What is budgetary control? Meaning, definition, process and Objectives

Budgetary control

Introduction 

Budgetary control is the process of determining various budgeted figures for the enterprises for the future period and then comparing the budgeted figure with the actual actual performance for calculating variances if any. First of all budgets are prepared and then actual performance are record. The comparison of budgeted and actual figure will enable the management to find out discrepancies and take remedial measures at a proper time. The budget control is a continuous process which help in planning and Coordination. It provide a method of control too. A budget is a mean and the budgetary control is the end result.

Definitions

"A system which uses budgets as a means of planning and Controlling all aspects of producing and/or selling commodities and services"

Process of Budgetary control

From the above definitions it is clear that the budgetary control involves the following :-

1. The objects are set by preparing budgets.
2. The business is divided into various responsibility control for preparing various budgets.
3. The actual figure are recorded.
4. The budget and actual figure are compared for studying the performance of different costs centres.
5. If actual performance is less than the budgeted norms a remedial action is taken immediately.

Objectives of Budgetary control

1. To ensure planning for future by setting up various budgets. The requirement and expected performance of the enterprise are anticipated.
2. To coordinate the activities of different department.
3. To operate various costs centres and departments with efficiency and economy.
4. Elimination of wastes and increase in profitability.
5. To anticipate control expenditure for future.
6. To centralized the control system.
7. Co-ordination of deviation from the established standard.
8. Fixation of responsibility of various individuals in the Organizations.