EXECUTIVE SUMMARY

Budgetary control is a systematic process that helps organization

monitor and manage their financial performance by comparing actual results
with planned [Link] allows businesses to track expenses, identify
variances, and take corrective action to meet financial goals.

Think of budgetary control like navigating a road trip with [Link] as a GPS
guides you to your destination,setting the best route and adjesting for traffic
or roadblocks,budgetary control guides a business towards its financial [Link]
sets the financial route, monitor progress,and adjust for unexpected expenses
or changes in revenue,ensuring the business stays on track.

OBJECTIVES OF CONTROL

The main objectives of budgetary control are to:-

 Plan for the future:- Budgetory control helps organizations plans for the
future by forecasting future income and [Link] allows
organization to recognize potential problems and develop strategies to
address them.
 Coordinate Activities:- Budgetory controlhelps to coordinate the
activities of different department and units within an organization. As a
result, everyone works towards the same goals and resourcesare not
duplicated.
 Control costs:- It helps organization control cost by setting targets for
spending and tracking actual performance against those [Link]
allows organizations to identify areas wherecosts are overspending and
take corrective action.
 Improve Efficiency:- It helps organization improve efficiency by
identifying areas where resources are ineffective. This can lead to
changes in processes and procedures that can save the organization
money.
 Increase profitability:- Budgetary control can help organization increase
by using their resources efficiently and effectively. This can lead to
higher revenue and lower costs,which in turn can boost profit.
INTRODUCTION
Finance is the life bood of a company or every business or organization. There
for,financial planning is of utmost significance to a [Link]
planning is concerned with raising funds and their effective utilization with a
view to maximize the wealth of board.

Every organization makes plans. Some plans are more formal than others and
organization plan more formally than others but all make same attempt to
consider the risk and opportunities which lie ahead and how to confront them.
In most of business this process is formalized at least in short term, with
considerable effort put into preparing manual budgets and monitoring
performance against those budgets.

Budgeting is management tool used for short term planning and control.
Traditionally budgets have been employed as divece to limit expenditure, but a
much more useful and constructive view is to treat that budgeting process as a
means for obtaining the most effective and profitable use of the company
resources via planning and [Link] term planning is formalized in the
budgetary process.

A budget is merwly a collection of plan and forecast, expresses largely but not
exlusively in financial [Link] though many organization do not plan
formally for more than year ahead, the annoul budget must be set in the
context of longer –term plans, which are likely to exist even if they have not
been made explicit. Budgets should be a management tools rather than merely
an accounting exercise.
MEANING AND DEFINITION

Budget:-
According to CIMA (chartered institute of managmentaccountants) UK, a
budget is “ A plan quantified inmonetory terms prepared and approved prior
to a defined perior of time, usually showing planned income to be generated
and,expenditure to be incurred during the perior and the capital to be
employed to attain a given objective.”

In a view of Kellerand ferrara, “ a budget is a plan of action to achieve stated

objectives based on predetermind series of relasted assumptions.”

[Link] states “A budget is written plan covering projected activities of a

firm for a definite time period.”

Once can elicit the explicit characteristing of budget after observing the
above definitions. They are…

 It is mainly a forecasting and controlling device.

 It is prepared in a advance before the actual operation of the company
or project.
 It is an connection with definite future period.
 Before implementation, it is to be approved by the management.
 It is also shows capital to be employed during the period.

BUDGETARY CONTROL
Budgetary control is a method of managing costs through
preparation of [Link] is thus only a part of the budgetary
control. According to CIMA, “Budgetary control is the establishment of
budgets relating to the responsibilities of executives of a policy and the
continuous comparison of the actual with the budgeted results, either to
secure by individual action, the objective of the policy or provide a basis
for its revision.”
THE MAIN FEATURES OF BUDGETARY CONTROL ARE :

1. Establishment of budget for each pupose of the business.

2. Revision of budget in view of changes in conditions.
3. Comparision of actual performance with the budget on a
continuos basis.
4. Analysis of variations of actual performance from that of the
budgeted performance to know the reasons thereof.

