Budgetary Control System Quiz

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Questions and Answers

What is the primary purpose of breaking down an organisation into various responsibility centres?

To reduce administrative costs

To delegate authority to employees

To carry out identified activities and formulate a comprehensive budget (correct)

To measure employee performance

What is the basis of measuring performance in a budgetary control system?

Managerial discretion

Financial statements only

Industry benchmarks

Objectives, output and outcomes of the organization (correct)

What is the purpose of a performance indicator in a budgetary control system?

To evaluate employee performance

To monitor and evaluate the performance and progress of each responsibility centre (correct)

To forecast revenue

To determine the budget allocation

What is the purpose of continuous performance evaluation in a budgetary control system?

To determine the performance of the organization in comparison with the budget Signup and view all the answers

What type of budgetary control ensures that the fund is properly kept and used in the right way?

Fund Control Signup and view all the answers

What is the purpose of Expenditure Control?

To ensure all spending is done for the agreed purposes Signup and view all the answers

What is the purpose of Cost Control in a budgetary control system?

To ensure the total cost incurred for any activity is within the right valuation Signup and view all the answers

What is the purpose of Cash Control in a budgetary control system?

To ensure spending plans are made based on approved vouchers and cash forecasts are done to avoid overspending Signup and view all the answers

What is the primary objective of budgetary control?

To ensure that expenditure of an organisation is within the available resources Signup and view all the answers

Who is responsible for the national budgetary control?

Ministry of Finance (MOF) Signup and view all the answers

What is the role of the Chief Operating Officer (CO) in budgetary control?

To ensure expenditure is within the planned budgets Signup and view all the answers

What is the purpose of budgetary control in an organisation?

All of the above Signup and view all the answers

What is the first requirement of a good system of budgetary control?

To set up accounts for collecting data on inputs and outputs Signup and view all the answers

What is compared in budgetary control?

Actual results and budgets Signup and view all the answers

What is the purpose of reporting in budgetary control?

To report any situations that might cause a change in the expected outcomes of the budget Signup and view all the answers

What is the relationship between appropriation and control in budgetary control?

Appropriation expresses the intent of the authorising agent, while control maintains information Signup and view all the answers

What is the primary objective of reviewing ministries' proposals every two years?

To improve the quality and efficiency of budget allocations Signup and view all the answers

What is one of the benefits of the new budget examination and review system?

Improved government cash flow planning and management Signup and view all the answers

What is the typical timeline for the preparation and submission of new year estimates?

January to March Signup and view all the answers

Who is responsible for issuing the Warrant for expenditure at the end of December?

The Minister of Finance Signup and view all the answers

What is the acronym for the budgeting technique that focuses on the outputs and outcomes of government programs?

OBB Signup and view all the answers

What is the purpose of the Budget Hearing from May to July?

To examine and review budget proposals Signup and view all the answers

What is one of the benefits of the new budget examination and review system in terms of resource allocation?

Redirecting resources to other beneficial programmes and activities Signup and view all the answers

What is the purpose of the BRO individual study in March?

To examine and review budget proposals Signup and view all the answers

Study Notes

Features of Budgetary Control System

Organisations are broken down into responsibility centres, where each centre carries out identified activities and formulates a comprehensive budget.
Objectives, output, and outcomes of the organisation are used as bases of measuring performance.
A performance indicator is developed to monitor and evaluate the performance and progress of each responsibility centre.
Continuous performance evaluation is carried out to determine the performance of the organisation in comparison with the budget.

Types of Budgetary Control

Fund Control: ensures funds are properly kept and used in the right way.
Revenue Control: ensures revenue collection from proper sources, monitors collections, and accounts for them properly.
Expenditure Control: ensures spending is done for agreed purposes, also known as Vote Control, exercised by the accounting officer.
Cost Control: ensures total cost incurred for an activity is within the right valuation.
Cash Control: ensures spending plans are made based on approved vouchers, with cash forecasts to avoid overspending.

Budgetary Control Process

Establishes a budgeting system to formulate financial action plans for an organisation's operations.
Directs finances to achieve desired actions specified in the budget.
Compares actual results with budgets.
The budgetary control process lies with the head or CO of organisations, who ensure expenditure is within planned budgets.

Rationale for Changes in Budget Examination and Reviews

Helps increase quality and efficiency of budget allocations.
Allows consideration of both short-term fiscal policies and medium-term objectives and policies.
Facilitates assessment of the fiscal position of the government, leading to improvement in government cash flow planning and management.
Enables accurate determination of government borrowing programmes in advance.

Budgetary Control Techniques

TBS (Traditional Budgeting System)
PPBS (Planning-Programming-Budgeting System)
MBS (Management by Objectives System)
OBB (Output-Based Budgeting)

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Description

Test your knowledge on budgetary control systems, responsibility centres, and performance measurement in organizations.