Budgetary control is a way of checking that the organisation not living beyond its means. It enables the enterprise to know how its money is being spent, and whether on as particular item the expenditure to date is more or less than it ought to be. Evaluation of financial performance begins an analysis of the operating budget plan (expectation) expressed in monitor terms. It is also used as a tool ii controlling expenditure.
Many people do not understand how and why budgets must be based on plans. In fact, some enterprises sped no business enterprises do attempt to develop budgets without knowing plans.
But when they do so, money allocated to pay for salaries, office space, equipment and other expenses becomes a matter of negotiation between a top authority and managers in the enterprise.
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The usual res: is that funds are not itemized and not allocated on the basis of what is really needed for accomplishing desired goals. Many of us have seen the kind of uncertainty and consequent “jockeying for position” in government and university budgeting.
Only by having clear goals and action plans to accomplish them can anyone in a top position of authority know how much money is necessary to do what is desired.
However, in many organisations, especially in the government sector, budgets are considered to be a necessary evil, to be prepared but not to be bothered about too much.
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An organisation’s financial health and in fact its ability to survive, is reflected in its adherence to the budget. The administrator should not only understand fully the budgeting process, but the budgeting process also needs his wholehearted support.