Community Participation & Development (CPD)

It is a forecast of expenses, to be incurred on selling and distributing the finished product. This budget should be prepared only after analysis of selling and distribution overheads of past years. Budgeting provides a basis to evaluate the performance of different departments.

  • Hence, sales budget should be prepared first and the production and other budgets will follow it.
  • A prime use of the budget is as a performance baseline for the measurement of actual results.
  • You would save money if you used your emergency fund to eliminate credit card debt, but the purpose of the fund is to prevent you from having to use your credit card for paying for unexpected expenses.
  • It is calculated on the basis of budgeted working days in a year on a month.

For example, imagine you allocated $10 million for your company’s annual corporate social responsibility (CSR) project. Unforeseen circumstances caused it to run $1 million over budget, and that money had to come out of other projects’ budgets. Budgets from previous periods can be compared to the company’s actual financial allocation and performance, giving an idea of how close predictions were to actual spend. There are few skills as critical to running a business as budgeting. Yet, over half of the executives surveyed in a 2019 McKinsey study report feeling dissatisfied with the transparency surrounding their organizations’ budgets. Any and all of these budgets are part of a company’s overall financial plan.

Financial Budget

Performance management can be more meaningful as actual results can be easily compared to flexed results – total variances can then be calculated for each revenue and cost. A flexible budget is a budget containing figures based on actual output. The flexible budget is compared to the company’s static budget to identify any variances (or differences) between the forecasted spending and the actual spending. Although the budgeting process for companies can become complex, at its most basic, a budget compares a company’s revenue with its expenses in a given period. When they spend more than what was budgeted they can create a revenue deficit. Cash budgets tie the other two budgets together and take into account the timing of payments and the timing of receipt of cash from revenues.

  • These budgets are then rolled up into a master budget, from which estimates are made for the financing requirements of the business over the span of the budget period.
  • Following are the rules that individuals can follow to make an effective financial plan.
  • This budget is prepared by giving due consideration to receipts and payments.
  • Such reports are usually in the forms of Departmental Operating Statement (Fig. 13.11) which shows the operating performance of a departmental manager, during a particular period.

The outcome may be run through several iterations before a reasonable budget model is created. At the most minimal level, a budget contains an estimated income statement for future periods. The term “basis of accounting” is used to describe the timing of recognition, that is, when the effects of transactions or events should be recognized. The basis of accounting used for purposes of financial reporting in accordance with generally accepted accounting principles (GAAP) is not necessarily the same basis used in preparing the budget document. Operating budgets include sales, production, direct labor, direct materials, overhead, administrative expenses, selling, cost of goods manufactured, and cost of goods sold.


Various departmental objectives are to be defined in accordance with the corporate objectives. Under this system, past records of expenses are not taken into account and every expenditure is studied in isolation. Evaluation of every activity is possible under zero base budgeting system. It emphasizes an optimum utilisation of resources and a proper control on unnecessary expenditure.

It Provides a Pivotable Plan

The concept of performance budgeting is used mainly in the Government and public sector undertakings. It projects the Government activities and expenditure thereon for the budget period. It shows budgeted expenses classified by functions, activities and unit cost, if possible. It is a forecast of expenses to be incurred on administrative works for budget period.

Included in these duties is the maintenance of appropriation accounting, reporting of expenditures and revenues, and the Budgetary/Legal Basis Annual Report to the Governor. In most departments, appropriations for the current year are typically shown fully expended in the Governor’s Budget. However, if accounting or budget estimates records indicate savings will be realized or that deficiency funding will be needed, expenditures may need to be adjusted, as appropriate, for the budget. To comply with these Government Code sections and the State Administrative Manual requirements, departments submit year-end financial statements to the State Controller’s Office (SCO).


Responsibility centres should be established within the organisation. A responsibility centre means a unit of an organisation headed by a manager having direct responsibility for its performance. (ii) A statement of duties and responsibilities of different personnel involved in the preparation of the budget.

