Task 1:
(a) Outline the roles that budgets traditionally play in organizations.
Every organization needs a budget and cannot progress or meet its financial goals without budgeting. Budgeting is the most important activity in a business, it gives direction and helps reach the targets easily.
Budget is a plan – quantified in monetary terms – which covers income, expenditure and capital investment and prepared prior to a defined period of time.
 It is always for the future.
 The time for which prepared is certain (6 months / 1 year / 3 years).
 Prepared in quantitative details.
 Reflects well-defined objectives and roles in organizations.
The roles that budgets traditionally play in organizations are as follows:
1. To ensure the achievement of the organization’s objectives. Targets may be set for individual departments and organization as a whole to be achieved within the timescale of the budget plan.
2. To compel planning and decision-making. Planning makes management to look in future, to make decisions, to prepare detailed plans for attaining the targets, to foresee problems and give the organization direction.
3. To communicate ideas and plans. Each person affected by the plans should be aware of what he or she is supposed to be doing. Hence one-way or two-way communication is necessary in each level of organization.
4. To co-ordinate activities. It is important to co-coordinate all the activities of different departments of organization in order to ensure maximum integration of effort towards common goals.
5. To provide a framework for responsibility. Personal managers’ control is required to achieve budget targets.
6. To establish a system of monitoring and control. It is necessary to have a control over actual performance by comparing actual results against the budget plan. Material differences between actual and budgeted should be