Budgeting and Budgetary Control

Purposes of budgeting

• Forecasting, planning and budgeting.
• Difficulties in budgeting for global companies.

Responsibility accounting

• Cost, revenue, profit and investment centres.
• Typical measures used to assess their performance.

Setting financial goals

• Financial key performance indicators (KPIs).
• Decomposition of budgeted goals. Goal trees.

Budgeting process

• Stages of budget preparation.
• Budget templates.
• Budget calculation formulas.
• Budget models based on the KPI decomposition.

Budget review

• Budget justifications. Communicating assumptions. Budget committee.
• Scenario planning. Sensitivity / “what if” analysis. Stress testing.

Budget performance

• Fixed and flexible budgets.
• Variance analysis.
• Controllable and non-controllable variances.
• Waterfall chart.

Approaches and methods of budgeting

• Participation in budgeting: imposed/top-down, participative/bottom up budgets.
• Incremental budgeting versus zero-based budgeting (ZBB).
• Periodic versus rolling budgets.

Alternative approaches to budgeting

• Beyond budgeting.
• Activity based budgeting (ABB).