CAR/CRAR-
Capital Adequacy Ratio/ Capital to Risk Weighted Asset
Ratio
· RWA- Risk Weighted Assets
Formulae for CAR=Total Capital
RWA *100
Now here, Total Capital=
Tier1+ Tier2 capital
CAR/CRAR-
Capital Adequacy Ratio/ Capital to Risk Weighted Asset
Ratio
· RWA- Risk Weighted Assets
Formulae
for CAR=
RWA*100
Now here, Total Capital=
Tier1+ Tier2 capital
Budgetary Control in
Organization:
Meaning, Definition, Objectives, Essentials and Other Details!
Meaning:
Budgetary control is
the process of determining various actual results with budgeted figures for the
enterprise for the future period and standards set then comparing the budgeted
figures with the actual performance for calculating variances, if any. First of
all, budgets are prepared and then actual results are recorded.
The comparison of
budgeted and actual figures will enable the management to find out
discrepancies and take remedial measures at a proper time. The budgetary
control is a continuous process which helps in planning and co-ordination. It
provides a method of control too. A budget is a means and budgetary control is
the end-result.
Definitions:
“According to Brown
and Howard, “Budgetary control is a system of controlling costs which includes
the preparation of budgets, coordinating the departments and establishing
responsibilities, comparing actual performance with the budgeted and acting
upon results to achieve maximum profitability.” Weldon characterizes budgetary
control as planning in advance of the various functions of a business so that
the business as a whole is controlled.
J. Batty defines it
as, “A system which uses budgets as a means of planning and controlling all
aspects of producing and/or selling commodities and services. Welsch relates
budgetary control with day-to-day control process.” According to him,
“Budgetary control involves the use of budget and budgetary reports, throughout
the period to co-ordinate, evaluate and control day-to-day operations in
accordance with the goals specified by the budget.”
From the above given
definitions it is clear that budgetary control involves the follows:
(a) The objects are
set by preparing budgets.
(b) The business is
divided into various responsibility centres for preparing various budgets.
(c) The actual
figures are recorded.
(d) The budgeted and
actual figures are compared for studying the performance of different cost
centres.
(e) If actual
performance is less than the budgeted norms, a remedial action is taken
immediately.
Objectives of
Budgetary Control:
Budgetary control is
essential for policy planning and control. It also acts an instrument of
co-ordination.
The main objectives
of budgetary control are the follows:
1. To ensure planning
for future by setting up various budgets, the requirements and expected
performance of the enterprise are anticipated.
3. To operate various
cost centres and departments with efficiency and economy.
4. Elimination of
wastes and increase in profitability.
5. To anticipate
capital expenditure for future.
6. To centralise the
control system.
7. Correction of
deviations from the established standards.
8. Fixation of
responsibility of various individuals in the organization.
Essentials of
Budgetary Control:
There are certain
steps which are necessary for the successful implementation budgetary control
system.
These are as follows:
1. Organisation for
Budgetary Control
2. Budget Centres
3. Budget Mammal
4. Budget Officer
5. Budget Committee
6. Budget Period
7. Determination of
Key Factor.
1. Organization for
Budgetary Control:
The proper
organization is essential for the successful preparation, maintenance and
administration of budgets. A Budgetary Committee is formed, which comprises the
departmental heads of various departments. All the functional heads are
entrusted with the responsibility of ensuring proper implementation of their
respective departmental budgets.
The Chief Executive
is the overall in-charge of budgetary system. He constitutes a budget committee
for preparing realistic budgets A budget officer is the convener of the budget
committee who co-ordinates the budgets of different departments. The managers
of different departments are made responsible for their departmental budgets.
2. Budget Centres:
A budget centre is
that part of the organization for which the budget is prepared. A budget centre
may be a department, section of a department or any other part of the
department. The establishment of budget centres is essential for covering all
parts of the organization. The budget centres are also necessary for cost control
purposes. The appraisal performance of different parts of the organization
becomes easy when different centres are established.
3. Budget Manual:
A budget manual is a
document which spells out the duties and also the responsibilities of various
executives concerned with the budgets. It specifies the relations amongst
various functionaries.
4. Budget Officer:
The Chief Executive,
who is at the top of the organization, appoints some person as Budget Officer.