Understanding Budgeting

A new budget will be prepared at the end of March, planning April to June in more details and July to March in lesser details. Four rolling budgets should be prepared each 12 months which requires more administrative effort. Next the expenses are listed for each programme and the total expenditure for a programme which they serve is computed. PB provides output oriented cost information since all expenses are classified by purpose. PB was first used in U.S.A. in 1982 in Government concerns.

This approach is especially useful for a new business that has no historical performance trend lines upon which to base its budget estimates. Budgets may also be based on the sum of each department within the company [2020] adp time tracking and scheduling software (little larger firms). One can also base its budget on the various departments of the company. Often both income and expenses are taking into account in each budget before creating an overview of its total budget.

Budgeting provides a means of informing managers of how well they are performing in meeting targets they have set. The process gets managers to consider how conditions may change and what steps they need to take, while also allowing managers to understand how to address problems when they arise. Expenditures are planned to be equal to incomes in a balanced budget. Changes in relevant factors such as economic conditions will cause changes in these assumptions, and the original budget might not be appropriate anymore. Go over all your bills to see what must be paid first and then set up a payment schedule based on your paydays.

It is a forecast of the number of labour hours to be worked by labour in production. Amount paid to workers and other perquisites are recorded in this budget. Time and motion study is kept into mind, while preparing this budget.

Hopefully, a company uses participative budgeting to arrive at this final budget, but it may also be imposed on the organization by senior management, with little input from other employees. The principal budget factor is the starting point for the preparation of functional budgets. For example, when sales potential is limited, sales become the key factor. Hence, sales budget should be prepared first and the production and other budgets will follow it. Sometimes more than one factor may limit the activity level. During the preparation of budgets reliable historical data are collected from the accounting department.

Finance designates a fund administrator for each fund and the organization is responsible for preparing the fund condition in the Governor’s Budget. Since Finance prepares the fund condition (Summary Schedule 1) for the General Fund, Finance reconciles with the SCO General Fund data to ensure that the past year balance is as accurate as possible. Departments are required to follow that same process for other funds if they are designated as the fund administrator for the fund. The Government Code, beginning with section 12400, sets forth the duties and requirements of the SCO.

A comprehensive budget, properly developed, will initially contain organizational goals and expectations, and subsequently can be used as an effective evaluation technique. Preparation of budgets either in physical terms or monetary terms or both in terms of various activities in pursuance of objectives set by the management. Feedback is provided to employees from time to time so that corrective steps are taken promptly so as to meet the targets.

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Community Participation and Development (CPD) has been working since 1993 which was initiated by a group of local enthusiastic social workers with a view of uplift the social and economic conditions of distressed women, Children and youth of different areas of Bangladesh. It has been implementing programs with the disadvantaged people, like childcare, health, women empowerment, adolescent development, skill development training, vocational skills training, apprenticeship and job placement for the graduated children through CSR, basic education, pre-schooling, Non Formal Education (NFE), soft skill/life skill/Employability and income generating activities, Sexual and Reproductive Health (SRH), Health services, climate change and adaptation, disaster risk reduction, Anti trafficking, anti-terrorism, child abuse and harassment by the support of national and international donor. All these components enable destitute and disadvantaged target children, youth and women to change their socio-economic condition and consequently the project will act as a supplementary program of the national plan. The basic objective is to uplift the socio-economic conditions of the disadvantaged women, children and youth. CPD believes that to improve the living condition of the disadvantaged women and adolescents and promote self- reliance is the key to meet the long-term needs to the beneficiaries struggling to overcome poverty and social insecurity. CPD also started working with the youth to create options of livelihood for them within the project areas in line with Education Prevention, Livelihood and protection. CPD is working to change in policies and practices affecting children’s and young people’s rights. The organization is striving to make itself institutionally, program wise and financially sustainable without compromising the quality of services.