Budget, Budgeting & budgetary control

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    26-Dec-2014

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Presentation on Budget, budgeting and budgetary control.. Contents- 1) Budgeting [characteristics] 2) Budgetary control 3) Difference in budget, budgeting, budgetary control 4) Essentials in budgetary control 5) Requisites for budgetary control system 6) Merits & limitations 7) Zero-based budgeting 8) Difference in Traditional & Zero based budgeting.

Transcript

<ul><li> 1. Budgeting &amp; Budgetary Control Submitted by: (MBA Ist SEM.) Chetna prasad Shikha pathak Chitra totwani Shilpi Panchal </li> <li> 2. Contents Budgeting [characteristics] Budgetary control Difference in budget, budgeting, budgetary control Essentials in budgetary control Requisites for budgetary control system Merits &amp; limitations Zero-based budgeting Difference in Traditional &amp; Zero based budgeting. </li> <li> 3. Definition &amp; Meaning of Budgeting A budget is a pre-determined statement of management policy during a given period which provides a standard for comparison with the results actually. -Brown &amp; Howard Budgeting is a preparation of comprehensive operating and financial plans for specific intervals of time -Shilinglaw </li> <li> 4. Characteristics of good Budgeting . Good budgeting should involve persons at different levels while preparing the budgets. There should be proper fixation of authority and responsibility. . The target of budget should be realistic, if targets are difficult to be achieved then they will not enthuse the persons concerned A good accounting system is also essential to make the budgeting successful. . Budgeting system should have whole hearted support of the top management. The employees should be imparted budgeting education. </li> <li> 5. Definition &amp; meaning of Budgetary Control Budgetary control is a system which uses budgets as a means of planning and controlling all aspects of producing/selling commodities or services -J Batty A budget is a means and budgetary control is the end result </li> <li> 6. Essentials of Budgetary Control Organization for budgetary control. Budget centers Budget officers/committee Budget manual Budget period </li> <li> 7. Organization chart for Budgetary Control Chief Executive Budget Officer Budget committee Production manager Sales manager Finance manager Accounts manager Personnel manager Research &amp; development manager </li> <li> 8. Requisites for Budgetary Control System Clarifying objectives Proper delegation of authority &amp; responsibility Proper communication &amp; budget education system Participation of all employees Motivation &amp; flexibility </li> <li> 9. Budgetary control Advantage s Tool for measuring performance Provides specific aims Creates budget consciousness Introduction of incentive scheme Limitation s Uncertain future, revision required Discourages efficient persons Problem of co-ordination Conflict in departments To make COST accounting Depends on Top management more reliable </li> <li> 10. Difference in Budget, Budgeting, &amp; Budgetary Control. Budgets are business estimates for future period, budgeting is the process of preparing these estimates while budgetary control is a system of achieving performance on the basis of budgets. Budget and budgeting are the parts of planning whereas as budgetary control is linked with co-ordination &amp; control. </li> <li> 11. Zero-Base Budgeting Zero base budgeting is the latest technique of budgeting &amp; it has an increased use of management tools. In zero base budgeting every year is taken as a new year and previous year is not taken as a base. It enables management to allocate funds. It improves efficiency of management and make optimum use of resources. Helpful in identifying economical &amp; wasteful areas. Related to organizational goals. </li> <li> 12. Process of Zero Base Budgeting Determine Objectives Plan of action Prioritization of activities Cost Benefit Analysis Approve decision package &amp; Finalize Budget </li> <li> 13. Zero Base Budgeting Advantages Efficient allocation of resources. Optimum utilization of resources Enhances capability of Managers. Identifies &amp; eliminates wasteful and obsolete operations. Disadvantages Non financial matters cannot be considered for cost benefit analysis Difficulty in process of ranking of decision packages It is time Consuming </li> <li> 14. Traditional v/s Zero Base Budgeting Traditional Budgeting Zero Base Budgeting . It is accounting oriented . Its approach is monitoring towards expenditure . Its focus is on increase and decrease of expenditure . It is simple to read &amp; prepare . Its method of preparation is based on extrapolation . It is decision oriented . Its approach is towards achievement of objectives . Its focus is on cost benefit analysis . It is more complex. . Its preparation is based upon selection of decision package </li> </ul>

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