031710_for_posting_v2003

031710_for_posting_v2003 - Strategic Finance Article:...

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Unformatted text preview: Strategic Finance Article: Turning Budgeting Pain into Budgeting Gain (March 2009) (posted on Angel) Its budget time again. Being a financial executive, you approach the annual process with excitement and a sincere belief that the process will be efficient, positive, and better than last year. Yet when members of your staff ask managers for their departmental budgets, they are met with blank stares, given excuses, or sent a budget whose form is completely unrecognizable from the template you gave the managers at the outset of the budgeting Kattelus -Spring 2010 1 Strategic Finance Article: Turning Budgeting Pain into Budgeting Gain Obstacles to good budgeting: people , process , tools Plan for improvement: 1. Evaluate your process 2. Upgrade your technology 3. Communicate 4. Communicate some more 5. Train and educate 6. Collaborate 7. Follow through Kattelus -Spring 2010 2 Kattelus -Spring 2010 3 Some key budgeting concepts Responsibility accounting accountable for what they can control Which standards -- theoretical or practical standards? The budgeting process (and types) A master budget Kattelus -Spring 2010 4 Responsibility accounting Managers should be held responsible for only what they can control (i.e., a department, segment, product line) Penalizing managers when actual revenues and costs differ from that which was budgeted may have dysfunctional results Managers should take initiative to correct discrepancies between actual and budgeted numbers More in CH 11 Segment Reporting and Decentralization Kattelus -Spring 2010 5 Types of Budgets Continuous/perpetual Zero-based or incremental Program/performance based Participative/self-imposed Self-imposed budget Kattelus -Spring 2010 6 Prepared with the full cooperation and participation of Prepared with the full cooperation and participation of managers at all levels, a.k.a. a managers at all levels, a.k.a. a self-imposed budget self-imposed budget ....
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031710_for_posting_v2003 - Strategic Finance Article:...

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