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ACCA Applied Skills · Performance Management · Budgetary systems and types of budget

Which of the following best describes the role of the budget committee in the budget preparation process?

The budget committee coordinates budget preparation, resolves conflicts between departmental budgets and approves the master budget. It does not write all detailed budgets itself, because managers who prepare their own budgets are more committed to achieving them.

  1. AIt prepares the detailed budgets for each department without consulting managers
  2. BIt coordinates the preparation of budgets, resolves conflicts between departments and approves the master budgetCorrect
  3. CIt audits the actual results after the year end to confirm they are accurate
  4. DIt sets the standard costs used by the production department only

Explanation

The budget committee coordinates budget preparation, deals with conflicts between departmental budgets, and recommends approval of the master budget. Preparing budgets without managers would undermine participation and ownership. Variance review after the year end is not its defining role.

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