The budget officer is empowered to scrutinize the budgets prepared by different
functional heads and to make changes in them, if the situations so demand. The
actual performance of different departments is communicated to the Budget
Officer. He determines the deviations in the budgets and the actual performance
and takes necessary steps to rectify the deficiencies, if any.
He works as a
coordinator among different departments and monitors the relevant information.
He also informs the top management about the performance of different
departments. The budget officer will be able to carry out his work fully well
only if he is conversant with the working of all the departments.
Essentials of
Budgetary Control
5. Budget Committee:
In small-scale
concerns the accountant is made responsible for preparation and implementation
of budgets. In large-scale concerns a committee known as Budget Committee is
formed. The heads of all the important departments are made members of this
committee. The Committee is responsible for preparation and execution of budgets.
The members of this committee put up the case of their respective departments
and help the committee to take collective decisions if necessary. The Budget
Officer acts as convener of this committee.
6. Budget Period:
A budget period is
the length of time for which a budget is prepared and employed. The budget
period depends upon a number of factors. It may be different for different
industries or even it may be different in the same industry or business.
The budget period
depends upon the following considerations:
(a) The type of
budget i.e., sales budget, production budget, raw materials purchase budget,
capital expenditure budget. A capital expenditure budget may be for a longer
period i.e. 3 to 5 years purchase, sale budgets may be for one year.
(b) The nature of
demand for the products.
(c) The timings for
the availability of the finances.
(d) The economic
situation of the country.
(e) The length of
trade cycles.
All the
above-mentioned factors are taken into account while fixing period of budgets
7. Determination of
Key Factor:
The budgets are
prepared for all functional areas. These budgets are interdependent and
inter-related. A proper co-ordination among different budgets is necessary for
making the budgetary control a success. The constraints on some budgets may
have an effect on other budgets too. A factor which influences all other
budgets is known as Key Factor or Principal Factor.
There may be a
limitation on the quantity of goods a concern may sell. In this case, sales
will be a key factor and all other budgets will be prepared by keeping in view
the amount of goods the concern will be able to sell. The raw material supply
may be limited, so production, sales and cash budgets will be decided according
to raw materials budget. Similarly, plant capacity may be a key factor if the
supply of other factors is easily available.
The key factor may
not necessarily remain the same. The raw materials supply may be limited at one
time but it may be easily available at another time. The sales may be increased
by adding more sales staff, etc. Similarly, other factors may also improve at
different times. The key factor also highlights the limitations of the
enterprise. This will enable the management to improve the working of those
departments where scope for improvement exists.
Advantages of
Budgetary Control:
The budgetary control
system help in fixing the goals for the organization as whole and concerted
efforts are made for its achievements. It enables ‘economies in the enterprise.
Some of the
advantages of budgetary control are:
1. Maximization of
Profits:
The budgetary control
aims at the maximization of profits of the enterprise. To achieve this aim, a
proper planning and co ordination of different functions is undertaken. There
is a proper control over various capital and revenue expenditures. The resources
are put to the best possible use.
2. Co-ordination:
The working of
different departments and sectors is properly coordinated. The budgets of
different departments have a bearing on one another. The co-ordination of
various executives and subordinates is necessary for achieving budgeted
targets.
3. Specific Aims:
The plans, policies
and goals are decided by the top management. All efforts are put together to
reach the common goal, of the organization. Every department is given a target
to be achieved. The efforts are directed towards achieving some specific aims.
If there is no definite aim then the efforts will be wasted in pursuing
different aims.
4. Tool for Measuring
Performance:
By providing targets
to various departments, budgetary control provides a tool for measuring
managerial performance. The budgeted targets are compared to actual results and
deviations are determined. The performance of each department is reported to
the top management. This system enables the introduction of management by exception.
5. Economy:
The planning of
expenditure will be systematic and there will be economy in spending. The
finances will be put to optimum use. The benefits derived for the concern will
ultimately extend to industry and then to national economy. The national
resources will be used economically and wastage will be eliminated.
6. Determining
Weaknesses:
The deviations in
budgeted and actual performance will enable the determination of weak spots.
Efforts are concentrated on those aspects where performance is less than the
stipulated.
