Budgeting is the process of
creating a plan to spend the money.
In other
words, budgeting is simply a process of balancing our expenses with the income.
Most of the people don’t realize that they spend higher than they earn and
slowly sink deeper into debt every year. And it is quantitative which could
measure the critical activities that should be highly concerned.

In the context of budgeting for a company, it
is a procedure of preparing a detailed statement of financial results that are
expected for a given time period in the future. Details are requested due to
budgeting is a thing that they should deeply analyze rather than just quoting
the prices in spend. Hence external party needs huge level of data in order to
identify the pattern before making the budget plan thereby it is better if the
process can be initiated through the internal budget planners who have hands on
experience about the business.

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Internal control, as defined in accounting and auditing, is a process for assuring triumph of an organization’s
objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws,
regulations and policies. A broad concept, internal control involves everything
that controls risks to an organization where it systematically facilitates the
process rather than just contemporary budgeting ways.

These internal controls
response are at its best when they are applied to multiple divisions and deal with
the interactions between the various business departments. No two systems of internal controls are
identical, but many core philosophies regarding financial integrity
and accounting practices have become standard managerial practices.
Thus having better a company’s internal controls, the more reliable its
financial reports, and the more confidence you can have in the quality of the
company’s operations.

Because at the budgeting stage, the planner
plans according to her/ his best of knowledge on that particular area and
thereby sometimes he/ she might over budgeting, under budgeting or at the right
level. Then when the result comes to the actual stage then can be over budgeted
and money waste, under budgeted and the work had not been done or sometimes budget
and actual usage will be the same amount. Thereby internal
controls sometimes works as a standard operating procedures that a company can
use for data analysis and spot troubles as quickly as possible. Accordingly
these controls are mostly useful in four areas such as budgeting, supervision,
compliance and theft and fraud prevention. In the categorization of preventive
and detective internal controls, preventive method is the proactive solutions
providing option which gives a clue on actual result that it is higher than
what is being budgeted. Detective internal controls are the backup procedures
that ensure the preventative internal controls are operating as intended.

Therefore,
importance of this internal controls regarding budgeted and actual can be
viewed through kinds of further examples such as ensuring reliability and
integrity of financial information where management has records of planning
progressing and monitoring records, previous budget allocation reports, promote
efficient and effective operations which can be measured through realistic
budgets and actual results.

However
in conclusion, above said importance elaborates best possible opportunities
which a company can have through effective measuring mechanism such as internal
control which matches budgeting amounts with actual results which may
ultimately lead the situation at a win-win cost that every stakeholder be
happy.