Introduction
The author of this paper works for a for profit professional university. The university uses a typical fiscal year date of July to July. The budget cycle though is on going with continuous monitoring of the overall operational budget and unit budgets throughout the year. The process of building the next year’s budget starts in the spring with guidelines/perimeters given by the chief financial office. Proposed budgets are then submitted, reviewed, and adjusted to fit the universities forecasted revenue. The closing of the budgets is a curious time period where accounts can be frozen due to revenue shortcomings or units can be encouraged to make large expenditures do to surpluses. Most recently the institution has seen a deficient in the overall operational budget for the university due to declining revenue. A key problem with closing the budget during these years of revenue shortcomings
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This practice allows for a freeze in spending, accounting for the loss in revenue. The result of this is non-essential items (i.e. new technology, travel, company meals, extra) are not purchased. At the university in question there is a habit of budget managers disregarding requests to slow expenditures, thus not reduce spending at the level set by the finance department. Therefore the practice of closing the budget forces a stop of non-essential expenditures. The problem comes with providing continues programing to our students. When it comes to student activities these expenditures are not essential to the function of the university, but are important to the well being of the students. As an institution that is solely dependent on the revenue generated from student tuition, student satisfaction is a priority. When annual student events or activities can’t happen because of a budget closing early this has a negative effect on student
(b) Diagnosis is the goal of what the organization needs to accomplish by maximizing the use of available resources. (c) Develop a budget plan, which is usually a cycle set for 12 months. (d) Implementation is the ongoing monitoring and analysis to avoid inadequate or excess funds at the end of fiscal year. (e) Evaluation is the periodic review or modification of the budget throughout the fiscal
Everyone has their own political leaning and that leaning comes from one’s opinion about the Government. Peoples’ opinions are formed by what the parties say they will and will not do, the amounts they want spend and what they want to save. In macroeconomic terms, what the government spends is known as fiscal policy. Fiscal policy is the use of taxation and government spending for the purposes of stimulating or slowing down growth in an economy. Fiscal policy can be used for expansionary reasons, which is aimed at growing the economy and increasing employment, or contractionary which is intended to slow the growth of an economy. Expansionary fiscal policy features increased government spending and decreases in the tax rates as where contractionary policy focuses on lowering government spending and increasing tax rates. It must be understood that fiscal policy is meant to help the economy, although some negative results may arise.
“Fiscal policy involves varying the intended expenditure and revenue of the Australian government so as to assist in attaining the government’s economic objectives.” (Bulmer, 2014) One of the main influences on the fiscal policy in Australia is the budget; which is an estimate of income and expenditure for a set period of time. A famous economist called John Maynard Keynes discovered a remarkable economic principle called Keynesian Economics. Keynesian economics is a theory of total spending in the economy (called aggregate demand) and its effects on output and inflation. (Binder, 2008) This economic principle is continuously used in Australian economics and helps governments and economics make economically based decisions.
Budgets are the financial requirements and consequences of plans. Budgets are made with specific goals in mind. Budgets can be used to lower living expenses, increase savings, or to save for a purpose such as: education or retirement. Budgeting is a process that involves these actions: defining goals, gathering information, forming expectations, reconciling goals and data, monitoring goals and variances, adjusting budgets, and redefining goals.
A company's budget serves as a guideline in planning and committing costs in order to meet tactical and strategic goals. Tactical goals such as providing budgetary costs for daily operations, and strategic objectives that include R&D, production, marketing, and distribution are all part of the budgeting process. Serving as a guideline rather than being set in stone, the budget is a snapshot of manager's "best thinking at the time it is prepared." (Marshall, 2003, p.496) The budget is a method in which to reign-in discretionary spending, and will likely show variances between what costs have been anticipated and what costs are actually incurred.
