Free Essay about Budget Reporting and Prototyping

Published: 2022-06-15 19:03:25
Free Essay about Budget Reporting and Prototyping
Type of paper:  Essay
Categories: Budgeting Financial management
Pages: 3
Wordcount: 698 words
6 min read
143 views

A budget report is a documented statement from the management department comparing the assumed revenues and costs to the actual returns and expenditure from the organization's product sales. This report is essential to managers for gauging the departments that met the budgeted costs and the fields of operations that require enhancement. This documentation is important in the internal and external environments of an organization (Treasury, 2003). For the internal environment, the CEO and the management team of a firm are involved to prepare project plans that are within the budgeted finances. On the other hand, stakeholders and investors in the external environment review a company's budget report to decide on the scale of involvement they will have to venture. A performance budget is a financial plan that analyzes the productivity of different departments. This statement is important in reviewing the resources that were necessary to complete production and the number of products that were rendered for the clients (Wentzel, 2002). In this particular field of operation, the budget is planned based upon the goals that the department has for a project. The budget committee evaluates the level of achievement of productivity within the current performance budget. This financial plan is set with the main agenda of motivating workers to effect better productivity from the previous one. Therefore, if the production exceeds the budgeted plan, the workers are in one way or another given a token of appreciation for their efficient performance. The output of a performance budget is required after the plan period is over. The evaluation for productivity is measured, and the outcome is published in the form of a report to the management board, the investors and the stakeholders. Subordinate employees need to know the outcome of the project for self-evaluation of the invested effort. A detailed analysis of the revenues gained from the output should be included in the report. The output should be delivered to the employees depending on the performance rate of each. This can be included in the salary as a pay rise, a free training program for focused workers, and promotions to the most productive employees. Based on the rating index of the project, the outcome of every performance should be confidential to the employees to avoid a misunderstanding in a new project.

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Prototyping refers to forming a model that takes the place of an actual system. With the alternate system, a firm can gauge the functionality of the model that is yet to be deployed. This exercise is an advantage since the system handlers can observe the features that will be expected in the final system (Ulrich, 2003). After the final model is released, it is tested by a selected board that analyzes the effectiveness and points out the corrections that should be implemented. Prototyping a business report creates room for adjustment in the future and thus gives a firm an overview of the next project. In designing a prototype for a budget report, the following steps should be followed:-

1. Have the suitable documents in place

When designing a budget report, essential documents that show different cash transactions and payments should be present to ensure a correct analysis. The ledger, receipts, and invoices are efficient for maintaining a constant adjustment of the budget.

2. Differentiate the revenues from the expenditures

Any firm's income and expenditures should be differentiated in the budget report. The actual expenditures should be indicated to avoid confusion with the estimated costs. The figures should be keyed in according to the time of occurrence.

3. Key in data

The figures should be entered according to the correct columns that are supposed to be in a budget report. The actual and the budgeted figures should be quickly notable to be differentiated between the two.

4. Setting goals

Every firm should set goals it wishes to achieve. The goals can be outlined in the additional section of the budget report. An organization may set goals over the different departments of the enterprise.

References

Treasury, H. M. (2003). Budget report 2002. London: HM Treasury.

Ulrich, K. T. (2003). Product design and development. Tata McGraw-Hill Education.

Wentzel, K. (2002). The influence of fairness perceptions and goal commitment on managers' performance in a budget setting. Behavioral research in Accounting, 14(1), 247-271.

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