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Utilisation of budget .pptx

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Utilisation of budget .pptx

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Difference between financial and budget planning; budget cycle; budget utilisation/ implementation; budget utilisation; management activities during budget utilisation

Difference between financial and budget planning; budget cycle; budget utilisation/ implementation; budget utilisation; management activities during budget utilisation

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Utilisation of budget .pptx

  1. 1. UTILIZATION OF BUDGET Nirmala Roberts India
  2. 2. Budget ■ An operational plan expressed in financial terms for a definite period usually a year, and based on the expected income and expenditure.
  3. 3. Difference between Financial and Budget planning Financial planning Budget Important tools for creating a stable financial situation, providing special benefits Provides a destination/ goal for the movement, which enhances the work of the budget Handles day to day costs & expenses, for a forward movement Identification of a goal Tool to achieve the goal Focuses on your entire life Focuses on immediate money issues Considers what you can be with your money Considers what you do with your money
  4. 4. The Budget Cycle Preparation & submission Execution Audit and evaluation Budget tracking
  5. 5. The Budget cycle… ■ Budget Creation – As per institutional policy and requirements. It is then submitted for approval. ■ Budget Approval – By designated approvers- o May approve, reject or put on hold. o On approval - Budget becomes active and ready for starting funding activities. ■ Budget Allocation – o Done by the management/ finance personnel o Involves distributing funds across the various areas. o Allocated down a hierarchy OR department-wise
  6. 6. …The Budget cycle ■ Budget Utilization – As budget requests and transfers. o Budget request – Submitted for validation and then approved . o Budget transfer - Transferring funds from one budget to another. ■ Budget Reconciliation- Reviewing transactions, supporting documentation, and resolving any discrepancies that are discovered. ■ Budget Tracking – Viewing the budget check book, cash memos and other expense vouchers showing transfer of funds.
  7. 7. Budget execution (utilization) ■ Making practical and effective use of Budget ■ Implementation of planned budget activities within the specified period and preparation of a report. ■ The act of carrying out the budgetary plans, programs and projects in accordance with the strategic plan in order to attain set goals and objectives. - K. Mathur and Inayatullah, 1980.
  8. 8. Budget Utilization/ implementation has two main operations… ■ Commitments – Decision taken to use a particular sum from a specific budgetary line to finance a specific activity. ■ Payments – The expenditure is authorised and the sums due are paid after – o Establishing the contract for the job o Delivery of the contractual service/ Details of receipt and payments are recorded in ordinal manner, with supporting documents which are auditable
  9. 9. Utilizing a Budget ■ Funds from the budget are committed against the various domains as decided by the management and finance committee, and are utilized over a period of time. - Eg., In a College of Nursing - For infrastructural works, equipment and supplies, salaries and payments ….
  10. 10. Budget utilization ■ Funds are withdrawn to execute purchases/ works ... ■ Details of credits and debits are updated periodically in columns, to track fund utilization. o The Credit column records the amount added as receipts (Student fee, other sources of funds) o The Debit column records budget used for purchase orders, work orders, event expenditure... o Details of receipts and payments in the form of cheques and bills, invoice and credit memos and filed for later reference and audit
  11. 11. Sample Receipts & Payments for Nov 2020
  12. 12. Management Activities during Budget Utilization ■ Verification of budget allotment – Checking whether - o Expenditure requested is within the approved budget o Funds are available based on the revenues collected ■ Earmarking of budget allotment and availability - Setting aside specific amounts from the available funds for possible future payments ■ Obligating of funds - The act of recognizing specific amounts from the available funds funds as spent
  13. 13. Procuring Library books/Journals ■ Initial procurement – Based on minimum requirement as per directions by apex body. o Consider the various subjects – Books and Journals. Select titles o Non subject books – Fiction & non fiction o Contact Book dealers – Call for price quotation (discounts etc) o Purchase made from an appropriate dealer
  14. 14. Procuring Library books/Journals ■ Subsequent procurement – Based on annual requirement as projected by teachers, students, librarian – A budget proposed for the year ■ Books/ Journals are allotted an accession no. and taken on charge in the Accession Ledger with details of procurement and costs. ■ Budget also includes provision for maintenance – Binding of books and journals etc
  15. 15. Procuring A.V aids ■ Requirement is projected by the HOI after obtaining feedback from dept. al heads ■ Budget for the items approved by the finance officer ■ Consider Inventory management techniques like - o ABC (Always, Better, Control) – Cost of item o VED (Vital, Essential, Desirable) – Critical service value o HML (High, Medium, Low) - Turnover o XYZ (Very little/ Some/ Most variation) – Variability of demand o Budget for repairs and AMC o Other contingencies
  16. 16. Salary emolument of employees ■ Salary is stated by category of employees & with increments spelled out ■ Budget - fixed accordingly ■ Salary details stated – Basic salary + allowances (risk, compensatory, house rent, transport..) + Insurance + any other ■ Mode of salary disbursement – to a Bank as a consolidated cheque
  17. 17. Stipend to the students… ■ The student’s role is normally unpaid or voluntary ■ Stipend - A regular fixed sum of money paid for services or to meet expenses (scholarship/ internship/ apprenticeship…), but not for work performed. ■ Reflects a complementary benefit ■ It is lower than permanent salary for a similar work, because of other benefits such as accreditation, instruction, food and/or accommodation..
  18. 18. Balance sheet for year ending 31.3. 2020
  19. 19. Budget Audit And Evaluation ■ The final stage of the Budget cycle ■ It examines whether the budgeting process is operating effectively - The techniques, procedures, motivation and budget effectiveness. ■ It is an evaluation of the budgeting effort. ■ It detects problems in the budgeting process ■ Conducted every 2 – 3 years by an independent party and not a budget staff. ■ The budget auditor reports to top management for appropriate action.

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