The Budgetary Control Function.

Abstract The objective of any control system is to reduce to a minimum the difference between actual conditions and desired conditions. The conventional concept of the budgeting control system emphasizes the process whereby management's attention is directed mainly to differences which have arisen. This concept, however, fails to give express recognition to the intangible and self-governing elements which serve to reduce the number and the magnitude of these differences. The budget itself controls as soon as it achieves its authoritative characteristics through approval by high management and communication to subordinates. All factors which increase employee identification with budget goals are control elements. These include a participative budgeting process, advance knowledge of performance evaluations, hiring and training programs, involvement in extra-organizational activities, and a system of sanctions. Attainability is a third attribute of good control by budgetary means. For this purpose, flexible budgets, multi-goal performance levels, and responsibility accounting are leading methods of implementation. To the extent that authority, identification, and attainability are properly applied, the effectiveness of budget control should be increased.