Budget Committee – Definition

Cite this article as:"Budget Committee – Definition," in The Business Professor, updated October 22, 2019, last accessed October 20, 2020, https://thebusinessprofessor.com/lesson/budget-committee-definition/.


Budget Committee Definition

A budget committee is a  group of individuals that prepares the financial plan of a company or country for a period of time. A budget committee is in charge of planning, creating and maintaining the budget of an organization for a specific period. Organizations or business entities can have their budgets planned quarterly, annually or biannually.

Budget committees do not only plan and review budgets, they are also responsible for how budgets are implemented. They review and approve budgets for various sectors and departments. Oftentimes, the top management of organizations make up its budget committee. In government, budget committees comprise of selected members of the house of representatives.

A Little More on What is a Budget Committee

A budget committee often comprises of top executives of a company or individuals who are professionals in the finance and accounting industry. The committee plans the finances of the company or organization and ensures that the plan is implemented. The budget committee also oversees the revenue and expenditure of the organization or government, this means that all the cash inflow and cash appropriation of a company government are known by the budget committee. The efficiency of a budget committee goes a long way in determining whether a company be solvent or turn out to be insolvent.

Example of a Budget Committee

Company XYZ is a fabric producing company and has a staff strength of 500 workers for many of its operations. A budget committee is set up for Company XYZ to help plan its finances and see to the proper allocation and disbursement of funds for its operations. The budget committee comprised of professionals and board members of the company and they review budgets submitted by different departments of Company XYZ for approval or disapproval.

The budget committee has an unrestrained access to the entire financial plan of the company and reviews the plan as to whether it is appropriate or inappropriate. The committee also maintain the budget by ensuring that various departments stick to their submitted budget without any alteration or overshoot.

Reference for “Budget Committee”

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Academics research on “Budget Committee”

Corporate budget planning, control and performance evaluation in Bahrain, Joshi, P. L., Al-Mudhaki, J., & Bremser, W. G. (2003). Corporate budget planning, control and performance evaluation in Bahrain. Managerial Auditing Journal, 18(9), 737-750. Examines budget planning; implementation and performance evaluation practices by utilizing a questionnaire survey of 54 medium and large sized companies located in Bahrain. Most of the companies prepare long‐range plans and operating budgets, and they follow a definite budget procedure and implementation methodology. Uses budget variances to measure a manager’s ability, for timely recognition of problems, and to improve the next period’s budget. While both the listed and non‐listed companies have reported many similar budget practices, the main differences were specific purposes served by budgets, degree of budget participation, periodicity of variance reporting, and purposes and authority to evaluate budget variance reports. In certain cases, firm size influences budgeting practices. Contributes toward filling a gap in the literature on the use of budgets as a planning and control tool in developing countries. Most prior studies were mainly confined to advanced countries. The study findings suggest the need for research on attitudes held by the budgetees towards the use of budget variances in the context of advanced management accounting techniques.

Electoral and financial effects of changes in committee power: the Gramm-Rudman-Hollings budget reform, the Tax Reform Act of 1986, and the money committees in 
, Milyo, J. (1997). Electoral and financial effects of changes in committee power: the Gramm-Rudman-Hollings budget reform, the Tax Reform Act of 1986, and the money committees in the House. The Journal of Law and Economics, 40(1), 93-112. Most rational choice theories of legislatures locate the source of committee power in the restrictive procedural rules that enforce committee jurisdictions. However, there is no empirical support for this claim; further, there is little evidence for the natural implication that membership on more powerful committees confers electoral benefits. I address these puzzles by exploiting the occurrence of major budget and tax reforms in the mid‐eighties; these reforms provide a natural experiment for measuring the electoral and financial consequences of changes in committee power. I show that the procedural rule changes, instituted by the Gramm‐Rudman‐Hollings budget reform, caused an increase in campaign contributions to members of the Budget Committee and led to a reduction in the vote share of members of the Appropriations Committee. This heretofore unrecognized effect, of the Gramm‐Rudman‐Hollings budget reform on the welfare of members of the House, rivals that of a more widely recognized “policy shock,” the Tax Reform Act of 1986.

Legislative budget offices: International experience, Johnson, J. K., & Stapenhurst, R. (2008). Legislative budget offices: International experience. Published in: Stapenhurst, R., Pelizzo, R., Olson, D. & Von Trapp, L.(eds.). Legislative oversight and government accountability: A world perspective. Washington, DC: The World Bank, 141-158. In most countries, parliament has the constitutional mandate to both oversee and hold government to account. In light of the increased focus on good governance, academics and legislative strengthening practitioners are re-examining parliament’s oversight function with a view to increasing public financial accountability, curbing corruption, and contributing to poverty reduction. This volume brings together research from many different perspectives and many different legislative settings worldwide. As the country case studies in section III demonstrate, the accountability mechanisms or oversight tools available to the legislature vary based on constitutionally defined powers of the legislature, institutional arrangements between the branches of government, divisions of authority between national, regional, and local governments, the degree of legitimacy conferred on the legislature, and the resources available to it. The budget process provides critical opportunities. Section II of this volume is devoted to examining budget oversight from the formulation and approval of the budget, to implementation and the ex post examination of the public accounts. Special attention is also paid to mechanisms to assist parliaments such as Public Accounts Committees and independent parliamentary budget offices. This title will be of interest to parliamentarians and parliamentary staff, legislative strengthening practitioners, and students of legislative development.

Document analysis methods, Salminen, A. (2003). Document analysis methods. Encyclopedia of library and information science, 916, 927.

Organizational professionalism and technological sophistication: Budget offices in the south, Willoughby, K. G., & Finn, M. A. (1994). Organizational professionalism and technological sophistication: Budget offices in the south. Public Productivity & Management Review, 19-35. This research analyzes the organizational and technological capacity of legislative budget offices in ten state governments. A comparison of offices to their counterparts in the executive branch indicates that separation of powers may explain distinctions in capacity across branches and governments.

Principles and patterns of financial scrutiny: Public Accounts Committees in the Commonwealth, Wehner, J. (2003). Principles and patterns of financial scrutiny: Public Accounts Committees in the Commonwealth. Commonwealth & Comparative Politics, 41(3), 21-36. Public Accounts Committees (PACs) are ubiquitous features of the legislative landscape in the Commonwealth. Based on a broad comparative overview and specific examples, this article looks at the role of PACs in financial scrutiny. It unpacks the concept of financial scrutiny, identifies key principles and procedural features that these committees share, and surveys some of the challenges they frequently encounter. The article concludes that PACs have an important and well-established role to play in ensuring sound public spending. However, they need to find innovative responses to several key challenges in order to safeguard and maximise their contribution to financial scrutiny.

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