The Objectives of Budgeting

The objectives of any budgeting system are as follows:

• To set the goals and objectives of the business and to write them in terms so that management and budget holders are clearly aware of their responsibilities and limits of authority.
• To calculate and draw up an agreed set of standards by which each department agrees to be measured.
• To agree to the process that will measure the efficiency and effectiveness of the company.
• To show any variances; this will be the basis for deciding what action to take when the business is seen to be off track.