Budgets has been widely used by a lot of organizations since it was first introduced, because it can helps managers to properly plan and control the business’s resources. Successful control mechanisms as Schick believes are the essential to budgetary development (Gray, Jenkins, and Segsworth, 2002, p.11). However, recently the use of budgets to control organizations has been the subject to criticise and debate (Hansen et al., 2003 cited in Libby and Lindsay, 2010). In this era that full of unpredictable environments has make it even harder for a business to achieve the targets set in the budgets. In fact, European surveys also reported that there has been a growing dissatisfaction among organizations about their budgeting system (Neely et al.,
The 2015 Federal Budget is part of the Government’s Economic Action Strategy to return the budget and erect a robust and prosperous economy. The ‘Budget’ marks a major erect by the Government to transform the role of state in companions’ lives. The Government will effort to supply equality of turn for all Australians and to redirect taxpayers’ dollars from unaffordable consumption today to productive vestment for the futurities, while support a strong safeness snare. The substantial savings decisions in this Budget put Australia back on vestige to a sustainable and responsible stiff position, with surpluses scheme to construct to well over one per cent of GDP by 2024-25, taking into calculation by and by toll remedy.
Quantitative plans are called budgets. Budgets are prepared to impose cost controls on the activities of an organization (Chenhall, 1986).Budgets are then used to evaluate the performance of the management and budget itself is considered as a standard to evaluate the performance Solomon, 1956). The purpose of the budget is also to implement the strategy of the organization and communicate it to the employees of the organization Rickards (2006). The change in the external environment has led to the change in the budgeting approaches from the initial cash based budgets to the zerio based budgets (Bovaird, 2007).
This type of budget planning has both advantages and disadvantages, but in the long run, if planned and properly conducted, will prove to be a more valuable way of preparing a budget. Businesses who have adopted the zero-based budget approach generally reported improvement and either saved money, improved services, or both (LaFaive, 2003). Zero-based budgeting carries many advantages. An important advantage of zero-based budgeting is it will cause a manager or department head to be more cognoscent of the financial requirements of their department. This will eliminate unnecessary spending in areas that have been overlooked by traditional budgets.
Budgeting is one of the phases in the management control system. Budget development is critical to identify revenue sources and expenditures throughout the year that will help a health care firm achieve its goals and objectives in a fiscal year. Development of the yearly budget is a good way to manage cost control within the healthcare organization. There are four objectives recommended for consideration by the American Hospital Association when developing a healthcare firm’s budget plan: - Providing a written expression, in quantitative terms, of the policies and plans of the healthcare firm or organization. - Provide a basis for the evaluation of financial performance in accordance with the plan.
For personal finances, the operating budget incorporates income, expenses (soft good consumables), debt payments, as well as savings or investments. Under capital budget, items that are significant purchases and are categorized as capital expenditures, are typically longer-lasting, durable goods. By differentiating these two budgets, one can more precisely monitor and manage monthly finances and related options, which can be substantially varied and distinct from using a simple average, uniformly spreading incomes and expenses across the financial period (Siegel & Yacht,
“COST CUTTING is the achievement of real and permanent reductions in the unit cost of the goods manufactured, or services rendered without impassing their stability for the use that is intended.”
The reliably adjusted budget shortage is in year 1 and year 2. Several financial specialists confine the utilize of money related approach, tolerating that monetary approach is more fruitful, or that the economy is satisfactory self-correcting. Financial Approach is impartial when the charge livelihoods break indeed with government utilizations after changing the diminish in income from a withdraw. Another title for the reliably adjusted budget is the full-employment budget. Most money related masters back the utilize of budgetary approach to help “push the economy” inside the needed heading, and the utilize of cash related approach for more “fine tuning” Financial analysts agree that the potential impacts of money related course of action on long-term efficiency improvement need to be assessed and considered inside the decision-making get ready, at the side the short-run repetitive effects.
The budget serves as a framework to allocate funds for each project; hence, a proper accounting of all sources of income and expenses should be reflected in the financial statements to support t...