WORKING OF A BUDGETARY CONTROL SYSTEM

 Working of a budgetary control system

The responsibility for successfully introducing and implementing a Budgetary Control System rests with the Budget Committee acting through the Budget Officer. The Budget Committee would be composed of all functional heads and a member from the Board to preside over and guide the deliberations. 

The main responsibilities of the Budget Officer are:

1. to assist in the preparation of the various budgets by coordinating the work of the accounts department which is normally responsible to compile the budgets—with the relevant functional departments like Sales, Production, Plant maintenance etc.;

2. to forward the budget to the individuals who are responsible to adhere to them, and to guide them in overcoming any practical difficulties in its working;

3. to prepare the periodical budget reports for circulation to the individuals concerned;

4. to follow-up action to be taken on the budget reports;

5. to prepare an overall budget working report for discussion at the Budget Committee meetings and to ensure follow-up on the lines of action suggested by the Committee;

6. to prepare periodical reports for the Board meeting. Comparing the budgeted Profit and Loss Account and the Balance Sheet with the actual results attained.

It is necessary that every budget should be thoroughly discussed with the functional head before it is finalised.

It is the duty of the Budget Officer to see that the periodical budget reports are supplied to the recipients at frequent intervals as far as possible.

The efficiency of the Budget Officer, and through him of the Budget Committee, will be judged more by the smooth working of the system and the agreement between the actual figures and the budgeted figures.

Budgets are primarily an incentive and a challenge for better performance; it is up to the Budget Officer to see that attention of the different functional heads is drawn to it to face the challenge in a successful manner.