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Budgetary Control in Performance Management - Essay Example
Finance & Accounting
Pages 7 (1757 words)
Running head: Budgetary Control in Performance Management Budgetary Control in Performance Management Insert Name Insert Grade Course Insert 16 February 2012 Budgetary Control in Performance Management Introduction Performance management has advanced its use of organizational budgets to control its operations to a more integrative control mechanism…
A budget is a formal statement of financial resources that have been set aside to finance specific activities over a given time period. Through a budget, managers can be able to coordinate organizational activities with it being a point of reference. Integrative Budgetary Control Integrative organizational budgetary control is a technique in which actual results of activities are compared to those specified in a budget and corrective actions undertaken. Differences that exist between actual and planned activities in the budget result in budgetary control measures where responsibility centers are charged with the responsibility of exercising organizational control action or revising the specific budget plans. Through responsibility centers, organization managers can monitor functions of the organizations and make necessary corrections to deviation from plans (Singla, 2009, p.117). A responsibility centre is basically a functional unit in an organization being headed by a hierarchical manager charged unit performance. Responsibility centers may include expense centers, revenue centers and investments centers. Budgetary control with regards to revenue centers involves comparison of actual outputs with budget outputs to ascertain necessary control measures. ...
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