What does budgetary control involve?

Budgetary control is a fundamental aspect of financial management that focuses on the systematic comparison of actual performance against the budgets that have been established. By closely monitoring and evaluating performance against these financial targets, organizations can assess their operational efficiency, identify any variances, and take corrective actions as necessary.

This process typically involves collecting data on actual revenues and expenditures, comparing this data to what was budgeted, and understanding the reasons for any discrepancies. These variances can provide valuable insights that help in better decision-making and future budgetary planning, ensuring that resources are utilized efficiently and effectively.

The other options do not encompass the full scope of budgetary control. Creating budgets without monitoring does not lead to effective control, while eliminating all variances is unrealistic since some variance can be expected and informative. Establishing budgets without any financial analysis overlooks critical planning steps that indicate the necessity for a sound budgeting process. Thus, comparing actual performance against budgets stands out as the key component of budgetary control.