Essay on Budget and Budget Effective Budgeting

Submitted By jhcoz
Words: 1162
Pages: 5
Open Document
Class Notes for February 5th
Budget Definition
A budget is a plan for getting and spending money to reach specific goals by a certain time.
A budget is a plan.

Four Rules for Budgets and Plans
Rule #1 – A budget is a plan for spending money to reach specific goals within a certain time period.
Rule #2 – Any budget is only as good as the time, effort, and information people put into it. Good budgets foster collaboration and exchange of information among all levels of the team.(From informal and formal individuals such as those in charge but also informal experts)
Rule #3 – No budget or plan is perfect because no one can totally predict the future
Rule #4 – In order to reach the goals, all budgets and plans must be monitored and changed as time goes on in execution.(City of Charleston CFO or Mayor can change a line budget up to $40,000) The Budget Book for Nonprofits Dropkin/Halpin/La Touche
Characteristics of a Good budget
Effective budgeting is thoughtful and deliberate.
Good budgeting is inclusive. It is top down and bottom up. It involves open communication of priorities, goals and operational plans
Finally, strong budgeting is an ongoing process. The Budget Book for Nonprofits Dropkin/Halpin/La Touche

The Budget Cycle itself (Bland p168) …
Preparation Legislative approval (Planning & Budgeting)
Executive implementation (Budget Execution)
Accounting and Auditing (Financial Mgmt & Audit)

Remember the Financial Cycle …
Planning> Budgeting > Budget Execution > Financial Management> Audit (Cycle chart and budget book handouts)
The Budget Office (B p.163)
Seeking the truth
Organizing the budget office
Principle duties
Role of Budget Analyst (B p.162) (To help departments execute their budgets the way they planned and if not ask why they did it differently and fix it for the next year)

From Practical Government Budgeting Text – (What a good budget should include:)
The Budget Message
The Budget Summary Data
The Program/Departmental Data
Supplemental Data Schedules

Some authors expand the basic areas of a gov’t budget to include...
Budget Message/Highlights/Executive Summary
Budget Summary
Sources of Revenues
Sources of Expenditures
Departmental or Agency Budget Information
Supplemental Budget Information

What does GFOA say about the basic elements of a strong budget? (Handout)
1. A policy document
2. A financial document
3. An operational guide
4. A communication tool

“A good budget should be user friendly.” **(If budget done well, it is the best document to understand how a government works)

Basic functions of a Budget has elements of the following -
Accountability
Control
Plan

Three basic Budget formats are … (3 Kinds of Budget)
Line Item Budget (One shown on B p. 156)
Program Budget
Performance Budget

The Line Item Budget is by far the most prevalent used by governments. It emphasizes control, but not creativity (Most accountability & Control, Doesn’t provide Plan)

This is a line item budget …
(Handout)
Two spin-offs of Line Item budgeting
Target Based Budgeting (B p. 157) (Start with basic budget, where you target things you can do and may have more or less money for other options)
Zero Based Budgeting (B p. 156) (Non-existent, 250 firemen, must explain every year what every single one does, equipment needed, etc. Instead, uses incremental instead, where go off last year’s budgets then decide if you need to move up or down in budget.) (Maybe in Non-profit, they may use zero based budget to see if a specific program is needed and have them explain all aspects of the program required. In govenment, they can use this for travel: all travel and training must be justified or ex. office supplies)

A Program Budget is shown here …
City of Graystown ’08-’09 Expenditures
Department of Public Works
The goal of this agency is to ensure that the city can continue to dispose of solid waste in the most effective and efficient manner as possible.
Objectives:
Provide for the removal of all solid
Show More

Related Documents: Essay on Budget and Budget Effective Budgeting

Advantages And Disadvantages Of Budgeting

Budgeting: virtues and shortcomings. Problems and consequences of the management’s misunderstanding of effectiveness and importance of budgeting technologies. A Thesis Presented to the Faculty of SBS Swiss Business School In Partial Fulfillment Of the Requirement for the Degree Master of Business Administration By 2015 Promoter: Sadvakassova Aigul DO NOT DISCLOSE Thesis Title Presented to the faculty of SBS Swiss Business School In partial fulfillment of the requirement for the…

