Budget revision | Need | Important points | Impact

What are the needs of budget revision?

It is a well-known fact that budget is prepared for future. Future is uncertainty. Hence, there is a need of revision of budget in the light of the changing conditions. Revision of budget is necessary in order to exercise proper control on the employees.

Revision of budget - Need, Important points, Impact

Revision of budget – Need, Important points, Impact

Important points to consider while reviewing budget

The following points have been considered while reviewing a budget.

1. Error may be find out which was not find out while preparing the budget originally.

2. Emergence of unforeseen and unanticipated situations.

3. Changes in the internal factors i.e. changes in the grade of labour, capacity utilization etc.

4. Changes in the external factors i.e. policy of the government, material prices, nature of economy etc.

Impact of budget revision:

The revision of one budget has either minor or major impact on other budgets. If there is minor impact, there is no problem to the management.

On the other hand, if the impact is major one, the management is going to face two types of problems. They are changing the only one budget and changing the master budget. Whatever may be the impact, everything should be communicated to the concerned departments by the management without any delay.

A revision of any budget including master budget is not debatable. If anybody opposes the budget for revision, it should be uncounted by the management with suitable control device. The reason is that, budget revision helps the management to evaluate performance of employees and to exercise control in more effective basis.

Moreover, all the members of the organization come to know of the expectations and standards of revised budget for which they will be accountable.

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