Budgetary Control Is Part of Overall Organisation Control and Is Concerned Primarily with the Control of Performance. the Use of Budgetary Control in Performance Management Has of Late Taken on Greater Importance

1945 Words8 Pages
The origin of the word budget can be trace back to few centuries ago, from Latin bulga, a little bag or knapsack, which came from a Gaulish source (Quinion, 1996). The Oxford dictionary defined the word budget as an estimate of income and expenditures for a set period of time or the amount of money needed or available for a purpose. Today, budget has been used by almost every organization as a tool of measurements when setting the organization targets and objectives. The use of budget allowed the managers to establish the objectives of the business in quantitative terms, usually a year, with a financial way of explanation. Budgetary control is described as the process of planning, controlling, coordinating and motivation through money values and departments within an organization (Ryan, 2006), and has lately taken a greater importance in performance management. Today, many issues has since been raised due to the increasingly relation between corporations and the capital market. This essay will analyze and define the advantages of budgetary control and simultaneously examine its limitations pertaining to the capital market. Organizations are a composed of many segments covering a diversity of functions and programs. Budget is a translation of an organization strategic plan into actions that used to direct, coordinate and providing more structure to an organization and at the same time it is also a motivation for the employees in attaining the organization goals (Biznik, 2008). Performance management has been described as “the set of metrics used to quantify both the efficiency and effectiveness of actions” (Neely and Mills et. al., 1995) and it is a must for managers to be in control to achieve good performances. Control can be classified into two types, that is, budgetary and financial. The definition of budgetary control is defined as “the establishment of

More about Budgetary Control Is Part of Overall Organisation Control and Is Concerned Primarily with the Control of Performance. the Use of Budgetary Control in Performance Management Has of Late Taken on Greater Importance

Open Document