Pre-requisites for effective budgetary control system, Financial Management

ORGANISATION FOR BUDGETARY CONTROL (or) PRE-REQUISITES FOR THE INTRODUCTION OF AN EFFECTIVE BUDGETARY CONTROL SYSTEM

1.   BUDGET CENTRE:  It is a section of the organization of an undertaking defined for the reason of budgetary control.

2. ORGANISATION CHART: A correctly drawn organizational chart shows the functional responsibilities of every member of management and make sure that she/he knows her / his position in the organization and his relationship with others.

3. BUDGET COMMITTEE: It includes all executives in charge of important functions and entrusted with the preparation and finalization of budgets for several centers and also for the whole company called Master budget. usually, the CEO of the company is the Chairman of the committee and executives in charge of main functions of the business are the members.

4.   BUDGET MANUAL:  It is a rulebook or document, which provides for instructions in framing the budgets. It is described as - 'a document which sets out the responsibilities of the persons busy in the routine of and the forms and records required for budgetary control'.

5.   BUDGET PERIOD: It is the period of a budget, which usually is one year.  It is the time period for which the budget is used and prepared.

6.   PRINCIPAL BUDGET FACTOR / KEY FACTOR /LIMITING FACTOR / GOVERNING FACTOR:  It refers to the factor which dominates the business operations and which acts as a barrier or impediment in accomplishing the wanted result specified in the company's budget.  It will limit the activities of an undertaking.  It generally refers to any factor, which is in short supply like demand, stock, etc.  To make sure that the functional budgets are reasonably fulfilled, the degree of the influence of this factor must be first assessed.

Posted Date: 10/15/2012 8:33:31 AM | Location : United States







Related Discussions:- Pre-requisites for effective budgetary control system, Assignment Help, Ask Question on Pre-requisites for effective budgetary control system, Get Answer, Expert's Help, Pre-requisites for effective budgetary control system Discussions

Write discussion on Pre-requisites for effective budgetary control system
Your posts are moderated
Related Questions
Rationale of Accounting Standards Accounting Standards are created along with a view to harmonise various accounting policies and practices in use inside a country. The goal o


(a) Let's presume that the firm may default only on last coupon payment date and that when this take place stock price would be less than some predetermined price K at the expira

Introduction to Financial Management Companies don't work in a vacuum, isolated from everything else. It transacts andinteracts with the other entities present in economic envi

Timing of Financial Reports: Just as the actual report requirements differ depending on the requirements of the stakeholder that will be using them, so too will the timing of t

Accounting Period - Accounting Principle Accounting period refers to span of time at the end of that and for which the financial statement are prepared to throw light on the r

7. Bill Peters is the investment officer of a $60 million pension fund. He has become concerned about the big price swings that have occurred lately in the fund’s fixed income sec

Sole Proprietorship This business form is the legal default form for any person who makes no effort to organize the business otherwise but does business in the United States. T

If firm A has a higher debt-to-equity ratio than firm B then that means what

What can be the reason for the negative synergistic gains for British acquisitions of U.S. firms? Negative synergies for British acquisitions of U.S. firms (united state firms) m