1.0 BUDGET AND VARIANCE ANALYSIS Why have budget controls been compared to a thermostatic control system? This question will be analyzed and discussed critically and whether it is applicable to budgetary control within an organization or not. Budgets are multi-purpose financial plans that can be short term (1 year duration), medium term (1-5 years duration) or long term (general budget, 5-10 years duration) and show the financial implications of the plans and corporate policies that incorporate financial and non-financial factors for an organization's future activities. A budget encourages management to look ahead and set goals for the organization in the hope that forecasting and planning will prevent any future problems. Traditional budgets (incremental or fixed) allow management to hopefully predict most problems within the company and better monitor current finances and allocate money more efficiently to different areas of a company and whether any profits or losses could be incurred. Effective budget control is the serious implementation of challenging but realistic objectives, goals and outcomes, both financial and non-financial, by management with effective leadership and full commitment by the CEO and the board throughout the process . A budget officer who will be a senior member of staff responsible for overseeing the budget control process or strategy and a committee ensures that the budget control process or strategy is followed correctly. This control system or process, as it is often referred to, is known as feedback control. As part of feedback control, timely performance reports are produced, usually monthly, and management compares actual results with… middle of paper… B. (2008). Corporate Finance and Accounting Second Edition. London: South-Western Cengage Learning.Scarlett, B. (2009). CIMA Paper P1: Performance Operations. Oxford: CIMA an imprint of Elsevier.Wall, S., Minocha, S., & Rees, B. (2010). International Affairs (3rd ed.). Harlow, Essex, UK: Prentice Hall Financial Times.Weetman, P. (2010). Management accounting (second ed.). Harlow: Pearson Education Limited.Weetman, P. (2013). Financial and management accounting: An introduction (6th ed.). Harlow: Pearson Education Limited.Welsch, G. A. (1976). Budgeting: planning and controlling profits (fourth ed.). Englewood Cliffs, New Jersey: Prentice-Hall Inc. Wood, F., & Sangster, A. (2008). Business Accounting 1 Eleventh Edition. Essex: Pearson Education Limited.Wood, F., & Sangster, A. (2008). Business Accounting 2 Eleventh Edition. Essex: Pearson Education Limited.