Managing Finance and Budgets Seminar 9

Follow-Up to Lecture Nine - Activities  Preparation: read Chapter 12  Describe key concepts: Budget definitions and purposes Budget-setting process Different types of budget  Exercises 12.3 and 12.7

Questions 1  What exactly is meant by a ‘budget’?  Describe briefly the different purposes that a budget may be used for.

The uses of budgets Five areas of usefulness: Forward planning Co-ordination Motivation Control Authorisation

Questions 2  Outline the steps in the planning and control process which encompasses the entire budget setting scenario.  Describe in detail the steps involved in actually preparing a budget.

Identify business objectives Consider options Evaluate options and make a selection Prepare budgets Perform and collect information on actual performance Respond to variances and exercise control Revise plans and (budgets) if necessary The planning and control process

Steps in the budget setting process Establish responsibility for the budget-setting process Prepare the budget for the area of the limiting factor Prepare draft budgets for all other areas Communicate the budgets to all interested parties Communicate budget guidelines to relevant managers Identify the key or limiting factor Review and co-ordinate budgets Prepare the master budgets Monitor actual performance relative to the budget

Follow-up Activities  M & A Exercise 12.3 & 12.7