Budgetary control is the establishment of budgets relating the responsibilities of executives to the requirement of a policy and the continuous
comparison of the the actual with budgeted results either to secure by individual action the objectives of that policy or to provide a basis of its revision.
The following are essential requirement of budgetary control:
- Budget must have the complete cooperation of chief executive.
- The budget must be realistic and the goals attainable.
- The ultimate realization of the maximum amount of profit should always be kept uppermost.
- Responsibility for the preparation of the estimates should rest on those individual responsible for performance.
- A budget committee should be established consisting of the budget director, the chief executive officer and the executives of various division of the organization.
- The budget should cover all phases of operation.
- Budgeting should be continuous.
- Periodic reports should be prepared promptly, comparing the budget and the actual results.
- The accounting system should be adequate.
- A good organization must be developed.