Exe pic has appointed a new chairman who will soon be involved in a board meeting at which budgets for the next financial year will be appraised. He is concerned with recent reports that managers are claiming that they have no control over a number of items in their budgets, so are losing interest in their performance assessments.

You are required, as management accountant, to write a report to the Chairman to explain and discuss the following:

(a) The objectives of a system of budgetary control. (10 marks)

(b) Some of the concepts or principles of a modern system of budgetary control which could be introduced to alleviate the situation as represented by the managers.