BUDGET PREPERATION Nature of Budget It estimates the profit potential of the unit. It is stated in monetary terms though non-monetary targets back the.

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Presentation transcript:

BUDGET PREPERATION Nature of Budget It estimates the profit potential of the unit. It is stated in monetary terms though non-monetary targets back the same. It is a management commitment. It is reviewed and approved by an authority higher than the budgetee. Once approved it can be changed only under special circumstances. Periodical variances of the performance are reviewed and action taken.

USES OF BUDGET To fine tune the long term plan. Coordinate the activities of the various units. Assign responsibility to the managers. To obtain the commitment from the managers. Comparing. Monitoring of the financial position. Take corrective action

BUDGETARY PROCESS TOP DOWN. –Prepared by the higher management and handed down to the lower units. Lack of commitment from the managers and the plan may not succeed. BOTTOM UP. –Lower level officers participate in the budgetary process. Commitment is ensured.

BEST PROCESS Blend of Top Down and Bottom up. –Budgetees prepare the first draft for their area of work. –Senior managers review and allot necessary budget. Approval is normally tough to ensure that budgetees do not “play games”. –This process has influence on the morale of the unit Greater acceptance of the budget. Effective information exchange ( grassroot level knowledge of the budgetee and the macro view of the senior manager ).

DEGREE OF DIFFICULTY An ideal budget is one which is attainable. If it is too difficult then managers may taken short term actions that may not be in the long term interests. Achievable budget targets reduce the tendency of the managers to manipulate data. Meeting the budget leads to a feeling of “winning”.

RAILWAY BUDGET I - REVENUE BUDGETII - WORKS BUDGET III - EARNING BUDGET BUDGETARY CYCLE I - REVENUE - BUDGET ESTIMATES GRANT AUGUST REVIEW REVISED ESTIMATES FIRST MODIFICATION CLOSING OF A/Cs (CASH + FINAL) APPROPRIATION ACCOUNTS

II - WORKS - (WORKS M + P ROLLING STOCK ) PRELIMINARY WORKS PROGRAMME DISCUSSIONS FINAL WORKS PROGRAMME PINK BOOK - OUTLAY FOR THE YEAR

BUDGET DOCUMENTS BUDGET FOR THE YEAR EARNINGS, REVENUE & CAPITAL/WORK/PLAN MEMORANDUM OF PROPOSALS FOR ADJUSTMENT OF FARES & FREIGHT KEY TO BUDGET DOCUMENTS

CONSTITUTIONAL PROVISIONS REGARDING BUDGET. ARTICLE 112. ANNUAL FINANCIAL STATEMENT TO BE LAID EVERY FINANCIAL YEAR. ITEMS OF CHARGED EXPENDITURE TO BE SHOWN SEPARATELY. ARTICLE 113. CHARGED EXPENDITURE NOT VOTABLE. POWERS OF THE HOUSE ON VOTABLE EXPENDITURE. PRESIDENT’s RECOMMENDATION - A MUST

ARTICLE 114 APPROPRIATION BILL - A MUST FOR WITHDRAWALS OF MONEYS OUT OF CONSOLIDATED FUND. ARTICLE 115 SUPPLEMENTARY / EXCESS / ADDL. GRANTS CAN BE AUTHORIZED BY PARLIAMENT. ARTICLE 116 PARLIAMENT EMPOWERED TO AUTHORIZE GRANT WITHOUT DETAILS IN EXCEPTIONAL SITUATIONS. ARTICLE 151 REPORT OF CAGI TO BE PLACED BEFORE PARLIAMENT