7. Corrective Action:
The management will
be able to take corrective measures whenever there is a discrepancy in
performance. The deviations will be regularly reported so that necessary action
is taken at the earliest. In the absence of a budgetary control system the
deviations can be determined only at the end of the financial period.
8. Consciousness:
It creates budget
consciousness among the employees. By fixing targets for the employees, they
are made conscious of their responsibility. Everybody knows what he is expected
to do and he continues with his work uninterrupted.
9. Reduces Costs:
In the present day
competitive world budgetary control has a significant role to play. Every
businessman tries to reduce the cost of production for increasing sales. He
tries to have those combinations of products where profitability is more.
10. Introduction of
Incentive Schemes:
Budgetary control
system also enables the introduction of incentive schemes of remuneration. The
comparison of budgeted and actual performance will enable the use of such
schemes.
Budgetary Control
Limitations of
Budgetary Control:
Despite of many good
points of budgetary control there are some limitations of this system.
Some of the
limitations are discussed as follows:
1. Uncertain Future:
The budgets are
prepared for the future period. Despite best estimates made for the future, the
predictions may not always come true. The future is always uncertain and the
situation which is presumed to prevail in future may change. The change in
future conditions upsets the budgets which have to be prepared on the basis of
certain assumptions. The future uncertainties reduce the utility of budgetary
control system.
2. Budgetary Revision
Required:
Budgets arc prepared
on the assumptions that certain conditions will prevail. Because of future
uncertainties, assumed conditions may not prevail necessitating the revision of
budgetary targets. The frequent revision of targets will reduce the value of
budgets and revisions involve huge expenditures too.
3. Discourage
Efficient Persons:
Under budgetary
control system the targets are given to every person in the organization. The
common tendency of people is to achieve the targets only. There may be some
efficient persons who can exceed the targets but they will also feel contented
by reaching the targets. So budgets may serve as constraints on managerial
initiatives.
4. Problem of
Co-ordination:
The success of
budgetary control depends upon the co-ordination among different departments.
The performance of one department affects the results of other departments. To
overcome the problem of coordination a Budgetary Officer is needed. Every
concern cannot afford to appoint a Budgetary Officer. The lack of co-ordination
among different departments results in poor performance.
5. Conflict Among
Different Departments:
Budgetary control may
lead to conflicts among functional departments. Every departmental head worries
for his department goals without thinking of business goal. Every department
tries to get maximum allocation of funds and this raises a conflict among
different departments.
6. Depends Upon
Support of Top Management:
Budgetary control
system depends upon the support of top management. The management should be
enthusiastic for the success of this system and should give full support for
it. If at any time there is a lack of support from top management then this
system will collapse.
DATA
REPRESENTATION -
Memory
Units:
4 bit = 1
nibble
8 bit = 1
byte
1024 B = 1
KB (Kilo Byte)
1024 KB =
1 MB (Mega Byte)
1024 MB =
1 GB (Giga Byte)
1024 GB =
1 TB (Tera Byte)
1024 TB =
1 PB (Peta Byte)
1024 PB =
1 XB (Exa Byte)
1024 XB =
1 ZB (Zeta Byte)
1024 ZB =
1 YB (Yota Byte)
bit <
Byte < KB < MB < GB < TB < PB < XB < ZB < YB
bit (b)
Byte (B)
Mbps – mega
bits per sec.
MBps –
mega Bytes per sec.
The information you put into the computer
is called Data
Information of a computer is stored as
Digital Data
A number system defines a set of values
that is used to represent Quantity
In which number system, the modern
computers are operated?
Binary
Number System
Name the most significant bit, which
represent 1 and 0 for a positive number and negative number, respectively.
Sign Bit
Which coding scheme represents data in a
binary form in the computer system? ASCII, EBCDIC and Unicode are the most
commonly used codes under this scheme.
Binary
Coding Scheme
EBCDIC is a 8-Bit code with 256 different
representations of characters. It is mainly used in mainframe computers.
