This Slide is Prepare for B.Sc. Nursing Students. Which help to Understand Budgeting Process in Simple Language. Content: 01. Meaning 02. Summary 03. Purposes 04. Characteristics 05. Features 06. Principles 07. Importance of Budget 08. Types of Budget 09. Budgeting Method 10. Advantages 11. Disadvantages 12. Preparing Budget Estimate 13. Role of Nurse Manager

1. Budget
Presented By :
Mr. Uttam Vaishnav
M.Sc. Nursing
(Psychiatric)

2. Meaning
• A forecast of the resources required to deliver the
services offered by the organization
• A plan for coordinating the financial goals of an
organization
• A formal , quantitative expression of management’s
plans, intentions, expectations & actions to control
results

3. In summary
• A budget is a financial plan that includes estimated
expenses as well as income for a period of time.
• Fixed or variable/ either controllable or non-
controllable .
• Fixed expenses do not vary with volume, whereas
variable expenses do

4. Purposes
Control costs
Establish annual
& monthly
budget
Identify & analyze actual
experience compared to
the budget plan
Accurately report
all financial and
statistical data

5. Characteristics
• It is a plan or program, framed on the basis of past
experience
• A scheme for action
• It should estimate revenues & expenditures as
accurately as possible
• It is comprehensive plan of action

6. Features
Flexible
Synthesis of past, present & future
Product of joint venture or participation of
executive at different levels
It should be clearly defined
Form of statistical standard laid down in
specific numerical form
Represent expected revenue as compared
with anticipated expense
Facilitate goal achievement

7. Principles
• Provide sound financial management
• Focus on objectives & policies of an organization
• Be flexible
• Budget necessitates a review of the performance of
the previous year & an evaluation of its adequacy

8. Importance of Budget
• An essential management tool
• Budget tells you how much money you need to carry
out your activities
• Budget enables to monitor income & expenditure
• The budget is a basis for financial accountability &
transparency

9. Types of Budget

10. Capital Budget
• Fund needed for the capital items for the growth
• New supplies & facilities & the replacement of worn out
equipment, machinery and furniture.
• The decision on capital budgeting is primarily is based
on:
i. Needs of patients and existing alternatives
ii. Effects of additional equipment on income &
expenditure
iii. Availability of funds

11. Operating Budget
• It provides an overview of an agency’s functions by
projecting the planned operations , usually for the
upcoming year.
• The nurse manager might include: personnel salaries ,
employee benefits, insurance , medical- surgical
supplies, office supplies , rent , light , house-keeping
• Both controllable and non-controlable expenses are
projected

12. Personal Budget
• Estimates the cost of direct labor
necessary to meet the nursing
needs of the estimated patient
population.
• The current staffing patterns,
number of unfilled positions and
last year’s report can provide a
base

13. Cash Budget
• Cash budget are planned to
make adequate funds available
as needed and to use any extra
funds profitably
• The ensure that the agency has
enough, but not too much , cash
on hand during the budgetary
period

15. Budgeting methods
• Simplest method
• Budget for the coming year is projected
• Requires little budget expertise from the part of the
manager
Incremental
• Assumes the base for projecting next year’s budget is
zero
• Manager’s are required to justify all activities &
programs as if they are initiated for the first time.
• Every proposed expenditure must be justified with:
• current environment
• fit with organizational objectives
Zero-Based

16. Continues…
• budget flexes over the year : up and down
• Flexible budget automatically calculates what the
expense is
Flexible
• This method emphasizes outcomes and results instead
of activities and outputs
Performance

17. Advantages
Places everyone on the management team
Helps to create cost awareness
Helps to measure individual & departmental productivity as
well as profitability
Produce cost savings
Provides a plan or forecast of what is expected.
Help clarify accountability & responsibility
Provides for communication within the organization

18. Disadvantages
Restrict the
activities
Under estimation
Over
budgeting
leads to over
expenditure

19. Preparing a Budget Estimate
Income/
Expenditure
Actual Current year Budget Next Year
Last year Budget Actual Proposed Approved

20. Role of Nurse Manager
• The administrator requires sufficient funds to support
sound program
• The administrator submits a budget request and a
justification for the proposed expenditures.
• Budget is presented to the president
• The budget is reviewed , analyzed and modified on the
basis of discussions of president and budget committee
• Once revisions are made , president presents the budget to
board of trustees for approval

21. Continues..
• When the budget is approved , it has given
authorization to make expenditure and to collect
income as indicated in the budget
• When the budget is adopted , administrator is
committed to support the budget
• Once the budget is approved , it is the responsibility
of the administrator to see that expenditures do not
exceed the approximates 1 made to the institution