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 Effective Budgeting, Planning & Control (M1053) QR Code

Effective Budgeting, Planning & Control

Overview:

Introduction:

Budgets are an essential financial tool, which aid, planning, decision making, resource allocation, coordination, and control.

Without the necessary skills Budgets can be badly prepared and/or implemented leading to poor decisions, mid-use of vital resources, poor coordination, and a lack of control or even too much control resulting in missed opportunities.

Course Objectives:

At the end of this course the participants will be able to:

  • Develop the skills to Plan Budgets within a sound Strategic Plan
  • Develop the skills to Prepare Budgets using:
    • Appropriate Forecasting Techniques including Time Series Models,
    • Exponential Smoothing, Regression and Correlation Analysis and
    • Costing Methods such as Activity Based Costing
  • Develop the skills to effectively implement Budgets
  • Become aware of the problems/limitations of budgets and the conditions required for their success
  • Integrate the budgeting process with the development of the company’s long-term strategic vision
  • Identify key performance indicators for effective and focused decision making
  • Perform “What If” and Sensitivity Analysis to evaluate the implications of changes in major factors of production and consumption
  • Recommend various courses of action to manage the implications of “What If” and Sensitivity Analysis.
  • Implement advanced planning and control techniques
  • Develop the skills to effectively Manage & Control the budgeting process

Targeted Audience:

  • Financial Managers
  • Financial Planning and Control Staff
  • Executives with Financial Responsibilities
  • Executives who are responsible for the cost and strategic analysis
  • Project Managers
  • Employees who want to gain new knowledge to improve their career

Course Outlines:

Unit 1: The Essentials of Budgeting:

  • Strategic Planning, Forecasting, Budgeting, and Costing – Defined
  • The inter-relationship of Strategic Planning, Forecasting, Budgets, and Costing
  • The Benefits & Limitations of Budgets and the Essential Features & Conditions Required
  • An Evaluation of Various Types of Budgets:
    • Fixed
    • Variable
    • Zero Based
    • Activity-Based
    • Capital Budget
  • The Essential Features of Activity-Based Budgeting
  • Developing the ABB application model
  • Budgeting for Processes rather than Departments
  • Defining Key Cost Drivers
  • Defining Key Activities
  • Development of ABB Cost Standards
  • Developing the Activity-Based Budget
  • Preparing The Master Budget using Excel
  • Sales Budgets
  • Production Budgets
  • Cash Budgets
  • Capital Budgets
  • The Master Budget

Unit 2: Forecasting Future Sales, Costs, Exchange Rates, Interest Rates:

  • Determine the Purpose or Objective of Forecasting
  • Methods of Forecasting using Qualitative and Quantitative/Statistical Analysis
  • including the Exploratory Data Analysis Tools Available in Excel
    • Their Use & Limitations
    • Recognizing the Basic Patterns Inherent in Historical Data
    • Time Series Analysis
    • Exponential Smoothing
    • Correlation and Regression Analysis
  • Presenting initial forecasts to decision-makers
  • Forecasting future Market/Sector developments using Qualitative Analysis – SWOT Analysis and LEPESTE & Co Analysis
  • Implementing Forecasts into the Budget
  • Considering Hedging Strategies where variables such as Exchange Rates and Interest Rates cannot be forecast accurately
  • Forwards, FRA’s, Futures, Options and Swaps

Unit 3: Preparing and Implementing Budgets Based on Forecasts:

  • Preparing the Sales Budget
  • Determining the price, credit policy, discount policy, and currency
  • Preparing the Production Budget
  • Preparing the Cash Budget
  • Make finance and investment decisions
  • Preparing Capital Budgets
  • Use Excel to evaluate various Capital Projects using Present
  • Value, Future Value, Net Present Value, Internal Rate of Return, Modified Internal Rate of Return and Discounted Payback models
  • An Introduction to “What If” and Sensitivity Analysis to evaluate the implications of changes in major factors of production and make strategic decisions
  • Implementing Budgets Successfully
  • The Conditions Required
  • The Management Skills Required

Unit 4: Break Even Analysis, Sensitivity Analysis, and What-If Analysis:

  • Break-Even Analysis, Cost Behaviour and Sensitivity Analysis
  • Identifying Fixed, Variable and Semi-variable costs
  • Identification of the level of sales/profit to break even
  • Identification of critical costs
  • Determining resources requirements
  • What if Analysis using Excel and leading software
  • Performing “What If” and Sensitivity Analysis to evaluate the implications of changes in major factors of production and consumption on the Cash Budget and Profit & Loss Account
  • Identification of key performance indicators for effective and focused decision making
  • Recommend various courses of action to manage the implications of “What If” and Sensitivity Analysis.
  • Developing Budget Re-Projection and Best Case / Worst Case Scenario Models
  • Planning for contingencies
  • Developing various scenarios
  • Using the Scenario tool in Excel® to explore the variable sets of assumptions while tracking the impact on the base model.
  • Building the financial simulation model using probabilistic (Monte Carlo) simulation
  • Building the financial simulation model using deterministic simulation

Unit 5: Variance Analysis, Reporting, Control, and Decision Making:

  • Accounting Systems, Accountability and Responsibility Systems
  • Essential Elements of a Costing System
  • Establishing and Implementing a Costing System
  • Undertaking Variance Analysis and Presenting a Variance Report to decision-makers
  • Evaluation of the results
  • Making Strategic Decisions based on the Variance Report/Business Planning

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