Budgets are tools for managing and planning business expenditures.
Planning and Control Process and Budgeting Article shared by: Planning and Control Process and Budgeting! Budgeting is a vital part in the planning and control process.
Control is the process of using feedback on actual performances and results, comparing the actual results with the plans, measuring its deviations from plans and policies and finally taking corrective actions to bring all future activities in line with the plan budget.
If the deviation is a result of a plan that is unrealistic or incorrect, the plan budget may have to be revised and updated. Furthermore, plans, as stated above, identify objectives and the actions needed to achieve them.
Budgets are the quantitative expressions of these plans, expressed in either physical or financial terms or both. Budget is a plan showing how resources are to be acquired and used over a specific time period.
Thus, a budget is a method for translating the goals and strategies of an organisation into operational terms. Thus management uses the planning process to establish programme, make basic policies and set goals and objectives for the overall organisation. In the control process, budget, which is a plan of action, is used to control by comparing actual operations and performances as they happen with the planned budgeted operations.Linking Strategic Planning and Budgeting: The overall perspective linkage between strategy (objectives) and operations (outputs to achieve the objectives) in terms of budget respective into objective-related budgets.
Given the inherent hierarchy it corresponds with a. The relationship between a company’s objectives and the operational budget is considered interrelated. This is because a company’s budget often will influence the objectives and the objectives may be influenced by the available funds in the company’s budget.
The Difference Between an Operating Budget & the Strategic Plan by Devra Gartenstein - Updated September 26, Strategic planning is a process of envisioning and articulating a company's long-term goals in order to provide a focus for day-to-day operations.
Financial budget is the budget for balance sheet elements. In other words, financial budget deals with the expected assets, liabilities, and stockholders’ equity. In other words, financial budget deals with the expected assets, liabilities, and stockholders’ equity.
In the control process, budget, which is a plan of action, is used to control by comparing actual operations and performances as they happen with the planned (budgeted) operations.
Exhibit shows the relationship between planning and control and . Operational budgets. Operational budgets. Relationship between control and flexible budgets. Performance report. Once a budget period has been completed and actual outcomes are contrasted with the budget, the differences/variances are examined to evaluate the quality of planning and assisting in shaping action and future planning.