Need and Importance of Budget report
The mere preparation any budget does not bring any benefits to the organization. The reason is that the preparation of budget is a planning function and implementation of budget is a controlling function. Hence there is a need for preparation of budget report to compare actual performance with budgeted figures.
The line managers receive a copy of their budget at the commencement of the budget period. In this way, they know their scope of their authority and responsibility. By knowing the scope of authority, they are expected to implement the budget spontaneously.
The actual performance is watching by the line managers continuously. If there is any deviation, the reasons and causes for such deviations can be find out by the respective line managers. Deviation means a difference between the actual performance and budgeted figures. Deviations may be minor or major. Whatever may be, any kind of deviations are brought before the management through a report. Such report is called as Budget Report.
How often budget reports be prepared?
The budget report may be prepared daily, weekly, fortnightly or monthly. The cost office is responsible to prepare the budget report. The systematic preparation of budget report is acting a best-cost control device. It point out the responsibility of a department or an executive for the deviations. Without budget report, the management cannot able to control costs.
Forms of Budget Reports
Generally, the budget report is prepared as in the form of tabulated statements. Sometimes, diagrams and charts are also given in the budget report along with necessary information. Each report has a distinct heading and mention the period to be covered.
The report must be clear and concise. The report contains the details like the name(s) of person(s) prepared and the name(s) of person(s) received.
Advantages of Budget Report
A budget report is prepared to get the following advantages.
- Budget error may be find out and corrected.
- Remedial action may be taken without delay.
- The budget can be revised if necessary.