COURSE OVERVIEW:

A budget is a financial plan to control future operations and results. It is expressed in numbers, such as dollars, units, pounds, hours, manpower, and so on. It is needed to operate effectively and efficiently. Budgeting, when used effectively, is a technique resulting in systematic, productive management. Budgeting facilitates control and communication and also provides motivation to employees.

Budgets are useful tools in allocating resources (e.g., machinery, employees), making staff changes, scheduling production, and operating the business. Budgets help keep expenditures within defined limits. Consideration should be given to alternative methods of operations.

Budgets link the nonfinancial plans and controls that constitute daily managerial operations with the corresponding plans and controls designed to accomplish satisfactory earnings and financial position.

Budgeting allocates funds to achieve desired outcomes. A budget may span any period of time. It may be short term (one year or less, which is usually the case), intermediate term (two to three years), or long term (three years or more). Short-term budgets provide greater detail and specifics. Intermediate budgets examine the projects the company currently is undertaking and start the programs necessary to achieve long-term objectives. Long-term plans are very broad and may be translated into short-term plans. The budget period varies according to its objectives, use, and the dependability of the data used to prepare it. The budget period is contingent on business risk, sales and operating stability, production methods, and length of the processing cycle.

The first step in creating a budget is to determine the overall or strategic goals and strategies of the business, which are then translated into specific long-term goals, annual budgets, and operating plans. Corporate goals include earnings growth, cost minimisation, sales, production volume, return on investment, and product or service quality. The budget requires the analysis and study of historical information, current trends, and industry norms. Budgets may be prepared of expected revenue, costs, profits, cash flow, production purchases, net worth, and so on. Budgets should be prepared for all major areas of the business.

Forecasting is predicting the outcome of events. It is an essential starting point for budgeting. Budgeting is planning for a result and controlling to accomplish that result. Budgeting is a tool, and its success depends on the effectiveness to which it is used by staff. In a recessionary environment, proper budgeting can increase the survival rate. A company may fail from sloppy or incomplete budgeting.

It is necessary to be familiar with the various types of budgets to understand the whole picture and how these budgets interrelate. The types of budgets include master, operating (for income statement items comprised of revenue and expenses), financial (for balance sheet items), cash, static (fixed), flexible, capital expenditure (facilities), and program (appropriations for specific activities such as research and development, and advertising).

The failure to budget may result in conflicting and contradictory plans as well as in wasting corporate resources. Budget slack should be avoided or minimised. Budget slack is the underestimation of revenues and the overestimation of expenses. Budgets should be revised as circumstances materially change. A manager who has responsibility to meet a budget should also have the authorisation to use corporate resources to accomplish that budget. Priorities should be established for the allocation of scarce resources. Budgets may include supplementary information such as break-even analysis by department, by product, and for overall operations.

This course will help you plan, prepare and document operational budgets for a variety of organisations. It has application to job functions that have budget responsibility and may include accountants and departmental managers.

This course covers the following topics; The Fundamentals of Budgeting, Types of Budgets, Forecasting, Operating Budgets, Cash Budgets, Master Budgets, Performance Reports, Flexible Budgets, Variances and Budgeting Behaviour.

LEARNING OUTCOMES:

By the end of this course, you will be able to understand:

• The fundamentals of Budgeting
• What is a Budget?
• The fundamental principles of budgetary control
• The Budgeting Process
• The benefits of Budgeting
• The limitations of Budgeting
• The presentation of Budgets
• How to report budgets and actual results by implementing a Balanced Scorecard?
• How to complete and distribute reports within timelines for specified periods and projects?
• The types of budgets
• The Planning Process
• What should be considered when developing the organisational policies and procedures for financial administration?
• Updating a budget to include actual figures for each month
• How to include variances between Budget and actual figures?
• The classification of Budgets
• The Double-Entry Bookkeeping for effective Budgeting
• What is Forecasting?
• The Forecasting Process
• The Qualitative Methods of Forecasting
• The Quantitative Methods of Forecasting
• The factors affecting revenue Forecasting
• How Milestones and Key Performance Indicators are measures of performance and significant objectives on a Budget?
• The Operating Budgets for Service Industries
• The Operating Budgets for Trading Industries
• The Sales Budgets
• The COGS Budget
• The Purchases Budget
• The Cash Budgets
• The Goods and Services Tax
• Credit Sales and Accounts Receivable
• The Cash Payments Budget
• The Integrated Cash Budget
• The Cash Receipts Budget allowing provision for discount
• The Cash Receipts Budget allowing provision for discount received
• The Cash Budgets using the Accrual Method
• The Master Budgets
• The preparation of a Master Budget for a Trading Industry
• The Performance Reports
• Responsibility Accounting
• The presentation of Performance Reports
• The principle of Management by Exception
• The Flexible Budgets
• The Fixed and Variable Costs
• The Flexible Budget Equation
• The Contribution Margins
• How to analyse Variances?
• The main causes for variances between the original budget and the actual results
• The Budgeting Behaviour
• The challenges in the Budgeting Process

COURSE DURATION:

The typical duration of this course is approximately 3-4 hours to complete. Your enrolment is Valid for 12 Months. Start anytime and study at your own pace.

COURSE REQUIREMENTS:

You must have access to a computer or any mobile device with Adobe Acrobat Reader (free PDF Viewer) installed, to complete this course.

COURSE DELIVERY:

Purchase and download course content.

ASSESSMENT:

A simple 10-question true or false quiz with Unlimited Submission Attempts.

CERTIFICATION:

Upon course completion, you will receive a customised digital “Certificate of Completion”.