Question

Both the budget process and budgets themselves can impact management actions, both positively and negatively. For instance, a common practice among not-for-profit organizations and government agencies is for management to spend any amounts remaining in a budget at the end of the budget period, a practice often called “use it or lose it.’’ The view is that if a department manager does not spend the budgeted amount, top management will reduce next year’s budget by the amount not spent. To avoid losing budget dollars, department managers often spend all budgeted amounts regardless of the value added to products or services. All of us pay for the costs associated with this budget system.

1. Write a 1/2 page report to a local not-for-profit organization or government agency offering a solution to the "use it or lose it" budgeting problem.

2. Will your solution be different if this was a personal budget? Explain your response.

3. Do you prepare a personal budget?

Answer 1

Answer :-

1 ) :-

• Administrators should be compensated for compelling and effective spending, not punished.
• On the off chance that toward the finish of a spending period it creates the impression that there will be unspent cash that can't be conveyed into the following monetary year for indicated venture, (for example, a capital building venture), at that point a non-benefit organization ought to set up a component whereby unspent and un assigned assets can be put into a spending thing which is allotted to a key objective of the office to encourage people in general great (i.e safe savoring water a provincial/undeveloped nation or country USA town).
• The chief ought to be required to state why the financing was not spent in the current year (i.e, cost efficiencies in another zone, staff turnover and so forth.); the trough ought to likewise be required to submit composed avocation on why his/her financial plan ought not be diminished the next year.
• At the point when the supervisor's execution survey comes around, the composed archive for which distinguishes the under use and supporting documentation for the future year ought to be a piece of the audit and it ought to be viewed as a positive spending execution for that director.

2 ) :-

• Regarding individual spending plan, the weight on one year from now spending portion being subject to current year spend does not exist.
• Subsequently the spend can be per the person's carefulness.
• Having said that, its constantly supportive to spend the financial plan crosswise over different diverse viewpoints like skilling oneself, spending on fundamental needs, well being, wellness, travel/excursion excitement.
• Better to keep away from boundaries - overabundance spending and being excessively closefisted.

3) :-

• Until as of late, I didn't set up an individual spending plan.
• However, last 2-3 months began getting more restrained fiscally and it was exceedingly uncovering.
• The sums that I think I was spending was terribly not quite the same as genuine spends (that were a lot higher).
• So keeping up close to home spending plans helps a considerable measure.