BUDGETARY

MANAGEMENT
UNIT ONE
INTRODUCTION
ORGANISATIONAL STRUCTURE OF
BUDGETARY SYSTEM
-Objectives
-Program of action
-Sales program
-Production program
-Supplying program
-Investment program
-Structural organisation of the enterprise
For the budgetary management to be
conducted rationally, each action should
undergo the following stages:

Forecasting Means
the action available

Programed of
action

Realisation of
action

Control
A budget is a quantitative expression of a plan
of action prepared in advance of the period to
which it relates. Generally, this period is a year.
In other words, a budget is a statement of the
expenditure and income forecasted. Budgets
may be prepared for the business as a whole,
department, for functions such as sales,
production or for financial and resource items,
such as cash, capital expenditure, purchases
etc. the act of preparing a budget is called
BUDGETING. The use of budget to cntrol a
firm’s activities is known as BUDGETORY.
TYPES OF BUDGET
- OPERATIONAL BUDGET OR EXPLOITATION
BUDGET
- INVESTMENT BUDGET
- EXPENSES BUDGET
- THE STAGES OF FINANCIAL PROVISIONS
(BUDGET)(TREASURY BUDGET, PROVISIONAL
RESULT ACCOUNT, PROVISIONAL
BALANCESHEET)
HIERACHY AND INDEPENDENCE OF
BUDGET
Budget management ensures elaboration of the
budget which enables to present the
forecasting. The budgets and their eventual
sub-divisions depend on the organisation of
the enterprise. They correspond to the main
function of the enterprise. E.g sales,
production, supplying.
The hierarchy of budget can be summarized as
follows:
Sales
budget

Manufacturing
budget

Supplying Investment budget Expenses bdget

budget

Cash Budget
Benefits and problems of budgeting
Benefits:
- It coordinates the actions of the different
decentralized units
- It foresees the difficulties that may occur in future
- It permits the evaluation of the performances of the

different functions
- It provides managers with a way of planning their

efforts
- It is an important method of communication and

coordination both vertically and horizontally

- It serves management time and attention is directed

to areas of most concern.

Problems:
- Budgets are developed round existing
organizational structure which may be
inappropriate for current conditions
- Badly handled budgeting system which undue

pressure or lack behavioral factors may cause

antagonism and may lower morals.