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Preparing Budgets



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,
  • Understand the 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

Targeted Audience:

  • Finance Managers
  • Finance Controllers Treasurers
  • Inventory Managers
  • Financial Professionals
  • R&D Professionals
  • General Accounting Professionals
  • The Staff Person who will be responsible for entering data into the budget system or training others how to enter information
  • Those who want to gain control of the firm's financial standing and obtain a firm grasp on the numbers side of their job
  • Anyone who wants to understand the basics of budgeting

Course Outlines:

Unit 1: Budgeting and Its Role Within the Management Process:

  • The Role of Budgeting within Management Accounting
  • Linking Costing and Budgeting to Strategy and Performance Measurement
  • The Process of Value Creation: Implications for Budgeting
  • What is a budget and why costing is fundamental?
  • Budgets - The Financial Expression of the Operating Plan
  • Linking Financial and Operational Issues
  • Behavioral Implications of Budgeting

Unit 2: Costs Analysis for Budgetary Purposes:

  • Costing for Budgeting: Why?
  • Cost Terms and Purposes
  • Fixed and Variable Costs
  • Cost, Volume, Profit (CVP) Relationships
  • The Key Concept of Contribution Margin
  • Direct and Indirect Cost – The Allocation Problem
  • Traditional Methods vs. Activity-Based Costing (ABC)

Unit 3: The Framework for Budgeting:

  • Elements of the Budgeting Framework
  • Key Concepts and Terminology
  • Advantages and Disadvantages - critical issues to be discussed
  • Overview of the Financial Statements
  • Balance Sheet, Income Statement, and the Statement of Cash Flows
  • Introducing Cost Analysis for Decision-making
  • The Importance of Understanding Full Costs

Unit 4: Flexed Budgets and Variance Analysis:

  • Budgeting for Management Control Purposes
  • Explain Why Standard Costs are used in Variance Analysis
  • Describe the difference between a Fixed Budget and a Flexed Budget
  • Compute Flexed Budget Variances and Sales Volume Variances
  • How to interpret variance analysis?
  • Integrate continuous improvement into Variance Analysis
  • Is budgeting enough?

Unit 5: Beyond Budgeting: Broadening Performance Measurement Systems:

  • Shortcomings of Traditional approaches to Budgeting and Measurement
  • Linking Financial to Operational Issues
  • Linking Strategy to Performance Measurement
  • The Balanced Scorecard and Six Sigma
  • Financial Perspective
  • Customer Perspective
  • Internal Business Process Perspective
  • Learning and Growth Perspective
  • Developing and Adapting the Scorecard

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