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    Budgeting and Financing

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    Mondrei TV
    Budgeting involves creating a financial plan for an organization's expected revenues and expenditures. It is one of the key areas of financial administration, along with securing funds, using funds according to objectives, and maintaining financial records and audits. There are different types of budgets such as line-item, program, functional, and zero-based budgets that organize spending according to categories, programs, management functions, or justify all expenditures regardless of past spending. Developing a budget involves setting goals, collecting information, considering alternatives, deciding priorities, and gaining approval. An organization's finances come from various sources depending on if it is public or private, and financial records and controls are maintained through ledgers, purchase procedures, and other documentation.

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    Budgeting and Financing

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    Mondrei TV
    63 views3 pages
    Budgeting involves creating a financial plan for an organization's expected revenues and expenditures. It is one of the key areas of financial administration, along with securing funds, using funds according to objectives, and maintaining financial records and audits. There are different types of budgets such as line-item, program, functional, and zero-based budgets that organize spending according to categories, programs, management functions, or justify all expenditures regardless of past spending. Developing a budget involves setting goals, collecting information, considering alternatives, deciding priorities, and gaining approval. An organization's finances come from various sources depending on if it is public or private, and financial records and controls are maintained through ledgers, purchase procedures, and other documentation.

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    Budgeting involves creating a financial plan for an organization's expected revenues and expenditures. It is one of the key areas of financial administration, along with securing funds, using funds according to objectives, and maintaining financial records and audits. There are different types of budgets such as line-item, program, functional, and zero-based budgets that organize spending according to categories, programs, management functions, or justify all expenditures regardless of past spending. Developing a budget involves setting goals, collecting information, considering alternatives, deciding priorities, and gaining approval. An organization's finances come from various sources depending on if it is public or private, and financial records and controls are maintained through ledgers, purchase procedures, and other documentation.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    63 views3 pages

    Budgeting and Financing

    Uploaded by

    Mondrei TV
    Budgeting involves creating a financial plan for an organization's expected revenues and expenditures. It is one of the key areas of financial administration, along with securing funds, using funds according to objectives, and maintaining financial records and audits. There are different types of budgets such as line-item, program, functional, and zero-based budgets that organize spending according to categories, programs, management functions, or justify all expenditures regardless of past spending. Developing a budget involves setting goals, collecting information, considering alternatives, deciding priorities, and gaining approval. An organization's finances come from various sources depending on if it is public or private, and financial records and controls are maintained through ledgers, purchase procedures, and other documentation.

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    of 3

    BUDGETING AND FINANCING

    BUDGET is a financial plan whether for an agency or a program.


    - According to Malvin Gross, “a BUDGET is a plan of action. It represents the
    organization’s blueprint for the coming months or years expressed in monetary terms.
    Characterized as a series of goals with price tags attached.”
    - BUDGETING is one of the areas of financial administration which include:
    Securing of funds or income.
    Using the funds in accordance with the objectives of the organization or budgeting;
    Maintaining appropriate records of financial transactions or accounting and also auditing.

    TERMS RELATED TO BUDGETING


    ACCOUNTING - the art of recording, classifying, and summarizing in a significant
    manner and in terms of money transactions or events which are in part of a financial
    character and analyzing and interpreting the results.
    RECORDING – making entries; classifying includes sorting mass of transactions in an orderly
    and systematic manner; summarizing means bringing together of accounting data in a form
    that further enhances this information.

    AUDITING – state of making an audit or an examination of some or of the following:


    documents, records, system of mutual control, accounting procedures, and other evidence.
    Purposes:
    - 1. To determine the propriety, legality and mathematical accuracy of proposed or
    consummated transaction;
    - 2. To ascertain whether all transactions have been recorded; and
    - 3. To determine whether transactions are accurately reflected in the accounts and
    in the statements drawn, therefore in accordance with accepted accounting
    procedures.

