Explain the features of budgetary control, Managerial Accounting

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Explain the Features of budgetary control

From the definition the following features of budgets control emerge:

1) Establishment of budgets: budgets are prepared for each function relating to the responsibilities of individual executives. The overall functional budgets are then coordinated with each other so that an overall budget for the business might be prepared.

2) Executive responsibility: executives have specific tasks to be performed and responsibilities to be discharged. These must be directed toward the attainment of the objectives of the enterprise.

3) Requirement of a policy: a budget is a policy statement. It indicates what the business plans to do and how it proposed to do it.

4) Comparison of actual with budgets: comparison is the foundation of control. Actual performance must be measured and periodically compared with the plans. Such comparisons will show decimation from the planned course of actual which must be highlighted in time, so that remedial action can be taken to reach the preset goods.

5) Revision of policy: sometime the comparison of actual performance with the plans may indicate the need to change policies. if change in policies is essential to the goals of the organization then the policy change must be brought about. To that extent, policies must be flexible.

 


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