Preparing Budgets

Introduction:

Budgets are an essential financial tool, which aid, planning, decision making, resource allocation, coordination, and control.

Without the necessary skills Budgets can be badly prepared and/or implemented leading to poor decisions, mid-use of vital resources, poor coordination, and a lack of control or even too much control resulting in missed opportunities.

This program provides participants with the skills necessary for the effective preparation and implementation of budgets

Targeted Groups:

• Finance Managers
• Finance Controllers Treasurers
• Inventory Managers
• Financial Professionals
• R&D Professionals
• General Accounting Professionals
• The Staff Person who will be responsible for entering data into the budget system or training others how to enter information
• Those who want to gain control of the firm's financial standing and obtain a firm grasp on the numbers side of their job
• Anyone who wants to understand the basics of budgeting

Course Objectives:

At the end of this course the participants will be able to:

• Develop the skills to Plan Budgets within a sound Strategic Plan
• Develop the skills to Prepare Budgets using:
• Appropriate Forecasting Techniques including Time Series Models,
• Understand the Exponential Smoothing, Regression and Correlation Analysis and Costing Methods such as Activity Based Costing
• Develop the skills to effectively implement Budgets
• Become aware of the problems/limitations of budgets and the conditions required for their success
• Integrate the budgeting process with the development of the company’s long-term strategic vision

Targeted Competencies:

• Integrating the planning process with the budgeting cycle
• Forecasting using various models including Time Series Models, Exponential
• Smoothing, Regression and Correlation Analysis using Excel and leading software/models
• Sales Budgets
• Production Budgets
• Cash Budgets
• Capital Budgets

Course Content:

Unit 1: Budgeting and Its Role Within the Management Process:

• The Role of Budgeting within Management Accounting
• Linking Costing and Budgeting to Strategy and Performance Measurement
• The Process of Value Creation: Implications for Budgeting
• What is a budget and why costing is fundamental?
• Budgets - The Financial Expression of the Operating Plan
• Linking Financial and Operational Issues
• Behavioral Implications of Budgeting

Unit 2: Costs Analysis for Budgetary Purposes:

• Costing for Budgeting: Why?
• Cost Terms and Purposes
• Fixed and Variable Costs
• Cost, Volume, Profit (CVP) Relationships
• The Key Concept of Contribution Margin
• Direct and Indirect Cost – The Allocation Problem
• Traditional Methods vs. Activity-Based Costing (ABC)

Unit 3: The Framework for Budgeting:

• Elements of the Budgeting Framework
• Key Concepts and Terminology
• Advantages and Disadvantages - critical issues to be discussed
• Overview of the Financial Statements
• Balance Sheet, Income Statement, and the Statement of Cash Flows
• Introducing Cost Analysis for Decision-making
• The Importance of Understanding Full Costs

Unit 4: Flexed Budgets and Variance Analysis:

• Budgeting for Management Control Purposes
• Explain Why Standard Costs are used in Variance Analysis
• Describe the difference between a Fixed Budget and a Flexed Budget
• Compute Flexed Budget Variances and Sales Volume Variances
• How to interpret variance analysis?
• Integrate continuous improvement into Variance Analysis
• Is budgeting enough?

Unit 5: Beyond Budgeting: Broadening Performance Measurement Systems:

• Shortcomings of Traditional approaches to Budgeting and Measurement
• Linking Financial to Operational Issues
• Linking Strategy to Performance Measurement
• The Balanced Scorecard and Six Sigma
• Financial Perspective
• Customer Perspective
• Internal Business Process Perspective
• Learning and Growth Perspective
• Developing and Adapting the Scorecard