Question

I have to write an essay about a person involved in budgeting, and was hoping someone with experience budgeting would answer these questions for me:

Name of person and title:

Organization’s name, business location:

Brief description of organization and role in the organization:

Budget Specific Interview Questions: Please discuss the following related to the budget process:

I. People involved in the budget process

What is the budget cycle in the organization?

What organizational area coordinates the overall budget process?

What levels of employees, at your organization, are involved in the budget process?

What function(s) do you play and your area of responsibility play in the overall budget process?

II. The development of budget

How is the budget used to make plans for the upcoming year?

How is the budget used to communicate senior management goals and objectives?

What method(s) are used to estimate budget amounts?

What systems or software tools are used to aid in preparation of the budget?

How is the final approved budget communicated?

III. The use of budget

Does your organization report variances between the budgeted plans and the actual results? If so, how frequently and in what manner?

How are budget variances reported and resolved? What actions are taken to resolve variances?

Are budget results considered as part of employee annual reviews and compensation?

Do you think that the budget process at your organization serves as an effective tool in communication, planning, and control related to resource allocation? Why or why not?

IV. Other

What advice would you give, based on your experience, to a new organization who is developing a new budget process?

Answer 1

I) a) it is the most important tool of business need. Budget cycles is the life of a budget ie creating to evaluating.4 parts of it are prepare and submit, approval, execution and evaluation.

b) All areas are covered in process of budgeting and each department is involved

c) Generally each department is asked to prepare budget to make a final budget and so each department one person at junior level prepares the budget and senior person of the department approves the budget of his department and sends to higher authority to be a part of budget.

d) Our role in department is not just limited to estimating the budget for next year but we need to justify the budgets prepared and increase in budget compared to last year. SO from preparing to explaination of why the change in budget and further get it approved and if any shortfall at later date need to justify that too.

II)a) For making plans for upcoming year budgets and actuals of last year are taken as the base and considering current year sales orders and liabilities and loans to pay off budgets are made.

b) Senior management goals and objectives can be seen in budget which is one way how they communicate their goals of sales, cost reduction etc for upcoming years

c) For new organisation its zero based budgeting ie start from the scratch but for other large organisation and old organisations last year budgets are taken as basis for oreparation

d) As there are various types of budgets like cash budget, sales budget, cost overheads budget, selling and advertisement budget, purchase budget etc so normally a single software is used so that at the end all the budgets can be compiled in one. One of the latest software used is SAP and also some organisations use Excel

e) After discussion and compilations of all the budgets; Management also has certain targets of cost , sales and profit and so accordingly wherever possible it tries to remove solution to reduce budget and each department has to maanage with it. Accordingly each department is communicated with the budget approved to them in writing.

III)a) YEs variances are reprorted normally yearly or half yearly depending on the size of an organisation. They are reported in the manner as decided by the Management either in short or detailed like that of budget v/s actuals

b) All possible efforts are made during the year to minimise the variances but as these are just budgets and actuals always differs and hence they need to be reported which helps for better budget in the next year and any major changes ie high variances and studied and actions are taken by management and department to avoid those in future.

c) BUdget is not just one thing to considrer its annual review and compensation but overall performance is looked at so budget is not the only thing

d)Yes as explained in earlier points

IV) It needs to go with Zero based budgeting but the organisation should review other companies and risk involved and cost involved for making a good budget