Budgetary control is very good technique of accounting for control the cost and increase the revenue. We can write its advantages in so many pages because if this technique is used, we will analyze comparable data of actual and budgeted. With this, we can take corrective measures for good improvement.
But there are lots of disadvantages of budgetary control, if we do not use it properly whose list has given below.
All budgets are made on the basis of historical data. If there is any mistake or window dressing in the accounting data, then it is the chance that budget will not become correct. Incorrect budgets will direct for incorrect budgetary control.
We all know, in the budget, targets are fixed. If targets are more than the capacity and resources of concern, it may give the pressure on a certain responsible employee. For fulfilling the targets, employee may use wrong ways. For example, you have to fulfil the insurance sales target in next one month. This is your sales budget but it has not made fully systematic. Wrong estimations have been taken on this, this budget was made. So, way of budgetary control through this will decrease the efficiency of employees instead of increasing the efficiency.
Sometime, budgets are made just for window dressing. You know what is your actual performance. As per real budgeted data, your performance will very adverse. But, you have changed the figure of budget and new your performance is looking good. All these things will be wrong for achieving great targets.
Time consuming in making budgets should be compare with the value of time of employees. Life is only today. Do best today will be helpful for making better tomorrow. Same time, we can use for motivating our employees. This may also increase the productivity of our employees. More time consumption may be big disadvantage of budgetary control.
But there are lots of disadvantages of budgetary control, if we do not use it properly whose list has given below.
1. Based of Historical Accounting Data
All budgets are made on the basis of historical data. If there is any mistake or window dressing in the accounting data, then it is the chance that budget will not become correct. Incorrect budgets will direct for incorrect budgetary control.
2. Pressure on a Certain Person
We all know, in the budget, targets are fixed. If targets are more than the capacity and resources of concern, it may give the pressure on a certain responsible employee. For fulfilling the targets, employee may use wrong ways. For example, you have to fulfil the insurance sales target in next one month. This is your sales budget but it has not made fully systematic. Wrong estimations have been taken on this, this budget was made. So, way of budgetary control through this will decrease the efficiency of employees instead of increasing the efficiency.
3. Misuse the Technique
Sometime, budgets are made just for window dressing. You know what is your actual performance. As per real budgeted data, your performance will very adverse. But, you have changed the figure of budget and new your performance is looking good. All these things will be wrong for achieving great targets.
4. Time Consuming
Time consuming in making budgets should be compare with the value of time of employees. Life is only today. Do best today will be helpful for making better tomorrow. Same time, we can use for motivating our employees. This may also increase the productivity of our employees. More time consumption may be big disadvantage of budgetary control.
