The organizational goal should be quantified and

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The organizational goal should be quantified and clearly stated. These goals should be within the frame work of organisation’s strategic and long range plans. The setting of budgets is not a process detached from planning of the company’s overall policy. A well defined business policy and objective is a prerequisite for budgeting. The budget system should be established on the highest possible level of motivation. All levels of management should participate in setting budgets. Since this can produce more realistic targets, lead to better understanding of corporate objectives and the constrains within which organization works. Participation in budgeting process will motivate the personnel to achieve budget levels of efficiency and activity. The budget control system should provide for a degree of flexibility designed to change in relation to the level of activity attained and the impact of changes in sales and production levels on revenue, expenses are known. It enables more accurate assessment of managerial and organizational performance. Proper communication systems should be established for management reporting and information service so that information relating to actual performance is presented to the manager responsible for it promptly to enable the manager to know the nature of variations so that remedial action is taken wherever necessary. Educating the budget process and creation of cost awareness atmosphere will lead to effective implementation of budgets.
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173 The top management’s involvement in budget process is essential for successful implementation of the budgets. It should take interest not only in setting the budgets and targets but also to check upon the actual attainment, motivating the personnel, rewarding for achievements, investigation into reasons for any deviation of actual from budgeted results, taking punitive action wherever necessary. A sound system for generating accurate and reliable and prompt accounting information is basis for successful implementation of budget system in an organization. 14.3.5 OBJECTIVES OF BUDGETARY CONTROL Budgetary Control assists the management in the allocation of responsibilities and is a useful device to estimate and plan the future course of action. The general objectives of budgetary control are as follows: 1.Planning a) A budget is an action plan and it is prepared after a careful study and research. b) A budget operates as a mechanism through which objectives and policies are carried out. c) It is a communication channel among various levels of management. d) It is helpful in selecting a most profitable alternative. e) It is a complete formulation of the policy to be pursued for attaining given objectives.
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