Budgetary control has the existence of broad and narrow sense. Broad budgetary control sees the entire budget system as a control system, which it is the formation of a prior, during and after the whole process control system. Through the budget preparation, budget evaluation, reward and punishment by monitoring of budget execution. Narrow budgetary control prepares a good budget as a basis for performance management and standards on a regular basis to compare actual performance with the budget analyze differences in the results and take corrective measures, which is mainly referring to something in the process of budget implementation in the monitoring of behavior.
According to control activities, budget control includes target control, process control and system control, while the budget as the primary means of corporate internal controls provides a comprehensive management platform. Budget target of control is that Budget management through strategic planning to determine the annual business objectives; then through the decomposition of indicators to clarify the responsibility of the objectives of the responsibility of the budget units as a basis for evaluation.
Role and Significance of Budgetary Control
Budgetary control mainly refers to the budget during the execution of the budget implementation of the routine supervision and control; it is the budget target to achieve the necessary guarantees. Control functions are the basic functions of management of the budget in the analysis of the implementation of enterprise budget management; Control effect of budget management throughout the management process.
Budgeting is a pre-budget control, budget execution is a matter of control, budget evaluation is a kind of ex post control. As the enterprise’s own internal and external conditions change, sometimes business strategy need to make corresponding adjustments, though corporate budget management must change in accordance with the strategic objectives of changes in the future management of operational activities to achieve feed forward control. In the budget execution process, from budget management, budgetary control organizations in the field and promptly discovered that the actual deviations from the budget differences, and took the necessary measures to eliminate weaknesses and achieve process control.
Budget management functions In the budget- feedback control, budget management, budget management and the implementation of the main functions keep the actual results to compare with budget targets in time, and deviations occur message to budget management and the main body so that adjust it timely to ensure the budget goals.
In short, the advance control focuses on the corporate budget management and budgeting. Things in the process control focuses on each link to control the implementation of a business, and afterwards, feedback control focuses on the feedback according to deviate from the budget target follow-up control of information. Because of the combination, only the budget to strengthen all-round management and control capabilities, it enables Enterprise’s strategic objectives to be refined to implement.
Budgetary control is not only a wide range of control, but also a full range of control; budget control must penetrate to the enterprise in all business processes and the business links, which is covering all business sectors and positions. On the one hand, the application of accounting measurement accounting methods reflect implementation of the budget process and oversight for accounting control and budget management for the basic values to provide the required information. On the other hand, in-depth into the origin of the value of management activities, the daily operations of specific business areas, such as procurement, production, sales and so on, to carry out management control. Enterprise Budget Management of the main needs of the accounting department and co-ordination between business units and communication account control and management control together.
Budget management involves many factors, the breadth of the decision of the board of directors and the boards of supervisors only grasp what is important in order to take into account the overall situation, but also decided to encourage the implementation of the budget, the main body of self-control is particularly necessary.