![]() There is a direct relationship between the expenditure that needs to be input in order to achieve the desired level of output. In a private company the output can be measured in terms of sales revenue, for example. Just as objectives are difficult to define quantifiably, so too are the organisation's outputs. This leads onto the next reason why budgeting is particularly difficult in the public sector. This is difficult to define in a quantifiable way, and how it is actually achieved is even more difficult to define. If, on the other hand, you are budgeting for a public sector organisation such as a hospital, then the objectives may be largely qualitative, such as ensuring that all outpatients are given an appointment within eight weeks of being referred to the hospital. The meeting of this objective can then be set out in the budget by aiming for a percentage increase in sales and perhaps the cutting of various costs. For example, a private company's objectives may be to maximise profit. In the public sector, the budgeting process can be even more difficult, since the objectives of the organisation are more difficult to define in a quantifiable way than the objectives of a private company. It is often an arduous process, however, and often strikes dread in the hearts of those involved in budget preparation. ![]() ![]() The budgeting process is an essential component of management control systems, as it provides a system of planning, coordination and control for management. An introduction to professional insights.Virtual classroom support for learning partners.Becoming an ACCA Approved Learning Partner. ![]()
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