To ensure effective budgeting practices managers need

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total sum. To ensure effective budgeting practices, managers need to be trained in the process of proper budgeting control and monitoring on an annual basis. This training will assist in qualifying the staff to make the proper decisions and recommendations concerning the budget. Steps in effective budget control are as follows (Issues in Budgeting, 2011): Businesses/organizations should profile the year-to-date and budget areas of activity for the full year. In profiling the budget, patterns of planned expenditure should be considered. For certain types of spending, such as non-staff-related costs, it is likely that spending will peak and trough at particular points in the year. Consider actual expenditures to date. Consider future expenditure commitments. Review the remaining annual budget balance. When future commitments and actual expenditures are compared to the full year budget, businesses can forecast the balance of budget remaining at the review point. Consider forecast outturn (an estimate of how much has been spent before the appropriation accounts have been prepared). This takes into account all anticipated expenses and is the expected position against the budget at the end of the year. Keep in mind that the forecast outturn may not be equal to the original budget. Analyze and explain all positive or negative variances when comparing expenses and forecast outturn to budget. Have a documented action plan to address any negative variances.
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Businesses should create a budget based on factual information of the revenue needed to effectively operate. Research should be conducted and information gathered regarding the pricing of different services or products that will be consumed each month. Ensure that fixed costs are accurately reflected within the budget and that flexible or floating items are covered with a budget amount that reflects the usual usage and standard of the operation. Focus on making sure that expenditures for all particular line items remain within the specified budgetary amount. Careful monitoring may mean reducing spending to prevent exceeding the budget on a particular line item. For example, if a business or organization has a monthly budget of $300 U.S. dollars for office supplies and has consumed $100 by the second week of that monthly period, proper budget control and monitoring will require that the office spend no more than $100 on office supplies for the remainder of the month. This may mean adjusting spending and use of office material and substituting higher priced purchases with other items that are less costly. Proper checks and balances should be in place for all preparing or handling the budget, as well as appropriate reporting and authorization mechanisms.
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