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. ...
Basically, there is no planning system that can be used successfully in performance management without having an efficient and effective control system. Budget formulation is closely attached to control aspects where executives exercise organization control through budgetary control. Integrated organizational budgetary control involves preparation of a broad variety of budgets, continuous comparison of performance plans with actual performance and budget revision in the light of existing variances. Budget revision requires that a budgetary control system should be able to provide enough flexibility scope for particular initiative and revision measures. Performance management budgetary control is therefore an important device used by executives to control organization in achieving goals and controlling costs more efficiently Budgetary control compels the management of a particular organization to think about the ideal expectations for the future and what measures should be put in place with regards to existing shortcomings. The control process forces individuals charged with managerial responsibility to look ahead and manage the organization towards a purpose and direction be setting out detailed plans to achieving the relevant targets. Through this, the management is able to promote communication and coordination within the organization. The process also defines clearly the areas of responsibility, as it requires managers of responsibility centers to be accountable to deviations or underachievement of budget targets. Integrative budgetary control uses a budget as a basis for appraising organizational performance at a departmental level. Organizational performance variance from planned ...
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They were confined to their villages only, and had little or no knowledge of the outside world. There was a great variation in the laws and practices by different countries. In addition, the rulers of a country had less influence, compared to the local lords, who had great influence in society.
(Botner, Stanley, 1991).
A budget is, simply stated, a plan for the future, any plan for any future period. A vacation itinerary and a meeting agenda, too, are budgets. A more suitable definition for the study of budgets in the context of financial management is that a budget is a detailed plan showing how resources will be acquired and used during a specific time period.
It is used as a tool for measuring the targets and objectives of an organisation. The budget has given the base of understanding to the managers for formulating objectives for their organisation. It is mainly scripted in quantitative
Budgetary control is therefore an important element in organizational control especially concerning performance management. Budgetary control, defined as the process involving planning, control, and coordination through money values and departments within an
as very critical for the optimum performance of the organization as it provides the set pattern to the management that it has to follow and makes the job of making performance analysis easier for the management as it is taken as the criteria against which the output or outcomes
This competition ensures that the company performs impressively in a manner that it does not have to carry out regular budgeting out of confidence. It is critical to analyze the various concepts involved in beyond
r, the Cost & Management Accountants (CIMA) Institute defines budgetary control as “The establishment of budgets relating the responsibilities of executives to the requirements of a policy, and the continuous comparison of actual with budgeted results, either to secure by
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