Pastor J. A. Adeyokunnu

All churches need to manage their financial performance so that their visions and missions’ objectives are achieved.

The Important Characteristic Of Budgetary Control Are:

• Planning of activities of each church and preparing the budgets.

• Communicating and agreeing to budgets with all concerned in the church.

• Recording of actual performance having an accounting system that will record all actual costs.

• Preparing statements that will compare actual costs with budgets; comparison between budgets standards and actual performance.

• Determining the deviations; showing any variances.

• Finding out the reasons for deviations and

• Taking of follow-up action; taking any appropriate action based on the analysis of the variances.

Action(s) that can be taken when a significant variance has been revealed will depend on the nature of the variance itself. Some variances can be identified to a specific unit and it is within that unit’s control to take corrective action. Other variances might prove to be much more difficult, and sometimes impossible, to control.

What variances reveal are historic. They show what happened last month or last quarter and no amount of analysis and discussion can alter that. However, they can be used to influence church decision and action in future periods.

Essentials of Effective Budgetary Control:

(1 )Effective Organization: The responsibilities of each unit heads/managers are clearly defined and the line of authority sharply drawn.

(2) Quick reporting: The subordinates must send reports on performance without any delay. The pastors on their part must analyse the report and take necessary action immediately.

(3) Support of top management: The top management must have a clear idea of the objectives of budgetary control and should implement the budgetary control programme in order to infuse a sense of seriousness among the subordinates.

(4) Reward and Punishment: The ministers whose performance is according to the budget plans should be suitably rewarded and the ministers whose performance is not as per budget should not go unpunished.

(5) Appropriate Authority: The ministers who are entrusted with the responsibilities of implementation of budgetary control should also be given appropriate authority to do so. If a person lacks authority to enforce his decision, it is difficult for him to fulfil his responsibilities.

(6) Flexibility: If the circumstance warrants, the ministers should not hesitate to prepare supplementary budget. But at the same time, care must be taken to see that the budget figures are not altered too much or too often.

Advantages of Budgeting and Budgetary Control

Budgetary control has become an essential tool of church for controlling costs and maximizing income. It acts as a friend and guide to the ministers of God. Its advantages to ministers of God can be summarized as follows:

I. Compels pastors to think about the future, which is probably the most important feature of a budgetary planning and control system. Forces pastors to look ahead, to set out detailed plans for achieving the targets for his church operation and (ideally) each pastor, to anticipate and give the church purpose and direction.

II. Promotes communication and coordination of church activities and expenses.

III. Clearly defines area of responsibility. Requires pastors of churches to be made responsible for the achievement of budget targets; for the operations under their personal control.

IV. Provides a basis for performance appraisal (variance analysis). A budget is basically a yardstick against which actual performance is measured and assessed. Control is provided by comparisons of actual results against budget plan. Departures from budget can then be investigated and the reasons for the difference can be divided into controllable and non-controllable factors.

V. Enables remedial action to be taken as variances emerge.

VI. Motivates pastors and staff by participating in the setting of budgets.

VII. Improves the allocation of scarce resources in the church

VIII. Economizes pastors’ time by using the management exception principle.

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