EBCDIC stands for Extended Binary Coded Decimal Interchange Code
In the Hexadecimal Number System each
number represents a power of 16. To represent the decimal numbers, this system
uses numbers from 0 to 9 and characters from A to F to represent numbers 10-15,
respectively. It is commonly used as a shortcut notation for groups of four
binary digits
BCD is a method that represents the decimal
digits with the help of binary digits. It takes advantage that one decimal
numeral can be represented by 4-bit pattern. BCD stands for Binary Coded
Decimal
This coding system is used to represent the
interval storage area of the computers. In this system, every character is
represented by a combination of bits. Binary Coding System
The Base or Radix of the decimal number
system is 10
The arithmetic operations (addition,
subtraction, multiplication and division) performed on the binary numbers is
called Binary Arithmetic
What is the standard code the computer
industry created to represent characters? American Standard Code for
Information Interchange (ASCII)
ASCII is a code used for standardizing the
storage and transfer of information amongst various computing devices.
It is required for representing more than
64 characters. At present, the mostly used coding systems are ASCII and EBCDIC
Which code is also known as Reflected Code?
Gray Code
The 7-bit ASCII code is widely used for Two
(0 or 1)
In the binary language, each letter of the
alphabet, each number and each special character is made up of a unique
combination of Eight Bits.
GENERATIONS
OF COMPUTER
Which was the first general purpose
computer, designed to handle both numeric and textual information? Universal
Automatic Computer (UNIVAC) (1951)
First
Generation (1940-1956) Vacuum Tubes:
The first computers used vacuum tubes for
circuitry and magnetic drums for memory, and were often enormous, taking up
entire rooms.
The UNIVAC and ENIAC computers are examples
of first-generation computing devices.
In first generation of computer, this
operating system allowed only one program to run at a time and a number of
input jobs are grouped for processing. It is known as Batch Processing.
Second
Generation (1956-1963) Transistors:
Transistors replaced vacuum tubes and
ushered in the second generation of computers.
Third
Generation (1964-1971) Integrated Circuits:
The development of the integrated circuit
was the hallmark of the third generation of computers. Transistors were miniaturized
and placed on silicon chips, called semiconductors, which drastically increased
the speed and efficiency of computers.
Fourth
Generation (1971-Present) Microprocessors:
The microprocessor brought the fourth
generation of computers, as thousands of integrated circuits were built onto a
single silicon chip.
What in the first generation filled an
entire room could now fit in the palm of the hand
Fourth generation computers also saw the
development of GUIs, the mouse and handheld devices
Fifth
Generation (Present and Beyond) Artificial Intelligence:
Fifth generation computing devices, based
on artificial intelligence, are still in development, though there are some
applications, such as voice recognition, that are being used today.
In 1981 IBM introduced its first computer
for the home user, and in 1984 Apple introduced the Macintosh.
What is Computer VIRUS ? Everything you need
to know
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When I
first read about computer virus, I was surprised to know it is not ‘virus’ –
but VIRUS!
VIRUS is
actually an acronym for Vital
Information Resource Under Siege!
Everyone
says computer technology is changing every day – true – so are viruses changing
and evolving every single day; thus it only makes sense we know a little about
these mischief makers.
To help
with the MCQs, I have italicized and bold-ended the proper terms.
Here we
go:
What is a
VIRUS?
It
is actually a program, created by people who have knowledge to
write software programs. In proper terms, it is called an ‘executable program’,
with bad intentions!
Viruses
are a type of malware, i.e., it is malicious software. You’ll read
about it some more later…
How does
it work? (Or, how does it make out lives difficult!)
A come
attached with another program, and once it is in our system and we execute our
program- we run the virus too!
The virus
replicates itself; that is multiplies when has attached itself to a computer
through an infected program.
So,
suppose we download an mp3 song from some suspicious looking website, and we do
not have anti-virus software on our PC, in such a case a virus may get
downloaded along with the mp3.
Once, the
virus is in our computer, it then starts making copies of itself on our computer.
So, you can imagine, once it replicates, it must need space, thus a virus uses
up the hard disk space and that makes our PC/system slow and makes it hang or
crash!
What other
damages does it do? (-apart from crashing our PC and frustrating us?)
Depending
on what the intention of the person programming the virus was, a virus can do
many different types of damages, like :
(i)
modification of data (Transformers movie anyone?)
(ii) files
maybe overwritten with false information
(iii)
files maybe damaged, so you can not open them anymore or work on them
(iv) it
may even wipe out an entire drive!
