CHAPTER-1

INTRODUCTION

Finance is very important for every business. Financial information is required for
Financial planning, analysis and decision making. All the activities of business is move
around finance. Accounting system of a firm is the main source of financial
information. Accounting is the process of identifying, measuring and communicating
economic information to permit informed judgments and decisions by users of the
information. It involves recording, classifying and summarizing various business
transactions.

Budgetary control is an important technique of control on business activities by

management, in which business activities are operated on the basis of pre-prepared
budget and thereafter actual results are evaluated in the light of budget estimates. Some
important definition of budget control are as follows :

“The term ‘Budgetary Control’ is applied to a system of management and accounting

control by which all operation and out put are forecasted as far as possible and the actual
result, when know , are compared with the budget estimate.”

-W.W. Bigg

“Budgetary control is a system which uses budget as a means of planning and controlling
all aspects of producing and /or selling commodities or services.”

-J.Batty

In brief, budgetary control is a tool of management control and accounting which directs
and co-ordinates the working operating on the basis of budgets. If there are variances in
actual results, then either they are corrected or budget is modified so that the objectives of
maximum efficiency as per the policy of management may be achieved.

‘Planning’ is the primary and ‘Control’ is the last function of management . ‘Budgeting’
and budgetary control’ occupies an important place among the various techniques which
are used in performing these function. In facts ‘Budget’, Budgeting and budgetary control
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all the three concept are linked with one generic term and all these three reflect different
aspect of the same system.

A budge is a formal statement of the financial resources set aside for carrying out specific
Activities in a given period of time . it helps to co-ordinate the activities of the
organization. An example would be an advertising budget or sales force budget.

Budgetary control is a technique where actual result are compared with budgets. Any
differences (variances) are made the responsibility of key individuals who can either
exercise control action or revise the original budgets.

IMPORTANCE OF BUDGETARY CONTROL

1. To use the forecasting Techniques
It is the importance of budgetary control that with this, we can use the forecasting
techniques. Three departments work hard for calculating best estimation of future.
Accounting departments provide old data. Statistical department provides the tools and
techniques of forecasting like probability, time series other sampling methods.
Management department uses both department services to estimate the expenditures and
revenue of business under the normal conditions of business. So, no department say
anything wrong in making of budget. So, it is necessary for business to use budgetary
control techniques.

2. Fix the Responsibility of Departments.

Department’s scientific name is cost center. Manager makes budget and show the
target of company and employees are given the powers to perform these targets. After
checking the variance in budget through budgetary control process, manager can fix the
responsibility of each department and its employees in a particular cost center.

3. Effective utilization of company’s resources

Company can only effective use its resources, if someone stops misuse of money and
fund of company. If budgetary control is used in company, at that time, no action will be
taken before making budget. Responsible personal of company will be accountable for
his action. Suppose, company has fixed the target of the company’s annual Sale is
$40,00,000 after participating sales manager in the setting of this sale budget. Now, after
one year, if sale is just $1,00,000. This sale manager must say what is the reason for not
selling the product up to standard level of sale.

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4. Excel yourself
After using budgetary control techniques in your business, you will definitely learn the
skills of excel yourself because we all know that a budget is based on estimates, it may or
may not be true. But continually practice of making good budget and apply in
organization, manager can learn skills and experience for increasing the efficiency in
every work of company. Meaning of this, manager will get positive approach through
budgetary control.

CHAPTER-2

RESEARCH DESIGN

A research design is a logical and systematic plan prepared for directing a research study.
It specifies the objectives of the study, the methodology and techniques. It provides a
systematic plan of procedure for the research to follow. It constitutes the blue print for the
collection, measurement and analysis of data.

A research design is a basic plan, which guides the data collection and analyses the
phases of the project. It is the framework, which specifies the type of information to
collect the sources of data collection procedure.

A research design is defined as the “Arrangement of conditions for collection and

analysis of data in the manner that aims to combine relevance to the research purpose
with economy in procedure.

Research Design helps in determining the suitable approach gathering and analyzing the
data.
It also helps in planning; it specifies the source and types of information relevant to the
research problem.

TITLE OF THE STUDY

“ANALYSIS OF BUDGETARY CONTROL” A study conducted at “SPEC”.

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STATEMENT OF THE PROBLEM
• To analyze how budgetary control helps the spec to select best course of action.
• To provide a detailed plan of action for a business over a period of time.
• To co-ordinate the different units and activities of the organization with a view to
utilize the resources judiciously.
• To revise the budget in the light of changed circumstances.
• To exercise control and on cost through comparison of actual results with the
budgeted one.
• To know the role of budgetary control.

OBJECTIVES OF THE STUDY

• To know the role of budgetary control of SPEC
• It shows the relationship between the actual number of working hours and
maximum possible number of working hour in budget period.
• To summarize the finding of the study.
• A budgetary control department fulfill the need of organization.

SCOPE OF THE STUDY

This study focuses mainly on the importance of “ANALYSIS OF BUDGETARY
CONTOL” in terms of understanding the level of the budgetary control.
The study conducted at SPEC, Bangalore. It is confined only to the finance
department of SPEC.

RESEARCH METHODOLOGY
Methodology may be understood as the science of studying how research is done
scientifically. The researcher has undertaken this study too broadly assess the
financial statement. Both primary and secondary data have been collected for the
purpose of this study.

Method of data collected are primary and secondary data:

1. The primary data was collected through the direct interview with the SPEC
officials. Besides officers of the company, discussions were also held with
professionals, academicians to understand the subject and for the analysis
purposes.
2. Secondary data was collected mainly through the text books, annual report or
SPEC.

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