Discuss the purpose and process of budgetary control Assignment

Discuss the purpose and process of budgetary control - Assignment Example Budget control is the process of managing individual items in a budget such that expenses arising from them do not rise above the forecasted amount in the budget estimates. Budget control helps an organization/ entity to plan adequately for the future. It also helps the organization to evaluate adherence to set policies. Through budgetary control, the organization is able to minimize wastage and inefficiency (Pollitt, 2001). In itself, the budget is a tool for expenditure control within a firm. In order to stick to the laid out expenditure program and prevent excessive spending, the organization has to carry out effective budget control measures, both before and after planning. Below is an outline of the main steps of budgetary control. This phase involves drawing up a list of policy guidelines for the firm that will guide both the management and lower-level employees in their daily operations. Integrating long term policies with short term ones forms a basis for periodic evaluation of success in implementing a set of policy guidelines. Several objectives that guide the business are laid out in order of prioritization. Besides profitability, which is the key objective of most business organizations, quality, market positioning, product differentiation and cost leadership form some of the more common goals that guide policy formulation (Toigo and Woods, 2006). Whereas policy harmonization is key to achievement of set goals, each level of management rolls out several objectives that guide its specific situation. However, the goals must work towards achieving the corporate objectives laid out by the top management. Each function that is deemed to complement achievement of policies formulated is listed together with its expected costs/ revenue. The forecasts should be made at both the micro and macro levels. Micro level forecasts involve activity based costs, while macro level forecasts involve transaction