Essential Points For The Implementation Of Budgetary Control
“There are certain steps, which are necessary for the successful implementation of budgetary control system. The proper organization is essential for preparation, maintenance and administration of budgets”
There are certain steps, which are necessary for the successful implementation of budgetary control system.1st is organization for budgetary control. The proper organization is essential for preparation, maintenance and administration of budgets. A Budgetary Committee is formed, which comprises of the departmental heads of various departments. All the functional heads re entrusted with responsibility of ensuring proper implementation of their respective departmental budgets. The chief executive of the enterprise is the over all in charge.
2nd place in budgetary control system is of Budget center. This part of the organization may be a department, section of a department or another part of the department. Actually budget is being prepared only for this part of the e organization. The establishment of budget centers is required for covering all parts of the organization.
3rd part of budgetary control system is Budget Manual. It is a document, which spells out the duties and also responsibilities of various executives concerned with the budget. It specifies relation amongst various functionaries.
4th part of budgetary control system is Budget Officer who is appointed by the chief executive. Budget Officer is empowered to scrutinize the budget prepared by different departments and to make change in them, if situations so demand. The actual performance of different departments is communicated to Budget Officer. He determines the deviations in the budget and the actual performance and takes necessary steps to rectify the deficiencies, if any.
5th part of budgetary control system is Budget Committee. In small-scale concerns the accountant is made responsible for the preparation and implementation of the budget. In large-scale concerns a committee known as Budget Committee is formed. The members of this committee are the heads of all departments of an organization. It is responsible for preparation and execution of budget.
Budget Period is another important part of budgetary control system. It is the length of time for which budget is prepared. This period depends upon the nature of budget i.e. sales budget, production budget, raw material purchase budget and the economic situation of the country, the length of trade cycle and the nature of demand for the product. The budget is prepared for all functional areas.
7th part of budgetary control system is Determination of Key Factor. Budget formation is an inter-departmental and inter-related activity. A proper coordination is necessary amongst different departments for the success of budgetary control system. A factor, which influences all other budgets, is known as principal factor or key factor.
Author - DeeKay
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