What is Budgetary control?


Budgetary control

It is a form of financial management control. Every budget is composed of a set of budget items. Every expense is controlled in the light of a budget in order to achieve efficiency.
The budget variance analysis is to analyze the differences between forecast and actual data.

Three parameters are considered:
- The quantity,
- Prices,
- Yields.

Too important differences should trigger a correction process.

The gap analysis has long been the preferred method of budgetary control. The regulation of short-term fiscal system is such corrective action, in turn, can trigger medium term learning effects.

The new management control methods aim to anticipate changes (Flexible planning scenarios methods) to be more responsive (faster responses to short-term changes in the environment) or to question radically the existing data (ABC method). 
Budgetary control is often criticized for its excessive focus on existing structures rather than the company's relationship with its environment. It seeks detecting inefficiencies rather than sources improvement possible. It is sometimes seen as a relatively inefficient formal exercise. The results are often evaluated on an accounting basis and not in order to implement action plans to improve business performance.
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