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Some Management Accountants Argue That Budgets Are Great for Planning, but Not For Control. What Do You Think They Mean?
Finance & Accounting
Pages 6 (1506 words)
Some management accountants argue that budgets are great for planning, but not for control. What do you think they mean? Do you agree with the statement? Explain why? Every organisation, company, governmental organisations have budgeting process that determines expenses and revenues, sales and savings and sets financial goals for the future…
First of all, control can mean making sure that the real numbers match the ones that were set out in the budgeting plan. It can mean ensuring the goals are met by controlling the expenditure, controlling the employees’ actions and controlling the outcome. Additionally, the use of planning cannot be underestimated. It is identified as an activity to plan a particular set of activities in order to serve a number of objectives. On the basis of objectives, the process of planning is identified and carried out. And, with the help of budgets, the process of planning is determined, discussed, highlighted and finally implemented. Without the use of budgets, the planning becomes ineffective and meaningless. On the other hand, controlling is a subsequent process, which can be achieved when an organization becomes in a position to compare the budgeted figures with the actual results. On the basis of such comparison, the organization is enabled to control the excessive costs or costs that can be reduced. On the basis of this understanding, planning serves different objectives with the use of budgets in comparison with the control that is there to bring different aspects of the management results. Although both are significant to the entire process of budgeting, yet they cannot be underestimated at the cost of each other. ...
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