FINANCIAL PLANNING AND

BUDGETING Presented by:

EMILY JEAN OMANDAM

FINANCIAL PLANNING - is the long term process of wisely managing your

finances so you can achieve your goals and dreams while at the same time negotiating the financial barriers that inevitably arise in every stage of life. It is a process not a product

Sound financial plan 1. establish goal 2. Gather data 3. analyze and establish your financial status 4. Develop a plan 5. Implement the plan 6.Monitor the plan and make necessary adjustments

FINANCIAL PLANNING COVERAGE Financial statement preparation and

analysis( including cash flows, analysis/planning and budgeting

Insurance planning and risk management

Employee benefit planning Investment planning Income tax planning Retirement planning Employee benefit planning

BUDGETING- Is the process of planning, adopting, executing,

monitoring, and auditing the fiscal program for the government for one or more future years

- means for planning and controlling activities at every level of the organization.

The local budget process is the core of the system of fiscal administration.

Budgets- are formal quantitative statements of the resources set aside for carrying out planned activities over a given period of time.

a. hiring and training personnel, purchasing equipment, manufacturing, advertisement and selling.

b. establish a clear and unambiguous standards of performance for a set time of period

BUDGETING SYSTEM FOR CONTROLLING FUNCTION output inputs output-input

Responsibility center- any organizational function or unit whose manager is responsibility for all its activities.

Revenue center- unit in which output are measured in monetary terms. Ex. Sales department

Expense center- administrative service and research departments where inputs are measured in monetary terms but outputs are not. Ex. Maintenance, administration, service and research department

Profit department- is measured by numerical differences between revenues and expenditures

Investment center-measure and compare output with assets used in producing them

Revenue

centers

Expense

centers

Profit centers

Investment

centers

Outputs compared with assets

THE BUDGETING PROCESS Begins with the forecast, sales and profit

objective for the coming year by top management.

Top-down budgeting vs. Bottom-up budgetingBudget are imposed are imposed by top managers with little or no consultation with the lower level manager

Are prepared by those who must implement them. The budget are sent up for approval to higher-level managers for approval.

FOUR PHASES OF BUDGETARY PROCESSES IN THE PHILIPPINES 1. Budget Preparation- the plan is used to

determine expenditure and sectoral ceiling; to formulate the function/project activities and to determine cost estimates

2. Budget and review- the plan is used to verify the consistency of the budget with the approved activities

3. Budget execution- the plan is the basis for determining the activities to be undertaken

4. Budget accountability- the plan sets the standard against which the performance can be measured.

Source: DBM

TYPES OF BUDGET 1. Operating budget – a. expense- engineered cost and

discretionary cost

b. revenue – are meant to measure marketing and sales effectiveness

c. profit budget- called master budget-consist of set of financial statement and schedule for the coming year(combine cost and revenue

2. Financial budgets- spell out the detail the money the organization intend to spend in the same period and where the money will come from

Thank You