Words 9844 - Pages 40

M4 U2 Notes Essay

Advantages of budgeting and budgetary control Budgeting is obviously a sensible thing for a business to do because it controls how much money a business should be spending on rent, wages etc. If departments keep to the budget or spend less than they actually can then the company in this case Legend T-shirts should have a favourable variance depending on how many sales they make. Legend T-shirts had anticipated to spend £80,000 on fixed costs and £72,000 on variable costs which has a total of £152…

Words 1004 - Pages 5

Contract The Budget System Of Fiscal Accountability In Presidential And Parliamentary Systems Of Government

Comparative Public Administration PROJECT Compare and contract the budget processes and systems of fiscal accountability in Presidential and Parliamentary systems of Government. Student: Lyn Marie James Abstract There is diversity of forms of government (Laundy, 1989) and different ways of classifying them and as such, this paper sets out to discuss the budgetary powers of the legislature under different forms of government, and the environment that informed the political structures…

Words 8218 - Pages 33

Essay about Zero Based Budgets

Zero-based budgeting starts from a "zero base" and every function within an organization is analyzed for its needs and costs. Budgets are then built around what is needed for the upcoming period, regardless of whether the budget is higher or lower than the previous one. Because of its detail-oriented nature, zero-based budgeting may be a rolling process done over several years, with only a few functional areas reviewed at a time by managers or group leadership. Zero-based budgeting can lower…

Words 2138 - Pages 9

Health Care Budget Paper

Health Care Budget Paper Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds for an organization. It means applying general management principles to financial resources of the enterprise or organization. The scope of financial management can cut across a wide range of the organizations departments and can involve investment decisions including investment in fixed assets. Investment in current assets…

Words 1157 - Pages 5

Budgetary Control System

used for financial planning and setting goals for the business enterprise. Effective and accurate planning can lead the organization towards success or failure. For the Ferguson & Son Manufacturing Company, the strategy was to compare the fixed budgeted cost with the actual cost each month of every department. This would enable them to view the performance for each department and allow them to better estimate the budget for the next year. However there is also an issue/problem that exists with…

Words 1229 - Pages 5

Resource Allocation Essay

distribution of resources, and in particular finance, from the centre to peripheral levels. It generally concerns broad levels of aggregated financial resources. Budgeting implies the more detailed determination of precisely how these funds are to be used. Given the importance we have placed on planning as a process that leads to action, budgeting and resource allocation are major planning instruments. Basis for Resource Allocation * Public goods and the rationale for public intervention. * Marginal…

Words 4191 - Pages 17

zero-based budgeting Essay

Zero-Based Budgeting MHA 612 Dr. Kathy Wood October 14th, 2013 Zero-Based Budgeting Introduction As the zero-based budget consultant for Windsor Memorial Hospital I will make recommendations to the Board of Directors on how to create a solid plan to reduce costs and increase productivity. This will be a team based solution. In order to sustain the plan for years to come, it will require continued effort and a commitment from all current and future employees. Zero-based budgeting is one…

Words 1140 - Pages 5

Group Assignment Essay

Question 1 Introduction This report aims to compare the differences between Traditional costing system and Activities Based Costing (ABC) system. The advantages and disadvantages of both concepts determine which method is more superior for the business. Traditional costing concepts Traditional costing is to consider how much will cost to produce a product. It plays an important role in the business to predicting the profitability of a product. Traditional costing is also well known as the conversional…

Words 3398 - Pages 14

Planning A Budget Dip Essay

Planning a Budget Davis Service Group is a large public limited company employing around 17,000 people. Its shares are quoted on the London Stock Exchange.The business is based on service contracts to source, clean and maintain industrial textiles, such as protective clothing and linens. This is across four key sectors: workwear, healthcare, hotels and restaurants, and general facilities, such as washroom linen Budgets are forward financial plans. They show financial targets over a given period of…

Words 1550 - Pages 7