Stages in Budgeting Process

920 Words Mar 4th, 2011 4 Pages

Budgeting is such an essential part for organization and it move through numbers of procedure. The process for the preparation of budget might be varied from one organization to another before it could be finally accepted. Here are some sort of important stages in budgeting process as follow:

Stage 1: Establish who will take responsibility for the budget-setting process
It is crucial part to ensure that the committee who responsible to the budget has real authority within the organization (e.g. the budget officer, functional heads).

Stage 2: Communicate budget guidelines and policy to relevant managers
The long-term plans and objectives of the business should be the foundation before drawing up the
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Commonly the budgets are originated by the lower level of management (e.g. junior sales manager) as they specifically aware or know what are going on with the company’s operations and coordinated by the higher level of management. The managers are responsible and communicate to the higher level management in determining the necessary information or content of the budgets.

Stage 6: Negotiation of budgets
All of the budgets prepared will be submitted to the superior for approval and acceptance. The manager is necessary to negotiate the budgets with different level of authority to achieve agreement. This maybe because the plans might not be matches with other departments or might not fit with the requirement/expectation of the superiors. This process is vital in order to ascertain whether the company’s budget has effective management tools or not.

Stage 7: Review and co-ordinate budgets
The budgets are then reviewed by the budget committee and satisfy itself that the budgets match with one another. The call for amendment might happen when the committee revised one of the budget and forced to assert its authority and insist that adjustment are made. The managers will be informed to modify with such changes.

Stage 8: Final acceptance of the budget
This stage includes the preparation of the master budgets. Master budgets perhaps a summarized from the budgeted profit and loss account, budgeted balance

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