The principles of budget management (in other words, budgeting) are usually reflected in the budget regulations, which, as a rule, are in every organization. However, this is more likely to apply to very large, steadily developing companies.
All others issue an order (signed by the CEO), which specifies the deadlines and lists the responsible persons. Below is an example of such an order:
Responsible person/manager Prescribed duties Deadlines
Stage 1. Information collection, planning.
Responsible executive of the Central Federal District
1. Forecasting expenses in relation to the assigned Central Federal District for the 4th quarter of 2017.
2. Study of data on actual expenses for 9 months of 2017 (provided by the PEO), plus analysis of planned indicators for October-December. These documents are the starting point for making budget forecasts for 2017.
3. Collection of information on the lebanon email list company's divisions for 2018 with mandatory consideration of expenses on which the volume of management expenses will depend.
4. Planning the budget for the Central Federal District for 2018 (based on the collected data).
5. Submitting the budget to the head of the Central Federal District for approval.
13.10.17-24.10.17
Head of the Central Federal District
1. Analysis, approval of the budget of the Central Federal District (for which this manager is responsible), submission of the budget for review to the financial director.
2. If necessary, providing clarifications and defending the budgets of the Central Federal District before the CEO.
27.10.17
Budget Controller
1. Preparation of a report on actual expenses for each financial center for 9 months, submission for review to the heads of the financial centers.
2. Checking the budgets of the Central Federal District at the development stage for compliance with the principles of budget planning.
3. Submitting the budgets of the Central Federal District to the financial director for review, drawing up a consolidated budget of management expenses.
Until 13.10.17
Stage 2. Preparation and protection
Financial Director
1. Study and approval of the submitted budgets of the Central Federal District; in case of disapproval, return for revision.
2. Support of the budget process, participation in the defense of budgets before the director.
27.10.17-07.11.17
General manager Approval of the Central Federal District budgets. 10.11.17-19.11.17
If compared with budget regulations, in practice it is more convenient to use an order. It specifies tasks for short-term periods of time, clearly specifies deadlines and responsible executors. In addition, the order is not cluttered with references to regulations, letters and other documents of local significance.
Step 4: Communicating planning principles to those responsible
So, the order is ready, the CEO has signed it, the next step is to familiarize all the responsible executors mentioned in it with the contents of the document. And not just familiarize, but convey the duties assigned to them. As a rule, this is done by the budget controller. He explains the essence of the matter, and then collects data on the main centers of financial responsibility and monitors the budget expenditure.
It is also important to individually explain to the staff the main objectives and principles of planning management expenses (using specific figures). For example, the budget for the fourth quarter of 2017 is formed based on the reports of the previous nine months and taking into account the indicators specified in the business plan. The validity of the distribution of expenses by items is also checked by the budget controller. This is done after the specialists have already fully prepared the expense plans for 2018.
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Step 5: Meeting with the head of the Central Federal District regarding budget parameters
The financial director holds such a meeting for each division with the head of the Central Financial Directorate.
In particular, the formation of the "Reserve Project" is being discussed. This article is additionally introduced into the budget specifically for those cases when there is not enough money for planned projects. For example, it is quite difficult to predict in advance how much money will be needed for a new project, and this is where the reserve fund comes to the rescue.
Often, the CFOs deliberately overstate the amounts needed to pay for management expenses in order to later receive impressive funding without going beyond the budget. Therefore, when the need for new projects arises, the departments' plans for administrative expenses must be revised.
Upon completion of all budgeting approvals, a joint meeting is held with all heads of the Central Federal District, where the general estimate of management expenses is announced.
Step 6: Complete analysis of budget indicators
The feasibility and relevance of planned management costs is assessed by conducting a comprehensive, full analysis. The following questions need to be answered:
how much do the planned and actual expenses for 2017 differ from the planned figures for 2018 (make a comparison for each Central Federal District);
what are the reasons for the identified deviations (identified using factor analysis);
what reserve funds the enterprise has for optimizing expenses. If necessary, review the projects planned for the next year.