A budget is a formal written statement of management’s plans for a specified future time period, expressed in financial terms. It is an estimation of revenue and expenses over a specified future period of time; it is compiled and re-evaluated on a periodic basis.
Budget committee: a budget committee is a group of key managers who are responsible for overall budgeting policy and for coordinating the preparation of the budget. This committee consists of the president, vice presidents, managers of various departments such as sales, production, purchasing, controlling. The budget committee approves the final budget. In a company, this committee usually consists of the top management and the CFO.
Functions of the budget committee: There are many functions of the budget committee. Some are as follows –
- Maintaining the overall budgeting policy;
- Coordinating the preparation of the budget;
- Determining the budget rate,
- Crating new budget for the New Year,
- It coordinates the budgetary control programme.
- The budget committee approves the final budget.
- It receives and reviews the individual budget estimates and different departments/divisions.
- It gives suggestions and modifications in budgets in accordance with organizational objectives.