Budgetary control ideally involves the following steps:
- The creation of budget centres.
- The introduction of adequate accounting records.
- The preparation of organization charts.
This defines the functional responsibilities of each member of management.
- The establishment of a budget committee:
It will consist of operating and financial managers, who will be required to review, discuss and co-ordinate business activities. The main function of this committee involves
- To issue instructions regarding budget requirements, deadline dates for the receipt of budgets e.t.c.
- Draw up the budget preparation timetable. It takes the form of network analysis whereby some activities are preceded by some others.
- To define the general policies of management in relation to the budget.
- Checking initial draft and problems considered. Limiting factors are usually considered.
- Ensuring that the budgets are synchronized within the boundaries of available resources.
- To analyze comparison of budgets and actual results and to recommend corrective action where necessary.
- Review of budgets.
- Prepare the master budget after functional budgets have been prepared.
The preparation of a budget manual. This is a document, which sets out the responsibilities of the persons engaged in the routing of, and the forms and records required for budgeting control. Such manual will provide such information as:
- Description of the system and its objectives.
- Definition of the responsibilities and duties.
- Reports and statements required for each budget period.
- Deadline dates by which data are to be submitted.
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