budget..............................pptx

budget..............................pptx

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  BUDGETING ]
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  INTRODUCTION  Budget isdefined as a statement of anticipated results during a stipulated period expressed in financial and nonfinancial terms.  Three essential steps in the control process include standards, comparing results with standards and taking the required corrective action.  Budget cover a stipulated time period- usually a year.  The budgeting process starts when the top management sets the strategies' and goals for the organization.
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  DEFINITIONS:  Budget isfinancial plan of the government for a definite period.  Budget can be defined as numerical statement expressing the plans, policies and goals of an organization for a definite period in future.  Budget is concrete precise picture of the total operation of an enterprise in monetary terms.
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  PURPOSE OF ABUDGET:  To provide a quantitative expression of the plans of the hospital or the institution.  To evaluate financial performance in accordance with the plans.  To control costs.  To supply a mechanism for translating fiscal objectives into a projected monthly spending pattern. To enhance fiscal planning and decision making.
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   To clearlyrecognize controllable and uncontrollable cost area.  To provide a useful format for communicating fiscal objectives.  To allow feedback of utilization of moneys spent.  To identify problem areas and facilitate effective solutions.  To provide a means for measuring and recording financial success in accordance with the objectives of the organization.
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  TYPES OF BUDGET Programme budget Production budget Cashbudget Flexible budget Rollover budget Open ended budget Fixed ceilinging budget Performance budget Sales budget Sunset budget Zero based budget Incremental budget Capital expenditure budget Revenbue and expense budget
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   Programme budget:this is one where costs are computed for entire programme. ex. Maternal and child health programme.  Incremental budget: this is based on estimated changes in the present operation, allowing for a percentage increase for inflation.  Open ended budget: this is a financial plan in which each operating manager presents a single cost estimate for the optimal activity level for each programme in the unit.  Flexible budget: this comprises several financial plans, each for a different level of programme activity.  Revenue or expense budget: this is expressed in financial terms and takes the nature of a proforma income statement for the future.
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   Zero basedbudget: this require the nurse manager is required to examine and justify each cost of every programme.  Sales budget: this is the starting point in a budgetary programme, since sales activities give shape to all other activities.  Rollover budget: this one forecasts programme, revenues and expense for a period more than a year, to accommodate programme that are larger than the annual budget cycle.  Fixed ceiling budget: this is a financial plan in which the uppermost spending limits are set by the top executive.  Production budget: this is the budget that aims at securing the economical manufacturing of products and maximizing the utilization of production resources.
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   Performance budget:this is a based on functions not divisions. E.g. direct nursing care, nursing research  Capital expenditure budget: this is prepared for assuring planned timely capital investment in the business to ensure the availability of capital at the right time over a longer period.  Cash budget: this is prepared by way of projecting the possible case receipts and payments over the budget period.  Sunset budget: this is designed to “self destruct” within a prescribed time period to ensure the expenditure is stopped by predetermined date.
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  PRINCIPLES OF BUDGETING: Soundfinancial management Based on objectives & policies Planned on advance Coordinating effort Under directions & supervision Quality & quantity evaluation
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  CONTINUE….. Flexibility Interpretation Appropriate to thenature Adequate check & balance Consistent delegation Financial & nonfinancial resources
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  STEPS IN BUDGETING Assessmentof the goals of the institutes & hospital. Assessment of the objectives of the present & proposed programmers Assessment of all old & new programmers for manpower, capital & operating expense
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  CONTINUE… Identify alternative methodsfor realizing the objectives. Compare alternatives to determine the most cost effective. Develop a budget request that details a fiscal plan for the preferred programme.
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  FUNCTIONS OF BUDGET: Budget explains and documents unit needs to higher administrative levels.  Budget recognizes the importance of and develops short and long range fiscal plans.  It estimates the internal and external environment of the organization.  It articulates unit level fiscal planning towards organizational goals and objective.  It ensures that documents that the client needs are rendered clearly and completely.
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   It coordinatesand monitors the different aspects of budget control.  It provides opportunities for subordinates to participate in relevant fiscal planning.  It precisely assesses personnel needs, using predetermined standards or an established patient classification system.  It underlines the use of appropriate technique.
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  ADVANTAGES OF BUDGETINGPROCESS:  A budget helps plan for detailed programme activities.  It helps fix accountability.  It states goals for all units, offers a standard of performance and stresses the continuous nature of planning.  It encourages managers to make a careful analysis of operations and base decisions after careful consideration.  Weakness in the organization can be revealed.  Staffing, equipment and supply needs can be projected and waste minimized.
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   Financial matterscan be handled I an orderly fashion.  Agency activities can be coordinated & balanced.  Budget help managers in integrating personnel efforts within the organization towards a common goals.  Budget controlling devices to correct any excessive expenditure.  Budgets help in just measurement of performance.  Budgeting helps the management learn from past experience.  Budget improves communication.  Budget helps new staff and lower level managers.
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  DISADVANTAGES OF BUDGETING:  A budget may become an end in itself instend of the means to achieve an end.  Budgetary goals may curb agency and gain autocratic control of the organization.  Over budgeting is a big danger and become meaningless.  Skill & experience are essential for successful budgetary control.  Budgetary planning is expensive and time consuming.