Budgetary Control its Objectives Advantage

 Budget is the financial documents that forecasts coming income and expenditure of a fix financial year for optimum utilisation of finance and achieve objective. There are many techniques use in the process of making Budget. Budgetary control is one of the most important techniques that is used to make Budget more effective and efficient.

The process in which Budget are compared with the actual performance of organization for finding out variance and control variance this process is called Budgetary control.

According to I.C.M,A, Budgetary control is the process of the establishment of budget, relating the responsibilities of executives to the requirements of a policy, and the continuous comparison of actual with budgeted results either to secure by individual action the objectives of that policy this process is called Budgetary control.

In other words we can say that Budgetary control is the system of controlling cost which includes preparation of budget coordinating the departments and establishing responsibilities comparing performance to optimum utilisation of resource to achieve goal.

Objectives-

1.To define the objective of the organization.

2.To provide policy, programme to achieve the objective of the organization.

3.To coordinate the activities of all departments of organization.

4.To increase the performance of all departments of organization.

5.To increase the profit of organization.

6.To correct and controll all variances that arise in the process of making budget.

7.To anticipate future capital expenditure of organization.

8.To reduce cost and cost control by an effective way.

9.To eliminate of all waste of organization.

10. To motivate employee to contribute their best for the development of organization.

Advantages-

1.It is an effective technique to measure the performance of organization.

2.It helps to identify strong and weak areas of organization.

3.It improves the coordination among departments.

4.It helps to establish coordination among all functions of business like Production, Demand Forecasting.Supplying, Pricing etc.

5.It helps to make an effective communication among employees,departments.

6.It helps to take corrective action to control variances.

7.It helps to reallocate resources among function and departments,

8.It also helps in working capital and cash management.

9.It also helps in effective capital expenditure in organization.

10.It also helps to achieve objectives of organization like profit maximization,sales revenue maximization etc.

Disadvantage-

1.It is time consuming process.

2.It is a costly process.

3.It requires extra human resource force and departments to execute at continuous basis.

4.It does not care qualitative aspects of business.

5.It reduces initiative and innovative skill of low level employees.

6.It is based on estimation so if estimation is wrong all process is wrong.

7.It changes target regularly so emploee may be demotivate.

8.Sometimes it creates conflicts among departments.

9.It is future oriented and future is uncertain so it can not be predictable by an easy way.

10.It requires active participation and cooperation to implement all levels in organization so if employees are mot cooperative it may not success.