QS Study

Budgetary control is a methodical control of an organization’s operations throw establishment of standards and targets regarding income and expenditure, and a 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.