ADVANTAGES OF BUDGETARY CONTROL

ADVANTAGES OF BUDGETARY CONTROL

The following as the advantages of budgetary control:

1. Budgetary control focuses attention upon the organizational structure and necessitates the assignment of responsibility.
2. It emphasizes the end for early planning of future policy.
3. Efficiency or inefficiency is spotlighted in periodic reports.
4. All the management members in all management level hierarchies are made to participate in the fixing of targets.
5. As a motivating factor the executive will strive to achieve budget target which has been set with his full cooperations, his success or otherwise in the organization solely depends on his achievement to a great extent.
6. It provides a yard stick against which actual results can be compared.
7. It shows managements where actions needed to remedy the situation.
   viii. It aims at maximization of profits through careful planning and control.
8. It compels managers to think ahead to anticipate and prepare changing conditions.
9. It assists in delegation of authority and assignment of responsibility.

 

CONSTRAINTS TO BUDGETING CONTROL

There are so many contributory factors to the failure of budgetary system, but my reason will focus on some few, which are considered to be the principal weakness of budgeting control;

1. LACK OF FLEXIBILITY: Some budgets are prepared without adequate flexibility to caution unexpected situations which may arise during the operations of the budget, because they are fixed and tight, they become an end to themselves rather a means to an end.
2. RESISTANCE TO CONTROL: Many managers regard budgetary control as unnecessary and an indirect way of curtailing their authority and as a witch hunting exercise. They adopt a protective stance on their budget center and resist anything which help to bring it into harmony with other center.

Budgets are developed around existing organizational structure which may be inappropriate for current condition.

1. Badly budgetary system with under pressure or lack of regard to the behavioural factors may cause antagonism and lower moral.
2. Variances are just as frequent due to changing circumstances and forecasting / management performance.