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Budget Committee

Budget Committee

What Is a Budget Committee?

A budget committee is a group of individuals inside an organization that makes and keeps up with fiscal responsibility for that entity. In a company, this committee typically comprises of top management alongside the chief financial officer (CFO). Budget committees normally audit and support departmental budgets that are presented by the different department heads.

The budget committee may likewise make and update the budget manual, which is a complex set of rules and directions utilized by large organizations to prepare budgets.

Figuring out Budget Committees

A budget committee is an official group that makes and directs the standards and best practices to carry out and refresh an organization's spending and resource allocation plans while keeping up with fiscal responsibility. Budget committees play a key job in the achievement or downfall of a company or other entity that depends on generating and spending cash flows to stay operational. This committee is charged with keeping organizational budgets on target, which then guarantee smooth operation and financial solvency and to fight off any financial issues before they go crazy.

What's more, the budget committee composes and alters the company budget manual and ensures the departments are sticking to their submitted yearly budgets.

The budget committee has a unique point of view in that they are conscious of the financial comings in general and goings of an organization. They appreciate the situation from start to finish, though individuals in individual departments will just see their specific segment of the company. For sure, the budget committee and the accounting and finance departments are in many cases the main elements inside the organization that can see the whole financial image of the firm.

Illustration of a Budget Committee in Practice

For instance, the budget committee for the speculative company Wendell's Widget Makers, Inc. is in charge of administering the yearly budget formation for each department inside the organization and supporting the budgets. Toward the beginning of the year, they discover that they can allocate $500,000 to different divisions in the firm. The sprocket division is embraced an intense new research and development project for another type of sprocket while the gadget division is operating as business to the surprise of no one.

The committee, adhering to the rules in their budget manual, apportions $350,000 to the sprocket division, with 60% of that reserved for the R&D project. $100,000 is allocated to the gadget division to fund operations, while the leftover $50,000 is kept close by to pay expansive taxes.


  • The budget committee creates and refreshes an organization's budget manual, giving clear rules and rules to the budgeting system.
  • Having a 10,000 foot perspective of an organization's total financial picture, the budget committee is vital in keeping up with fiscal responsibility.
  • A budget committee is a group inside an organization that regulates the allocation of financial resources for a company and distributes funds likewise to parts of the organization.