Unit 8/Week 8 – PP 101 Instructor Flentroy-Parker

Unit 8: Budgeting and Financial Management Key Concepts to be Covered: Read Chapter 7 Participate in the Discussion Board (Post a response and 3-4 additional responses) Attend and participate in this week’s Seminar Complete quiz

Budgeting and Financial Management Budgeting and financial management as it relates to public administration is concerned with utilizing limited resources on issues that governments and other entities encounter. The federal government followed the lead of numerous local and state governments that had in place similar action such as the Budgeting and Accounting Act of 1921 that establishes the executive budget process. It is a budget process that brings about order in reference to public spending. Overall, the budget is the format for government priorities that controls the decisions made concerning policies.

Budgeting A budget depicts what you expect to spend (expenses) and earn (revenue) over a time period. A budget is best defined as a plan that outlines an organization's financial or operational goals. A budget is an action plan that helps a business, agency, or entity allocate resources, evaluate performance, and formulate plans. Understanding the importance of budgeting and how to budget is the first initial step in successful financial planning. Budgets can help refine goals based on realistic resources.

Budgeting (cont’d) Budgets can also provide accurate information to adjust, analyze, and evaluate programs and activities. It can be an aid in decision making. Budgets are useful for: planning your finances and then tracking if you're operating according to plan. projecting how much money you'll need for a major initiative. Budgets fall into several categories, such as: yearly (operating) budgets, project budgets, cash budgets, etc. The overall format of a budget is a record of planned income and planned expenses for a fixed period of time.

Example Budget Previous YearCurrent Year Revenue Dues and activity fees________________________ Student government allocation________________________ Services rendered________________________ Commissions from machines________________________ Sales________________________ Fundraisers________________________ Program receipts________________________ Other receipts________________________ Prior year carried forward________________________ TOTAL REVENUE________________________ Expenses Personnel services________________________ Salaries________________________ Hourly wages________________________ Fringe benefits________________________ Workers compensation________________________ Social Security________________________ Insurance________________________ Operating expenses________________________ Telephone line charge________________________ Long distance________________________ Other communications________________________ Office supplies________________________ Printing________________________ Postage________________________ Equipment rental________________________ Equipment repair________________________ Program expenses (Develop budget for each program) Newsletter________________________ Speakers________________________ Travel________________________ Outstanding debt________________________ Miscellaneous expenses________________________ Capital List by item________________________ Contingency ________________________ TOTAL EXPENSES________________________ BALANCE________________________

Financial Management Basic skills in financial management start in the critical areas of cash management and bookkeeping, which should be done according to certain financial controls to ensure integrity in the bookkeeping process. If your small business is a corporation, you would do well to find someone experienced in financial management. Once budgets have been prepared and approved by governments, the implementation of the expenditures must be carefully controlled. A system of control utilizes standards, institutions or mechanisms to supply controls at all levels and phases of budgetary implementation.

Financial Management (cont’d) Financial management has become increasingly pertinent in government. The activities exceed all departments and agencies, while providing a system for managerial planning, control, and evaluation. Financial management has become the principal means for effectively handling tax dollars and their corresponding usage. Every program a government undertakes requires commitments of financial resources, making the finance manager’s role a crucial one.

Financial Management (cont’d) Another important role financial management plays in government is accountability. Internally, financial management procedures information that is critical to the decisions legislators and administrators make on policy formulation. Externally, it produces information that is as pertinent to government overseeing agencies, citizens, creditors, and insurers as it is to the financial stability of the governmental entity.