This is a pity but it does not mean that the budgeting exercise has been a complete waste of time.
- The participants will have thought logically about the organization, its finances and its future.
- Some of the detail will remain in their minds and influence their future actions.
- Nevertheless, the budgets will be much more valuable if they are used in an active way.
Regular performance reports should be issued by the accountants.
- These should be in the same format as the budgets.
- It should give comparable budget and actual figures.
- Variances should also be given.
- All levels of management should regularly review these figures and explain the variances.
- Significant variances will pose the question of whether corrective action needs to be taken.
Budgets do not necessarily have to be done just once a year.
They may be updated, reviewed or even scrapped and redone as circumstances dictate.