5 limitation of budgetary control

Budgetary control is the process whereby managers set financial and performance goals by preparation budgets and then compare the budgeted performance with actual results and adjust performance as it is needed.

The following are limitation of budgetary control:

The budget is always based on estimates. The success or failure of a budget, to a large extent, depends upon the accuracy of estimates. The estimates can not be accurately made in this dynamic world although much statistical techniques are available.

Budgeting is only a tool of management but it can not replace management.

To evolve a budgetary control system, normally, it takes several years as it has to be tried, improved and discarded, depending on the changing circumstances.

The success of budgetary control depends upon the enthusiastic participation of all levels of management. But it is difficult to secure the wholehearted cooperation of all organizations.

It may be difficult to install a system of budgetary control in small organizations owing to the expenditure involved.

Leave a Comment

Your email address will not be published. Required fields are marked *

%d bloggers like this: