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THE ROLE OF MANAGEMENT ACCOUNTING IN BUDGET CONTROL
ABSTRACT
Most of the books on financial matters use the terms budget and budget control interchangeably. However, these two terms differ in theory and practice. “The term budget refers to the prediction and estimation of future organizational needs according to previous figures and statistical data for a specific period of time whereas budget control refers to the actual comparison of obtained results with the figures and data relating to budget in order to take necessary actions for solving or preventing the recurrence of deviations.” In this sense, budget shows the objectives and budgetary control shows the obtained end result. Management can be used for budget control with the help of accounting and, in this way, reduce the waste of financial and human resources in organizations. Needless to say, the task of management accounting is to determine the costs with precision through conducting necessary studies and prevent the waste of resources. Finally, with the proper deployment and utilization of equipment and manpower in the intended direction, management can avoid the occurrence of waste. Budget control can predict the waste of resources that occurs in operations, and management can use budget control to reform the situation and consider such situations to avoid the recurrence of the waste of resources in the provision of future budgets. As a result, budgetary control not only is effective, inclusive and practical for the controlling and direction of activities and the prevention of activities that are carried out on a path other than what was intended, it is also one of the best ways to exert control in organizations.
KEYWORDS: management accounting, budget, budget control, operational budgeting, activity-based costing, balanced scorecard, accountability assessment accounting