Budgetary control is a methodical control of an organization’s operations throw establishment of standards and targets regarding income and expenditure, and continuous monitoring and adjustment of performance against them. It refers to how well managers utilize budgets to monitor and control costs and operations in a given accounting period.
An essential condition of the budgetary control
A budget is a plan as well as a control tool. A business budget is a plan covering all phases of operations for a definite period in a fixture. For an effective system of budgetary control, certain prerequisites must be present. These essential conditions are as follows –
- The budgetary control system should have the full support of top management.
- There should be well-planned organizational set-up with responsibilities.
- The accounting system should provide accurate and timely information.
- Staff should be strongly and properly motivated towards the system.
- It should be meaning Ml participation of all concerned.
- The budget should be actually aiming as a coordinating device rather than a control device.
- The budget should be flexible to permit the adjustments.