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Budgetary control

Budgetary control compares actual results with appropriate budgets, explains differences and supports action or learning. A flexed budget can distinguish activity changes from spending or efficiency differences. Reports should identify controllability, materiality and interdependent causes rather than merely list favourable and adverse totals. The process can revise actions, forecasts or assumptions without retrospectively changing the original authorised target to disguise a result.

Worked example

Actual output is 1,200 units instead of budgeted 1,000. Compare material spending with a budget flexed to 1,200 before concluding that extra spending means poor control.

Common mistake

Do not compare variable costs at different activity levels and call the whole difference a spending variance.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA APM Direct September 2026–June 2027
ACCA MA Direct September 2026–June 2027
ACCA PM Direct September 2026–June 2027
FIA FMA Direct September 2026–June 2027