Budget Committee: What Should They Do?

A standing budget committee is usually responsible for overall policy relating to the budget program and for coordinating the preparation of the budget itself.

This committee may consist of the president; vice presidents in charge of various functions such as sales, production, and purchasing; and the controller.

Difficulties and disputes relating to the budget are resolved by the budget committee. Also, the budget committee approves the final budget.

Disputes can (and do) erupt over budget matters. Because budgets allocate resources, the budgeting process determines to a large extent which departments get more resources and which get less.

Also, the budget sets the benchmarks used to evaluate managers and their departments.

Therefore, it should not be surprising that managers take the budgeting process very seriously and invest considerable energy and emotion in ensuring that their interests, and those of their departments, are protected.

Because of this, the budgeting process can easily degenerate into an interoffice brawl in which the ultimate goal of working together toward common goals is forgotten.