A budget committee, consisting of several members of the top management group, may oversee the work of preparing the budgets. The committee prepares, reviews, discusses and co-ordinates the budget activity in the organization. The members of the budget committee generally are : the chief executive (CEO, M.D. or General Manager); various departmental heads, chief engineer and budget officer etc.
Though the basic outlines (initial estimates) of various functional budgets are prepared by the line organization and the final approval for the budget is given by the head of the budget committee, i.e chief executive officer of the company. The line organization is assisted in its preparation of the budgets by a staff unit headed by the budget director or budget officer. He reports generally to the chief executive of the company.
Roles and Functions of a Budget Committee
The budgeting process is closely associated with the operations of the business and its organization structure. Its effectiveness, to a large extent depends upon the organizational efficiency.The main roles and functions of the budget committee are as follows :-
(1) To lay down general policies of management in relation to the budgetary system.
(2) To lay down the various guidelines for the preparation and implementation of the budgets.
(3) To provide historical data to help managers in forecasting.
(4) To help in the preparation of various functional budgets.
(5) To assemble the budget figures and to see that everyone submits his figures in time.
(6) To scrutinize budgets.
(7) To suggest lines of revision and amendments, if needed, in the submitted budgets.
(8) To accord final approval to budget.
(9) To formulate the Master Budget.
(10) To prepare budget summaries, if required.
(11) To keep track of deviations of actual results from those budgeted.
(12) To recommend corrective action if and when required.
(13) To co-ordinate the whole budgetary programme.
(14) To resolve the department difference among various line executive members in the committee.
(15) To submit the final budget to the president and to the board & directors for approval.