CMA(Part1): Budgeting Concepts
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The document discusses key concepts related to budgeting. It defines a budget as a plan that identifies the resources and commitments needed to achieve goals over a period of time. It also describes budgets as planning, control, motivation, communication, and coordination tools. Finally, it discusses budget periods, participants, cost standards, and preparation tools for developing an effective budget.
CMA(Part1): Budgeting Concepts
- 1. Budgeting ConceptsIyadMourtada, CIA, CMA, CFE, CPLPIyadMourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 2. Budgeting ConceptsIntroduction to Budgeting Role of the BudgetBudget Periods Budget ParticipantsCost StandardsBudget Preparation ToolsIyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 3. Anoperational plan and control tool that identifies resources and commitments needed to satisfy goalsover aperiod of time.Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 4. Budget Cycle International Budget PartnershipIyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 5. ResourcesBudgetGoalsIyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 6. Budget = Planning Tool A Written plan.
- 7. Anticipating problems (managers are proactive rather than reactive).
- 8. Defining the goals in quantitative terms. Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 9. Budget = Control Tool Setting cost guidelines.
- 10. Managers will understand the budgeted cost of their departments.
- 11. Measures the performance against established goals.
- 13. Avoiding budgetary slack.Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 14. Budget = Motivational Tool Motivating employees to stay within budget.
- 15. Must be seen a realistic budget and not as a restriction.
- 16. Some degree of flexibility should be allowed.Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 17. Budget = Communication Tool Communicating the goals.
- 18. Making everyone in the organization working toward the goals.Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 19. Budget = Coordination ToolMotivating departments to communicate and coordinate their work to be able to create the budget. Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 20. Successful Budgeting Aligned with corporate strategy.
- 21. Used to allocate resources effectively.
- 22. Used as planning, communication, coordinating, and motivating tools.
- 23. Buy-in at all levels.Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 24. Controllabilityvs. Controllable CostsNoncontrollable CostsIyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 25. 1243“If you don’t know where you are going, any path will take you there.”Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 26. Mission Statement PlanningStrategic Plan Long-term ObjectivesCapital Budget Capitalize &Amortize Operating Budget Capital Investment Short-term Objectives Current Investments ExpenseIyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 27. Budget Periods Strategic Plan Long-term plans (budgets) Short-term plans (budgets)Strategic 10-2 years
- 28. Intermediate 2-1 year
- 29. Operational Less 1yearIyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 30. Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 31. Authoritative (top-down budget) Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 32. Participative (bottom-up budget)Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 33. Budget ParticipantsIyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 34. Managers can underestimate the amount of income or revenue that will come in over a given amount of time, or overestimate the expenses that are to be paid out over the same time period.This will create “Budgetary Slack”, which is the excess of amount budgeted over and actual amount needed. Budgetary SlackAmount Budgeted Amount NeededIyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 35. Budgetary SlackAdvantagesProvides flexibility for operating under unknown circumstances.Offsets the costly setups from design changes and/or small lot size orders. DisadvantagesDecreases the ability to highlight weaknesses and take timely corrective actions on problem areas.Decreases the overall effectiveness of corporate planning. It limits the objective evaluation of departmental managers and performance of subordinates by using budgetary information.Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 36. Cost Standards How much an operation or a service should cost?Types of Standards:Authoritative vs. Participative Ideal vs. Reasonably AttainableIyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 37. Cost Standards Standard Costs of Direct Material (Quality - Quantity - Price) Standard Costs of Direct LaborSources for Standard Setting:- Activity Analysis - Historical Data - Market Expectations and Strategic Decisions - BenchmarkingIyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 38. Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 39. Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 40. Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 41. Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 42. Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com
- 43. IyadMourtada, CMA, CIA, CFE, CPLP, M.A.iyad.mourtada@gmail.com http://ae.linkedin.com/in/iyadmourtada http://twitter.com/iyadmourtadahttp://www.youtube.com/Iyadmourtadahttp://www.iyadmourtada.comhttp://www.facebook.com/iyad.mourtada iyadmourtada
Editor's Notes
- #2: 1. Hi Everyone. This is Iyad Mourtada and I would like to welcome you all here today on behalf of OpenThinking Academy. OpenThinking Academy is an online training company offering many online training programs which can help you improve your thinking process and allow you to take your problem solving and decision making skills to the next level.As for me, I have been teaching the Finance and Accounting for many years including the CIA and CMA review courses and I am excited to have more than 120 CIA students world wide studying with me this year. So, Our topic today is “Overview of the IPPF”. So let’s get started.