In: Accounting
ACTIVITY 4 – The Budget or Finance Policy If you have found a budget or finance policy then, 1. Review the policy in line with the 11 dot points below. How many of these elements does your policy have?
A budget policy would ideally consider the following elements:
- The organisation’s functions, programs, outputs and outcomes and how these relate to organisational and budget structures;
- The organisation’s current and longer-term fiscal strategy (including, for example, senior management’s position on balancing the budget and drawing on accumulated reserves or surpluses);
- Broad strategic priorities on which the internal budget is based;
- The organisation’s budget objectives and targets for the budget year and forward estimate period with sufficient detail to guide operational areas, individually and across outputs and programs;
- Planned sources of income and how these are to be allocated (including receipts from independent sources);
- Key measures against which budget allocations and submissions will be assessed;
- Key internal and external planning assumptions to be applied across the organisation (for example, salary rates, indexation factors, and productivity gains);
- The reporting basis on which the budget will be prepared;
- Expected impacts and treatments of one-off or temporary conditions in the organisation or in the external market;
- Circumstances under which a departure from the above principles, parameters and assumptions is permitted; and
- Governance arrangements to be followed in developing and approving the internal budget.
Ans:
A budget policy would ideally consider the following elements:
1. The organisation’s functions, programs, outputs and outcomes and how these relate to organisational and budget structures;
2. The organisation’s current and longer-term fiscal strategy (including, for example, senior management’s position on balancing the budget and drawing on accumulated reserves or surpluses)
3. Broad strategic priorities on which the internal budget is based;
4.The organisation’s budget objectives and targets for the budget year and forward estimate period with sufficient detail to guide operational areas, individually and across outputs and programs;
5. Planned sources of income and how these are to be allocated (including receipts from independent sources);
6.Key measures against which budget allocations and submissions will be assessed;
7. Key internal and external planning assumptions to be applied across the organisation (for example, salary rates, indexation factors, and productivity gains);
8.Governance arrangements to be followed in developing and approving the internal budget.
9.The reporting basis on which the budget will be prepared;