ESSENTIALS OF EFFECTIVE BUDGETARY CONTROL

SYSTEM

MADE BYCHARAN KAUR –

260SECTION D

WELL DEFINED OBJECTIVES : THE GOALS OF ANY SYSTEM TO B LAID DOWN MUST BE CLEAR, SPECIFIC AND WELL DEFINED. BUDGETS CAN BE PREPARED AND IMPLEMENTED EFFECTIVELY ONLY WHEN THE OBJECTIVES ARE PINPOINTED.

ACHIEVABLE GOODS : THE GOALS SET MUST BE CAPABLE OF BEING ATTAINED. THEY SHOULD BE REALISTIC AND NOT ILLUSORY

OPTIMIZATION OF PROFIT : THE ULTIMATE GOAL OF ANY SYSTEM DESIGNED AND PUT INTO OPERATION BY THE MANAGEMENT MUST AIM AT OPTIMIZATION OF PROFIT AND NOT ITS MAXIMIZATION.

SUPPORT OF ALL CONCERNED : RIGHT FROM TOP TO BOTTOM, EVERYONE MUST BE QUIET AND FORTHCOMING TO THE SYSTEM IN ORDER TO ATTAIN THE BUDGETARY TARGETS

CONJUNCTION WITH STANDARD COSTING : BUDGETARY CONTROL SHOULD BE APPLIED AS FAR AS POSSIBLE IN CONJUNCTION WITH THE SYSTEM OF STANDARD COSTING. THE TWO SYSTEM PUT TOGETHER YEILD BETTER RESULTS.

PARTICIPATIVE MANAGEMENT : COORDINATION AMONG DIFFERENT LEVEL OF MANAGEMENT IS NECESSARY. IT IS ESSENTIAL THAT IN PREPARATION AN EXECUTIVE BOTH, ALL CONCERNED PARTICIPATE. RECOGNITION OF PEOPLE IS MUST.

BUDGET EDUCATION : THOSE WHO ARE AFFECTED AND ARE TO BE HELD RESPONSIBLE FOR OFF PERFORMANCE MUST BE PROPERLY EDUCATED ABOUT THE TARGETS AND CONSEQUENCES OF FAILURES TO ACHIEVE THEM TOGETHER WITH ADVANTAGES WHICH SHALL ACCURE WHO ALL FOR FAVORABLE PERFORMANCE.

TIMELY REPORTING : THE ACTUAL PERFORMANCES AND DEVIATIONS OF BUDGETS FROM THEM MUST BE REGULARLY REPORTED TO HIGHER AUTHORITIES SO THAT NECESSARY FOLLOW UP ACTIONS MUST BE TAKEN IN TIME.

COST BENEFIT ANALYSIS : NO SYSTEM SHALL BE SUCCESSFUL IF ITS COST EXCEEDS THE BENEFITS. HENCE EFFECTIVENESS OF BUDGETARY CONTROL SYSTEM DEMANDS THAT ITS COST MUST BE CONTAINED WITHIN THE PARAMETERS OF ITS BENEFIT.