OBJECTIVES OF BUDGETARY CONTROL:

1. To provide a detailed plan of action for a board over a
period of time.
2. To coordinate the different units & activities of the
organization with a view to utilize the resources
judiciously.
3. To revise the budgets in the light of changed
circusmstances.
FINANCIAL BUDGET:-
Financial budget is a summary statement for the future that shows
the estimated requirements of cash inflow and outflow.

According to walker, “A financial budget is a comparision of estimated cash

inflows and outflows for particular period i.e.a month, quarteror year.”

According to Guttmann and Dougal, “ financial budget is an estimated of cash

receipts and disbursements for future period of time,”

CASH BUDGET:-

The cash budget is a sketch of the business estimated cash inflows and
outflows over a specific period of time. Cash budget is the most important and
one of the last to be prepared. It is detailed projection of cash receipt from all
sources and cash payments for all purpose and the resultants cash balance
during the [Link] is a mechanisim for controlling and coordinating the fiscal
side of business to ensure solvency and provides the basis for forecasting and
financing required to cover up any deficiency in cash. Cash budget thus plays a
vital role in the financing management of a business enterprise.

FUNCTIONS OF CASH BUDGET

 It makes sure that enough cash is available when it is required.

 It designated cash excesses and shortage so that steps may be taken in
time to invest any exces cash or borrow funds to meet any shortages.
 It shows whether capital expenditure could be financed internally.
 It provides funds for standard growth.
 It provides a sound basis to manage cash posi

A CASH BUDGETHELPS THE MANAGEMENT IN KSPCB:-

1) Determining the future cash needs of the board.

2) Planning for financing of those needs.
3) Exercising control over cash and liquidity of the board.
 THE FOLLOWING METHODS:-
1. Receipt and payment method.
2. The adjusted profit and loss method.
3. The balace sheet method.

RECEIPT AND PAYMENT METHOD :-

In case of this method the cash receipts from various resources and the
cash payments to various aspects are estimated. In the opening balance of
cash estimated cash receipts are added and from the total, the total of
estimated cash payments are deducted to find out the closing balance.

THE ADJUSTMENT PROFIT AND LOSS METHOD

In case of this method the cash budget is prepared on the basis of opening
cash and bank balance, projected profit and loss account and the balance of
various assets and liabilities.

THE BALANCE SHEET METHOD:-

With the help of budgeted balances at the end except cash and bank
balnces, a budgeted balance sheet can be prepared and the balancing figure
would be the estimated closing cash /bank balance. Thus, under this method,
closing balance other than cash/bank will have to be found our first to be put
in the budgeted balance sheet. This can be done, by adjusting the anticipated
transactions of the year in the opening balance
 Model of cash Budget
particular JANAUARY FEBRUARY MARCH
Opening Balance - - -
ADD: RECEIPTS: - - -
Cash sales - - -
Receipts from Debtors - - -
Interest and Divident - - -
sale of fixed assets - - -
Sale of Investment - - -
Bank Loan - - -
Issue shares & Debenture - - -
others - - -
Total Reciepts (A) - - -
LESS:payments - - -
Cash purchases - - -
Payment to creditors - - -
Salaries & wages - - -
Addministrative expenses - - -
Selling expenses - - -
Divident Payable - - -
Purchase of Fixed Assets - - -
Repaymnet of taxes - - -
Total payments (B) - - -
Closing balance ( A-B) - - -
BUDGETARY CONTROL TECHNIQUES:

1. Direct supervision and observation

Direct supervision and observation is the oldest technique of
controlling. The supervisor himself observes the employes and their
work. This bring him in direct contact with the [Link], many
problems are solved during supervision.
2. Financial statements
All business organization prepare profit and loss account. It gives a
summary of the income and expenses for a specified period. They also
prepare balance sheet, which shows the financial position of the
oraganisation at the end of the specified period.

Ratio analysis :- can be used to find out and analyse the financial
statements. Ratio anayysis helps to understand the profitability, liquidity
and solvency position of the business.