(v) it may
make your system to re-boot again and again
(vi) high
threat viruses which target databases of big organizations and MNCs may even
leak top security information of the companies…
A Virus
can be programmed to do anything, so its threat can be anything; it’s a creepy
virtual world out there!
Famous
Viruses?
Yep,
Viruses are sometimes accorded celebrity status too!
(i) First
actual virus – Creeper (1970s), detected on ARPANET.
It
displayed a message on the screen, “I am the creeper, catch me if
you can!”
(ii) First
actual personal computer virus – Elk Cloner (1982), it affected Apple OS
through a floppy and displayed a short poem!
(iii)
First virus to hit Microsoft’s DOS – Brain (1986)
(iv) Most
destructive virus – MYDoom (January 2004)
(v) Most
widespread and fast spreading virus – ILOVEYOU, also known as the love letter!
(2000)
Categories
of Viruses?
Yes,
Viruses are categorized based on what/where/how they affect.
(i)File
Virus/Parasitic Virus: most of the viruses fall in this category. In this type
the viruses come attached to a file, usually a file which is executable, i.e.,
it can be run.
(ii) Boot
sector Virus: these viruses, as the name suggest, affect the boot sector. Which
means it will load before the operating system. It infects through floppy
disks/ hard disks drives.
Imagine, a
virus loading before the operating system does! This can only mean trouble!
(iii)
Macro Viruses: Macro programs consist of a set of commands which executes
itself every time it is run. So, this type of virus affects a
program/application/software’s macros programming feature, to infect documents.
(iv)
Multipartite Viruses: spread and infect in multiple ways, they can effect the
boot sector as well as infect documents/files. They can have multiple means of
transmission and of infection.
6. What
are worms, malware etc.?
(i)
Malware – is the short for malicious software, as the standard definition goes
– is any software which can disrupt normal computer operation, gather sensitive
information or gain access to private system.
It is also
sometimes referred to as badware. Malwares are essentially of two types: (1)
Viruses and (2) Worms.
(ii)
Worms: worms are like viruses in the sense that they do the same damages that
viruses do, they also replicate themselves.
However
the main difference being, it is a standalone malware – i.e., it does not need
to attach itself to any host/executable file. It on its own actively transmits
itself through a network and infects computers.
In other
words for virus infection to happen, a user has to actually run the virus
infected program, only then will the virus program run too. But worms spread by
themselves!
(iii)
Trojan horse: This is my favorite malware as it is named on a very interesting
piece of history which involves Achilles and his heel!
Also known
as the Trojan, it is a malicious software which run without the knowledge of
the user, to gather sensitive information.
Its
specialty is it can run undetected, or when the system is shut down. It can
encrypt/decrypt files and documents and transmit them to those who want it.
Trojan are
disguised in the form of a legitimate and desirable program, that any user
would without suspicion run. User thinks that the program it is running has
nothing wrong with it, whereas the Trojan is secretly doing its work!
Trojan can
also be called a ‘Spyware’; but it is NOT a virus. Why? Simply because Trojans
do not replicate like viruses do!
(iv)
Rootkits: are programs that modify setting in the operating system to keep the
malwares hidden from detection.
How can we
keep viruses away?
By installing
anti-virus softwares!
This is
probably something every one you must have heard or seen or installed one
yourself!
Anti-virus
software protects your system by periodically scanning its
files/documents/programs to check for hidden executable programs.
It works
by searching for those which are a match to any pre-defined virus already
stored in its virus definition file. When there is a match, the anti-virus
tells you that your PC has been infected by ‘so-and-so’ virus, and will proceed
to remove it.
If it
finds that there exists a program which is suspicious, but the anti-virus does
not know its name, then it’ll ask you to take appropriate action.
Every
other day new viruses are programmed and unleashed, and every other day
thousands of e-mails are opened, movies/songs/files/softwares etc. are
downloaded and these viruses find their way into out PCs.
That is
why it is very essential for any PC to have an updated anti-virus all the time!
I hope
this topic was informative and enjoyable!
Next time
you run a virus scan on your PC, take some time and read the descriptions
written alongside the viruses detected; some will be malwares, some worms and
some Trojans!
Beware!
But keep
learning and sharing knowledge and giving enthusiastic feedbacks!