    TYPES OF BUDGET (Skidmore)


    LINE-ITEM BUDGETING – most used format
    - based on line-item accounting and incremental increases in projecting ahead for a year or
    more.
    - indicates how the money is to be spent, but it does not depict what the agency does.
    - does not present agency goals, targets, or results.
    - main feature: reliance on explicit categories of expenditures to insure justification.
    PROGRAM BUDGETING - useful management tool in monitoring the effect of key allocation
    decisions (Program, Planning and Budgeting System).
    - goals and objectives are a significant part
    - cover several years
    - includes cost estimates and specifics

    WHAT IS PPBS?
    - A management tool to help focus on the main goals of the agency.
    - Consist of 4 elements; such concept is embodied in the systems theory
    - According to Arthur Smithies, this system involves classifying expenditures based on an
    analysis of objectives and resources and its interrelation among them.
    - According to Greenberg, a tool which can help the administrator starts with the assumption
    that an organization rarely finds its resources adequate to finance all of the valid programs.
    He cited the elements of its operation:
    a. Keeping an eye on the “end product”
    b. Taking a long-range view
    c. Identifying alternative course of action
    d. Analyzing in terms of both its combination towards achieving the end product
    and its cost
    e. Keeping tab on what is happening in the system
    f. Being flexible

    TYPES OF BUDGET (Skidmore)


    - FUNCTIONAL BUDGETING
     it encompasses program services but emphasizes the supporting administrative services
    that are needed for operating an agency.
    revenues and expenditures as they relate to management and general functions, fund-
    raising functions, and identifiable programs offered by the agency.
    - ZERO-BASED BUDGETING
     Done particularly in the government agencies
     Agency starts with no money each year and describes and justifies all expenditures for
    the coming year, whether or not they have existed before.
    BUDGET-MAKING PROCESS (Skidmore)
     Setting the specific needs and goals of the agency.
     Collecting and studying basic information regarding the current and past operations of the
    agency (to include the what has and has not been accomplished).
     Looking at alternatives and different ways of using the money that may be available
    during the year.
     Deciding on priorities for the agency.
     Finalizing decisions regarding the budget.
     Providing adequate interpretation and public relations.
    CHART OF ACCOUNT
     Estimating the cost of each objective or goal listed before.
     Estimating the expected income of the agency.
    Public agencies – government appropriation
    Private agencies – general public’s contribution
     Comparing the total expected income with the expense of achieving the goals or
    objectives.
    *Big item budget: personnel’s salaries, pensions and retirement plans, social security and other
    personnel benefits
    *For SWA, biggest item are social services
    Remember: After preparation of budget, submit for hearing to the appropriation body for
    signature and authorization.
    FACTORS OF AN IDEAL BUDGET
    1. It is comprehensive- it includes all planned expenditures and all estimated income.
    2. It is clear and easily understood.
    3. It is flexible.
    4. It is workable.
    5. It is accurate and realistic.

    FINANCING
    - The allocation of an organization/ agency’s liquid assets to assure their most productive
    use.
    - Funds required by government agencies come from the taxes of people.
    - Those required by non-government or voluntary agencies to administer and deliver
    their services come mainly from the following sources:
    1. fees for services
    2. membership dues
    3. investment earnings
    4. use of capital resources
    5. sale of goods and publications; other grassroots funding raising efforts.
    6. bequests (inheritance, gifts, donations, endowments ) ; private foundations
    7. tax funds or government grants
    8. grants or contract of services
    9. donor contributions.

    FINANCIAL RECORD
    - This is an on-going record of what the agency has spent on what and how well it
    is staying within the budget.
    - The agency’s bookkeeper or accountant enters into this ongoing record or ledger book
    all receipts, cancelled checks and other necessary documents or paper showing what
    has been spent.
    FINANCIAL CONTROL
    - In most agencies a set of procedures for purchases is followed in addition to keeping
    a ledger book on expenses.
    E.g. in preparing Purchase Request. We prepare 4 copies, one for requesting party, 1 for
    the supply unit, 1 for accounting and one for Bids and Awards Committee (BAC) Sec.

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