure that the performance of the organization conforms to the plans and objectives. Budgetary control makes control possible by continuous comparisons of actual performance will that of the budget so as to report the variations from the budget to the management for corrective action.

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