Discussion—Working with Budgets Budgets are the driving force behind all organiz
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Question
Discussion—Working with Budgets
Budgets are the driving force behind all organizations. Whether a manufacturing organization, or a service organization such as a medical or public accounting firm, budgets are used not only for planning purposes but also for performance monitoring and evaluation of areas within an organization.
More than likely, you are often required to work with budgets within your organization. Using the module reading and the Argosy University online library resources, research budgets including multiple budgets.
Respond to the following:
Describe in detail the budgets that you work with.
In your description, what was the objective of the budget i.e., to motivate employees or control costs? (A budget could have more than one objective.) Was the use of the budget successful in achieving the objective?
Based on the effectiveness of the budget, what recommendations would you suggest to improve the communication and/or utilization of the budget(s)?
Assume your organization has multiple budgets and you are to work with these. Explain how these budgets should be linked together.
Explanation / Answer
The budgets i work with
A.Master budget-Refers to the main budget estimates that caters for all the other departments in an organization.It is usually prepared in such a manner that it coincides with the financial year of an organization.It is comprised of two parts
B.Operating budgets-It is a subsidiary of the master budget.It deals with a summation of all expenses,operating costs and income over a period of one fiscal year
2.Cost control-The main purpose of the described budgets above within the organization is to follow real expenditures against budgeted expenditure to ensure the the objectives of the budget are achieved within the set limits.
C.Recommendation on improving communication
All the stakeholders in the budget making process need to embrace honesty in their engagements as this will save time and efforts and promote good working relationships among them
Recommendation on utilization of budget-My advice would be that organizations automate this process as this improves data management,accuracy and speed of the entire budgeting process.And in cases where technology is employed,organization should embrace the latest tools to improve the above aspects
3.To achieve this,some elements of the budget need to be combined together.For example the operating budget and the cash flow budget could be combined in such manner that operating expenses for various departments can be reflected with one expenditure account