Budget Committee:
Learning
Objective of the Article:
- What is a budget
committee?
- What are the functions and responsibilities of a budget
committee?
Definition:
Budget committee is a group of key
management persons who are responsible for overall policy matters relating to
the budget program and for coordinating the preparation of the budget.
Functions and Responsibilities:
A standing budget committee will usually be
responsible for overall policy matters relating to the budget program and for
coordinating the preparation of the budget itself. This committee generally
consists of the president; vice president in charge of various functions such as
sales, production, and purchasing; and the controller. Difficulties and disputes
between segments of the organization in matters relating to the budget are
resolved by the budget committee. In addition, the budget committee approves the
final budget and receives periodic reports on the progress of the company in
attaining budgeted goals.
Disputes can (and do) erupt over budget matters.
Because budgets allocate resources, the budgeting process to a large extent
determines to which department get more resources, and which get relatively
less. Also, the budget sets the
benchmarks by which managers and their
departments will be at least partially evaluated. therefore, it should not be
surprising that managers take the budgeting process very seriously and invest
considerable energy and even emotion in ensuring that their interest, and those
of their departments, are protected. Because of this, the budgeting process can
easily degenerate into an interoffice brawl in which the ultimate goal of
working together toward common goals in forgotten.
Running a successful budgeting program that
avoids interoffice battles requires considerable interpersonal skills in
addition to purely technical skills. But even the best interpersonal skills will
fail if, as discussed earlier, top management uses the budget process
inappropriately as a club or as a way to find blame.
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