Cma1 Budgeting concepts 110724154108 Phpapp01

7/25/2019 Cma1 Budgeting concepts 110724154108 Phpapp01

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Budgeting

Concepts

Iyad Mourtada, CIA, CMA, CFE, CPLP

Iyad Mourtada, CIA, CMA , CFE, CPLP

Openthinkingacademy.com



Budgeting Concepts

• Introduction to Budgeting

• Role of the Budget

• Budget Periods

• Budget Participants

• Cost Standards

• Budget Preparation Tools

Iyad Mourtada, CIA, CMA , CFE, CPLPOpenthinkingacademy.com



An operational plan and control tool

that identifes resources andcommitments needed to satisy

goals over a period o time.




BudgetCycle

International Budget Partnership




Resources

Budget

Goals




Budget = Planning Tool

A Written plan.

Anticipating problems(managers are proactiverather than reactive).

Defning the goals inquantitative terms.






Budget = Motivational Tool

!otivating employees tostay "ithin budget.

!ust be seen a realisticbudget and not as a

restriction. ome degree o &e'ibilityshould be allo"ed.




Budget =

Communication Tool

Communicating the goals.

!a%ing everyone in theorganiation "or%ing to"ard

the goals.




Budget =

Coordination Tool

!otivating departments tocommunicate and coordinate

their "or% to be able to createthe budget.




Successful Budgeting

Aligned "ith corporate strategy.

sed to allocate resourcese*ectively.

sed as planning+communication+ coordinating+and motivating tools.

Buy$in at all levels.Iyad Mourtada, CIA, CMA , CFE, CPLPOpenthinkingacademy.com



vs.

Controllable

Costs

Noncontrollable

Costs

Controllability




,- you dont %no" "here youare going+ any path "ill ta%e

you there./

01

23




Mission Statement

P l a n n i n g

Strategic Plan

Long-term ObjectivesCapitalize & Amortize

Capital InvestmentCapital Budget

Short-term ObjectivesExpense

Operating Budget

Current Investments




Budget Periods

trategic 04$1 years

-ntermediate 1$0 year

5perational 6ess 0year

trategic #lan

6ong$term plans (budgets) hort$term plans(budgets)







Authoritative (top$do"n

budget)




#articipative (bottom$up

budget)




Budget #articipants




Budgetary

lac%

A

m o u n t

B

u d g e t e

d

A m o u n t

7 e e d e d

Managers canunderestimate the

amount of income orrevenue that i!! comein over a given amountof time, or overestimatethe e"penses that are to#e paid out over thesame time period.

$his i!! create%Budgetary lac% &,hich is the e"cess of

amount #udgeted overIyad Mourtada, CIA, CMA , CFE, CPLPOpenthinkingacademy.com



Budgetary lac%

Advantages

• #rovides &e'ibility oroperating underun%no"ncircumstances.

• 5*sets the costly

setups rom designchanges and8or smalllot sie orders.

Disadvantages•Decreases the ability tohighlight "ea%nesses and ta%etimely corrective actions on

problem areas.

•Decreases the overalle*ectiveness o corporateplanning.

• -t limits the ob9ectiveevaluation o departmentalmanagers and perormance osubordinates by usingbudgetary inormation.




Cost Standards

:o" much an operation or aservice should cost;

<ypes o tandards=

Authoritative vs. #articipative

-deal vs. >easonablyAttainable




Cost Standards

tandard Costs o Direct !aterial(?uality $ ?uantity $ #rice)

tandard Costs o Direct 6aborources or tandard etting=

$ Activity Analysis $ :istorical Data

$ !ar%et @'pectations and trategicDecisions

$ Benchmar%ing



















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Cma1 Budgeting concepts 110724154108 Phpapp01