Control through Budget Summaries and Reports

Summary budgets are increasingly being used as forms of overall control. A budget summary is a collection (resumé) of individual budgets and it reflects the company plans so that the various elements i.e. sales, profits, costs, use of capital and ROI may be seen in their proper relationship.

It will show how the company is succeeding as a whole. For best control through a budget summary a manager must first be satisfied that total budgets are an accurate and reasonable complete indication of enterprise plans.

A budget summary however is not a substitute for good operation and the success of budgeting is affected by the plans being the budget. The better the plans, the more effective the budgeting.

In the face of decentralization of authority budget summaries provide an effective means of overall control as they give a means by which enterprise objectives can be clearly and specifically defined and departmental plans can be made to contribute toward such objectives.

If the summaries show that the firm is not moving toward its objectives, the top management have a convenient and positive means of finding out where deviations are occurring.