In the current economy, budgetary process is one of the major tools that each government considers for decision making to aid in the growth of the economy. A budget being a documented draft that contains authorized forecasted annual revenues and expenditure of a country the ministry of finance has a responsibility in ensuring that it is tabled min the legislature and approved for a fiscal year (Kim& Schachter, 2013). It also includes quantitative measures such as assets, cash flows and planned revenues for a specified period to facilitate organizational control in an economy.
For a budget to be efficient and manageable, it has to be flexible and easy to understand making adjustments in activities that were overvalued or undervalued for the management to meet its enterprise goals and objectives. The procedure by which the executive management prepares in advance its finances and controls its operations by forming standards relating to income and expenditure to adjust on its actual performance. Further, the process is essential to all managers in measuring the financial performance of the organization for service delivery to customers and accountability based on operations assessment.
In addition, before a budget become legal and operational, four major processes must adhere with for reliable implementation Zainon et al., 2012). The first step is designing a budget manual by which contain instructions guiding the duties of persons and records relating to the development and use of the budget. In addition, it is concerned with drafting a budget for submission to the legislature and a financial policy is set up to estimate the number of available revenues. These funds are meant for establishing total resources for spending within the budgetary period, and it has to be approved by the legislature.
Secondly, is the budget committee constitution that consists of the chief executive officer and representatives of different sectors such as finance, production, marketing, selling and engineering. Their role is to design the program for the preparation of the budget, directly reports to the top management accumulated budget data, modifies the resources and suggest changes that can be made by the organization's objectives. Furthermore, the committee coordinates corrective actions used in improving efficiency to achieve budgetary goals and balancing of business operations.
Moreover, the identification of principal budget factor is also a process that needs consideration due to the factor limits and the level of activities for example insufficient skilled labor, inadequate machine capacity and raw materials. The items need to be investigated and determined before making a final draft of functional budgets to assist in the realization of the liquid assets that needs to be considered at the top of budgeting list as they are the core function f or business existence. However, the appointment of a budget leader elected mostly design rules used in giving instructions on drafting a budget for different sectors and receiving their estimated budgets. The officer also offers relevant information to various departments that will help the managers forecasts cash funds their organizational budgets within the required period to ensure that the budgets are properly monitored and verification before it is approved.
Establishing the budget periods is the last process and entails drawing up control periods on a weekly, monthly, quarterly or yearly basis. Preparation of the master budget being a consolidation of several useful resources such as production budget and distribution budget (Ebdon et al.,2012). It can be summarized into Budgeted Statement of Comprehensive Income and Budgeted Statement of Financial Position to determine a deficit or an increment on the actual budgeted to the estimated amount.
In conclusion, for any government to have a full allocation of resources in an efficient manner, he must practice fiscal discipline that will assist in the measurement of total revenues and expenditure to maintain a financial balance of production. A well-forecasted budget plan helps in projecting annual expenses of the corporation making the staffs in the sector think about future regarding financial and economic performance.
Ebdon, C., Krane, D., & Franklin, A. L. (2012). Multi-Level Governance Processes-Citizens & Local Budgeting: Comparing Brazil, China, & the United States. China, & the United States (June 6, 2012). Retrieved from http://www1.worldbank.org/publicsector/LearningProgram/PEAM/DorotinskyBackCh4.ppdf
Kim, S., & Schachter, H. L. (2013). Citizen participation in the budget process local government accountability: Case studies of organizational learning from the United States and South Korea. Public Performance & Management Review, 36(3), 456-471. Chicago.
Zainon, N., Lou, E. C., Mohd-Danuri, M. S., & Rahim, F. A. (2012). How it works-Private Finance Initiative (PFI) procurement process in Malaysia: A comparative analysis of practices with the United Kingdom. 1561-882X, 19(8), 2-18. Chicago
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