Budgeting is the
process of expressing the predicted costs and resources for a planned course of
action over a specified time period. Budgets can be drawn up for business
units, departments, products, teams or the entire organisation (see master
budget below). Another term for a budget is a financial plan, but budgets can
refer to non-cash resources, such as staff or time. Budgeting helps all types
of organisation to plan and control their operations, and to support their
managerial strategies.
BUDGET
A budget is: 'A
quantitative expression of a plan for a defined period of time. It may include
planned sales volumes and revenues, resource quantities, costs and expenses,
assets, liabilities and cash flows.' CIMA Official Terminology, 2005
A budget is a
comprehensive plan in writing, stated in monetary terms, that outline the
expected financial consequences of management’s plans and strategies for
accomplishing the organization’s mission for the coming period.
A budget is a master
financial document or a “blueprint for action” that set out the expected
contribution from the operation or control of an organization in terms of
anticipated cash flows or revenues and expected expenditures over a certain
period of time.
BUDGETING
Budgeting is the
process of preparation, implementation and operation of budgets decisions into
specific projected financial plans for relatively short periods of time. In
other words, budgeting is the process of “translating financial resources into
human purposes” (Wildavsky, 1986).
BUDGETARY CONTROL
Budgetary control is
defined by CIMA as “the establishment of budgets relating the responsibilities
of executives to the requirements of a policy, and the continuous comparison of
actual with budgeted results, either to secure by individual action the
objective of that policy, or to provide a basis for its revision”.
Budgetary control is a
system of controlling costs and resources which includes comparing actual
performance with the budgeted performance and subsequently acting upon the
actual results to minimize variance and achieve maximum returns.