budgetting in case of formulating yearly plan
- 1. BUDGETING Presented by- Tabeena Javeed M.Sc. Nursing 1st year
- 2. DEFINITION: Budgeting is an operational plan, for a definite period usually a year. Expressed in financial terms and based on the expected income and expenditure. Or Budgeting is a concrete precise picture of the total operation of an enterprise in monetary terms. By: H.M. Donovan
- 4. PURPOSE OF BUDGETING: Mechanism for translating fiscal objectives into projected monthly spending pattern. Enhances fiscal planning and decision making. Clearly recognizes controllable and uncontrollable cost areas.
- 5. Offers a useful format for communicating fiscal objective Allows feedback of utilization of budget. Helps to identify problem areas and facilitates effective solution. Provides means for measuring and recording financial success with objectives of organization.
- 7. CHARACTERISTICS OF BUDGETING: Should be flexible. Should be synthesis of past, present and future. Should be product of joint venture and cooperation of executive/department head at different level of management. Should be in the form of statistical standard laid down in the specific numerical terms. Should have support of top management throughout the period of its planning and implementation.
- 9. IMPORTANCE OF BUDGETING: Needed for planning future course of action and control over all activities in the organization. Facilitates coordinating operation of various departments and sectors. Helps to weigh values and make decision when necessary.
- 11. PRINCIPALS OF BUDGETING: Budget should be balanced one. Budget estimates should be cost based. Budget revenue and capital portions should be kept distinct. Estimation should be as close as possible. The form of estimates should correspond to the form of accounts. Rule of lapse.
- 12. TYPES OF BUDGETING: OPERATING BUDGET (Revenues and Expenses): Provides an overview of agency function by projecting the planned operation for upcoming year. Deals with salaries, medical-surgical supplies, office supplies, laundry services, books periodicals, recreation and contractual services. MASTER BUDGET: This is nothing but the target profit and loss statement and balance sheet of organization.
- 13. o FIXED BUDGET: Financial plan in which the uppermost spending limit is set by the top executives. o FLEXIBLE BUDGET: It consists of several financial plans, each for different level of program activity. o PROGRAM BUDGET: The cost are related to the objectives of each department of services, the scope and activities undertaken are identifiable and measurable unit of worth. o ZERO BUDGET: Zero budget requires the manager to examine, justify cost of every program both old and new, in every annual budget.
- 15. BUDGETING PROCESS: STEP 1: Establishment of operational goals and objectives and policies. STEP 2: Goals must be translated into quantifiable management objectives for organizational units. Departmental goals are made. STEP 3: Formal plan for budget preparation and review including assignment of responsibilities and timetable is prepared.
- 16. STEP 4: Departmental budget are revised and master budget is prepared. STEP5: Financial feasibility of master budget is tested and final document is approved and distributed to all parties involved. STEP 6: Every head of the office required to prepare budget estimate in respect of salaries of establishment, contingent expenditure and others. Example- Telephone, office expenses, rent of building etc.
- 18. ADVANTAGES OF BUDGETING: Fixes accountability, assignment of responsibility and authority. Encourages managers to make careful analysis of operation. Weakness is revealed, corrective measures taken. Financial matters can be handled in orderly fashion. Activities are balanced.
- 19. DISADVANTAGES OF BUDGETING: Converts all aspects of organizational performance in monetary values. Only easy aspects can be considered and equally important facts such as organizational development may be ignored. May become an end in itself instead of means to end. Budgetary goals may supersede agency goals. Skills and experiences are required for successful budgetary control. Time consuming and expensive.
- 20. REFERENCES: Basavanthapa BT, Nursing Administration, Jaypee Brothers Publications; 2nd edition; 2009; page number-306-317. Masih S, Essentials of nursing Management;2nd Edition, Lotus Publishers; 2020; Page no. 290-295 www.unsouthal.edu/osp/documents/sa mple research budg.doc. www.doculink.org/downloads/doc sample.