BUDGETING

Budgeting

Budgeting

Introduction

As a consultant of the Budgeting, it is my duty to inform the clients about the budgeting. In this regard this report is based on budgeting and its principle for my clients. Budget is a form of planning report, which identifies the need for various resources, materials and costs. These are designed to coordinate the use of the firm's resources, improve in-house communication, and identify weaknesses in the organizational structure and allocation of duties (Neth, 1966, pp. 17).

The defining characteristics of the budget are, first, formalization, i.e, a quantitative expression. It is primarily a set of numbers, while the plan includes the addition of a list of specific activities to achieve organizational goals.

Secondly, the centralization is another characteristic of the budget. Budgeting is carried out under the scheme of interaction "upper" and "bottom", because the planning and budgeting is a single process, which provides for constant interaction and coordination of the budgets of various levels of management.

Discussion

To ensure the efficiency of the budget should be drafted in a relatively short period of time. This is usually a year, by quarter, month, or even days. As a starting point the budget is usually used in the level of transactions this year. Taken as a basis for proposed changes in the period ahead and use the "incremental method" are compared with the current year. However, this approach is not always successful, especially for larger companies. The main drawback of the "method of increments" in this case is the preservation of past mistakes. At the same time the budget sale may overlook the possibility of entering other markets, and the budget to keep spending unnecessary waste of resources and tools (Neumann, 2001, pp. 44).

The main principles of the budget are:

The fiscal integration, which is to bring together individual budgets into one common system of budgeting based on planning calculations to ensure the successful implementation of the strategy of the organization;

The principle of sequence - preparation of the consolidated budget is according to this pattern, the initial stage of which is budgeting sales;

The budgeting system is based on norms and standards;

The principle of through budgeting - the formation of the consolidated budget based on a system of drawing up a separate (private) budgets;

The principle of methodological comparability - to provide quality analysis and control of budgets to ensure the unity of methods for comparing income and expenditure, actual and planned performance.

The peculiarity of the structure of the master budget of the organization, in turn, depends on many factors. The first is the scale of the organization. The larger the company, the harder it is the organizational structure and the more important it is coordinating work between the individual segments. Without a clear plan and a system of exchange control information between departments and centers of responsibility is almost impossible to ensure the coordinated work of the organization (Neth, 1966, pp. 17).

Steps in developing the company's budget

The process of forming budget of the enterprise is usually as follows:

First of all, on the ...