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INTRODUCTION
BUDGETARY CONTROL
This is the establishment of a budget relating the
responsibilities of executive management to the
requirement of a policy and continuos comparison
of actual and budgeted results.
Control
should ensure that actions are
accordance with the objective of the policy in
question
Also provides a basis for its revision.
ELEMENTS OF BUDGETARY
CONTROL
Setting up budgets i.e. planned targets on
revenue, expenses, assets and liabilities relating
to the activities concerned.
Measuring actual results against the budgets on
a continuous basis
Identifying and analyzing deviations from
budgets and modifying both actual operations
and subsequent budgets.
PURPOSE OF A BUDGET
PREPARATION OF THE
BUDGET
1. Identify objectives
2. Gather data about alternatives
3. Select alternative courses of action
4. Discuss the plans/activities and allocate the
budget.
5. Establish monitoring mechanisms.
6. Respond to problems encountered in the
previous budget.
PURPOSE CONT.
Communication:
PURPOSE CONT.
Performance Evaluation: a budget is used to
evaluate the capability of managers to achieve
targets.
Good performance is associated with achieving
better performance targets set on costs of
operations and benefits to the organisation.
PURPOSE CONT.
EXTERNAL INFORMATION
Market
and competitors
Economic conditions
Industrial structure
Political factors
Technological change
Demographic trends and social factors
Government statistics, commercial data,
banks.
Media coverage, business trips,
conferences.