Budgetary Control

Budgetary control is also referred to as responsibility accounting because it gives individual managers the
responsibility to achieve results. It is important to distinguish between those items that managers can
control and for which they should be held accountable and those items over which they have no control
and for which they are not held accountable.
Diagram of control cycle
PREPARE BUDGET

IMPLEMENT BUDGET

REVISE THE
BUDGET
RECEIVE ACTUAL DATA

COMPARE ACTUAL v
BUDGET

EVALUATE THE
DIFFERENCES

ACCEPTABLE AND/OR
UNCONTROLLABLE

TAKE
CORRECTIVE
ACTION

UNACCEPTABLE AND
CONTROLLABLE