A CIMA definition of budgetary control is 'The establishment
of budgets relating the responsibilities of executives to the requirements of a
policy, and the continuous expansion of actual with budgeted results, either to
secure by individual the objectives of that policy or to provide a basis for
it's revision'.
What the above definition is stating, is that a budget provides
the basis for achieving targets for business growth. In order to achieve long
term prosperity, a business must regulate it's income and expenditure.
In order to have proper budgets systems in place, the business must have a
sound accounting system.
The budget targets must be concise and accurate, a budget which sets
targets that are too easy will lead to de-motivation amongst staff,
similarly, targets that set targets which are too high will simply result in
de-motivation.