Question

To work in the finance department you will need to know they features of organisational policies and procedures relating to budgeting and forecasting. What are organisational policies and procedures, what is a budget, how does forecasting impact on budgets and from what sources will information about organisational policies and procedures come?

Answer 1

PROCEDURES FOLLOWES POLICIES.PROCEDURES GIVES THE KNOWLEDGE TO COMPLETE A TASK IN EFFICIENT AND EFFECTIVE MANNER.HOW EVER POLICIES IS A BRODER TERM . EACH AND EVERY ORGANISATIONS HAVE ITS OWN POLICY AND IT DIFFERS FROM EACH OTHER ON THE BASIS OF THEIR OBJECTIVES, STRATEGIES, MISSION ,VISION AND ITS STYLE OF PERFORMANCE.

BUDGET IS NOTHING BUT A PLANNING IN ADVANCE FOR THE ALLOCATION OR UTILISATION OF MONEY FOR A SPECIFIC PERIOD LIKE ONE MONTH OR ONE YEAR OR FIVE YEAR LIKE THIS.

ACTUAL UTILISATIONS MAY DIFFERS FROM BUDGET .TAKE AN EXAMPLE OF PRODUCTION BUDGET, ACTUAL UTILISATION MAY DIFFER DUE TO THE PRICE INCREASE IN MATERIAL AND THERE ARE MANY OTHER FACTORS WHICH DIFFERENTIATE ACTUAL ALLOCATION FROM BUDGETED.

FORECASTING USES PAST INFORMATION TO PREDICT THE FUTURE.BUDGET DEPENDS ON THE FORECAST ,MEANS BUDGET IS PREPARED KEEPING IN MIND THE FUTURE PREDICTION ,WHICH IS DONE BY FORECASTING.IF THE FUTURE PREDICTION WILL BECOME WRONG THAN BUDGET CANNOT BE APPLIED PROPERLY AND IT WILL DIFFER FROM ACTUAL UTILISATION.

POLICIES ARE MADE BY THE TOP LEVEL MANAGEMENT OF THE ORGANISATION .SKILLED AND KNOWLEDGEABLE PERSONS ARE ACQUIRED TO DECIDE THE POLICY OF THE ORGANISATION.THERE ARE MANY STANDARDS ON ACCOUNTING AND AUDITING ,KEEPING THEM IN MIND POLICIES SHOULD BE MADE FOR THE ORGANISATION TO RUN IT EFFICIENTLY AND EFFECTIVELY.