A system of business control based on the establishment of annual operational budgets for all profit and cost centers of the company, periodically verifying how the reality of the company’s performance matches these budgets, and analyzing the deviations that occur in order to understand and correct the causes. A budget is a systematic summary of projections, which are initially mandatory, of projected expenses and estimates of expected revenues to cover such expenses. It is prepared at regular intervals, normally coinciding with the natural year, and allows for short-term planning, goal setting, and management control by calculating deviations between actual and budgeted results. Annual budgets are the means of corporate action that allow decisions contained in the plans and programs of an organization to be given economic form. If a company does not have a complete planning process, the budget constitutes (or should constitute) the moment of anticipated reflection for the coming exercise, becoming the document that reflects the estimate expressed in quantities and valued in monetary units of the economic-financial activity intended by the company and approved by management.
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