The effectiveness of the budgetary control system in 'Cleaning For Essay

The effectiveness of the budgetary control system in 'Cleaning For London' - Essay Example It will include illustrating and evaluating the role of budgetary control in support to internal planning and decision making. It aims to create an effective budgetary control system for its operations, to identify cost behaviours and to propose a suitable recommendation for improvement. Budget is a quantitative financial plan of operations. It identifies the resources needed in order to accomplish the organisation’s goals and objectives. It contains detailed plans and policies to be pursued in a future accounting period. It is continuous where one updates the budget for the year at the end of each month or each quarter. A continuous budget remains more relevant and more current. As a service company, â€Å"Cleaning Services for London† the operating budget includes purchase budget, human resources budget and sales budget. One of the major facets of budgeting is cost control. Budgets are the key to cost control. The purpose of budgetary control is to help master the financial aspects of the company’s operations and solve problems before they occur. Financial control is exercised by managers in preparing budgets for revenues and expenditures of an organisation in advance. Budgetary control facilitates the management and allocation of resources and funds in operating the business to achieve desired outcomes or to provide basis for revision of business objectives and plans. The activities of the company are categorized into two – revenue generators and cost drivers. These main activities summarise the operations of the company in financial terms where revenue generators are cash inflow of the company while cost drivers are expenses incurred in the operation of the business. The company utilises a simple budget system in line with a business plan for one year. The manager who is responsible for the financial, marketing, administrative and operational matters uses cash flow forecasts as basis