The roles of budget analysis and budget controls on the functioning of an organization

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The corporate budget is an essential strategy for any organization, regardless of its size or legal nature. Among the advantages of budgetary control, it can be mentioned that it fully meets the basic administrative functions of the company of planning, control and execution. Established in public administration, it is also widely accepted by well-managed companies.

Even if one can ask the question of the capacity of budgetary control to integrate all the dimensions of an organization, it is necessary to model its operation well and to define its orientations in terms of resources and objectives.

Budgetary control will identify deviations; this is its primary role. However, it will not give managers and operational agents the keys to piloting their activity and dysfunctional processes compared to the standard provided for in the budget.

Indeed, the budget does not assess the skills of agents, nor the evolution of citizens’ expectations or the attractiveness of a territory. In terms of decisions, budget control encourages the implementation of cost reductions rather than investment plans because it is a more secure and easily measurable approach in the short term.

The budget process is a process that takes place in 5 main stages:

  • The strategic orientations of the structure;
  • The draft budget;
  • Budgetary arbitrations;
  • The final budget;
  • Budget monitoring.

In this process, it is necessary to involve all the different stakeholders. But several pitfalls exist with this approach. Managers are tempted to underestimate their ability to build up performance reserves and thus exceed their budget.

The budget cycle is so heavy that the manager can feel dispossessed of his ability to act, which is reflected in his motivation. The only respect of the budget can then lead to aberrations of the type: “the users are not satisfied, but nevertheless I respect the budget; nothing to see “.

Budget control should not be the only management tool for the organization. Other indicators must be put in place. The implementation of off-budget performance indicators makes it possible to counterbalance the weight of the financier in the process of quality of service and satisfaction of internal and external actors.

The directorates-general must analyze each month the indicators of deviations from the budget and a whole other set of external indicators. Only the synthesis between the budgetary objectives and the operational results makes it possible to validate a performance approach in a relevant way.

Controlling the budget remains for many a pledge of good management. The budget is constantly criticized for its perverse effects, but no one will question it globally. The current budget control tools combine the classic approach and the management approach.

Budget aggregates are combined with performance indicators. The operations manager can see deviations and dig to identify root causes and take corrective action in real time.

Business Intelligence tools have adapted to this demand and meet these expectations in real time, so they are developing intensively in their organizations lately.

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