Learn the definition budgetary control, a system necessary to monitor actual performance against budget so as to ensure business success.
This is the establishment of budgets relating the responsibilities of executives to the requirements of a policy, and the continuous comparison of actual with budgeted results. This is either to secure by individual action the objectives of that policy or to provide a basis for its revision.
It is a system which, despite the fact that it uses financial terms as its mode of expression, is intimately concerned with all the activities of a business – that is to say, with the technical, production, and commercial functions, as well as with the financial. It is therefore necessary to ensure that the firm employing such a system is organised in such a way that it can be operated successfully and to the maximum advantage. The is really an application of the techniques of scientific management in the financial sphere, and therefore requires the application of similar techniques in other spheres as well. The important thing is to ensure that the various functions in a company are clearly defined, and hat the responsibility of each executive is clearly laid down so that no overlapping of responsibility occurs. You can read our sample budget proposal to learn more.