What type of control is budget?

Budgetary control characteristics

To understand the importance of budgetary control, we must begin by drawing up a budget. This will allow us, as a company, to set economic objectives. In addition, we can see what resources we have available and how we will allocate them. In short, it is an economic planning that will make it easier to achieve our goals. It is elaborated in the following way:

What has been the level of expenditure? What has been the level of income? Have there been unforeseen expenses that you have not taken into account? What has been the level of performance of each department? These are all real variables that you should collect in a report at the close of your budget. Analyze each line item independently to get the most detailed results possible.

Once you have the deviations in hand, you have to take the appropriate corrective measures for the next fiscal year. These may include reducing costs, improving marketing, optimizing performance or increasing PVP. Think about how to implement effectively.

What type of control is budgetary control?

What is Budgetary Control? Definition. It refers to all the activities, tools and mechanisms that make it possible to monitor the budget, in order to identify the appropriate use of resources and according to plan.

What is budgetary control and what are its types?

Budgetary control is one of the forms of organization regularly used by companies, since it is based on the comparison between actual and estimated results obtained in the company in a given time, and to carry out the proper functioning of any organization.

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What is budget control?

Budget control is a process that brings benefits to the company, since it periodically checks how reality is adjusted to what was planned in the budget; it also analyzes the deviations produced, in order to understand and correct the causes.

Levels of budgetary control

Although there are various perspectives on the types of budgets, the most commonly used classifications are those based on each organizational function. Here we will explain each budget by its scope and particular characteristics.

Each budget should be conceived as a strategy for organizing the company’s money and optimizing its performance; it should be carried out under two premises: exhaustive control of the accounts and the ability to react to correct or improve any shortcomings.  To this end, factors such as the following must be taken into account:

The master budget collects all budgets to create a comprehensive financial picture; this is why it encompasses all information. It includes the economic data destined to the budgeted cash flow and everything related to the financial and economic base in order to achieve the main objective.

What is that objective? To maintain the balance in the relationship between the various departments of the company. From this perspective, it encourages the functionality of the processes and contributes to achieving the goals of the entire business.

What is the role of budget control in today’s companies?

Contribute to the internal and general order. Establish best reporting practices for better control of operations. Contribute to the flow of information necessary to comply with accounting and tax requirements. Allows to obtain key information for decision making.

Who exercises budgetary control?

The General Directorate of Public Budget performs budgetary control, which consists exclusively of monitoring the levels of expenditure execution with respect to the budgetary appropriations authorized by the Annual Public Sector Budget Law and its amendments, within the framework of the rules of the Public Sector Budget Law and its amendments.

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What is budget evaluation?

Within the budget process we have the Budgetary Evaluation, which allows us to measure the results obtained and the analysis of the physical and financial variations executed at the end of the 2019 fiscal year, using instruments such as performance indicators of the execution of the budget and the …

Budgetary control tools

Budgets are quantitative planning models. Budgeting is the process of preparing budgets and requires the use of forecasts, as well as knowledge of the origin of activity costs and the ability to integrate the organization’s activities.

-g) Budgets must be managed in a flexible manner. Changes in the environment and in plans can generate changes in budgets. A rigid adherence to budgets is not the modern way of managing, characterized by the rapid succession of changes in the environment. Moreover, if a budget is rigid, it becomes a decision, and ceases to be a plan.

Also called variable budgets. In this type of budget, the budgeted figures for the different items vary as the company’s activity levels change. For each level of sales or production activity, flexible budgets show different levels of costs and expenses.

What is management control in a company?

Business management control focuses on the collection of information that helps to optimize decision making in the management of the company. A disruptive business strategy cannot be established without the help of financial and operational management control.

Who is in charge of budgeting?

The General Directorate of the Public Budget is the Ministry’s line body, governing the National Public Budget System, and as such, it is the highest technical and regulatory authority at the national level in budgetary matters, in charge of leading the budgetary process of the Public Sector.

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What is budget implementation?

The implementation of the budget for results requires the definition of outputs and expected results as a consequence of the execution of policies and programs (strategic planning) as well as the determination of institutional processes for the generation of data that will allow to know the degree of progress (…

Types of budgetary control

The budget is the main and basic element in the planning of the accounts of an organization or administration. Since, from this, it is possible to foresee the expenses that we are going to have in a fiscal year. All this is based on the actions planned and the way in which they are going to be financed, through taxes and other tax, recurrent or extraordinary revenues.

From budgetary control, it is possible to anticipate and study the deviations that may arise in the execution of the budget. For this purpose, taking measures periodically when imbalances and instabilities in the obtaining of income or in expenses that have shot up.