Business and Management
Submitted By yytking
3.1 Explain the purpose and nature of the budgeting process.
IN business,budget can be defined as a plan for an organization is outgoing expenses and incoming revenues for a specific time period.
Budgets are used in many organizations to
Track and control spending
The purpose is to ensure that available funds are used according to plan,within preset limits and not exceeding available funds.
Support funding requests
The purpose is to justify the use of funds and to help plan future spending accurately by describing how funds will be used.
The budgeting process:
Companies and organizations typically develop and implement budgets on a periodic basis at fixed intervals. The norm in private industry is to produce a plan for each fiscal year. Some government organizations also prepare annual plans, but two-year (biennial) budgets are also common in government. Although plans are sometimes adjusted in "real time" (that is, they are treated as flexible budgets after start of the planning period they cover), such changes are exceptions to the normal rule, which is to keep the forecast intact (static) once implemented.
In the period of time between issuance of one budget and the next, planning-related decisions and plans are referred to as the budget cycle or process. In large companies, large educational institutions and non profit organizations, and in government organizations, the process normally extends across months, if not the entire period between budgets.
For those involved in the budgeting process there can be many specific steps and requirements to meet, and the nature and timing of these vary widely among companies and organizations. Most large organizations in fact publish a description of their own process, calendar, and approval requirements on the internet. This information is sometimes publicly accessible, or it may…...