Define Budgetary Control.

Budgetary control is a financial management technique that involves the systematic planning, monitoring, and control of an organization's financial resources to ensure that expenditures align with the predetermined budgets. The primary goal of budgetary control is to facilitate effective management by comparing actual financial performance against planned or budgeted figures.

The process of budgetary control typically involves several key steps:

1. Budget Formulation: Establishing a comprehensive budget that outlines the expected revenues and expenditures for specific time periods. This budget serves as a benchmark against which actual performance is measured.

2. Budget Communication: Clearly communicating the budgetary goals and financial targets to the relevant departments, teams, or individuals within the organization. This ensures that everyone is aware of the financial expectations.

3. Monitoring and Recording: Regularly tracking and recording actual financial transactions and performance against the budget. This involves comparing actual results with the budgeted figures to identify any variances.

4. Analysis of Variances: Investigating the reasons for any discrepancies between actual and budgeted figures. Variances may result from unforeseen circumstances, changes in economic conditions, or inefficiencies in operations.

5. Taking Corrective Action: If significant variances are identified, appropriate corrective actions are taken. This may involve adjusting spending patterns, reallocating resources, or revising the budget to reflect changing circumstances.

Budgetary control provides management with a structured approach to financial planning and decision-making. It helps organizations optimize resource utilization, maintain financial discipline, and achieve their strategic objectives by ensuring that financial activities align with the overall organizational goals.