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Topic 3: Financial Planning and Control - Coggle Diagram
Topic 3: Financial Planning and Control
Budget is the overall plan of a business expressed in financial terms.
Purposes of budgeting are to
Plan the business
Decide for the business
Exercise control over the business
The Budgeting Process
Define objectives
Audit resources
Operationalise strategies
Allocate responsibility
Prepare budgets
Approve budgets
Implement budgets
Measure performance
Act to control the event
Methods of Budgeting
Continuation – budgets compiled on the basis of no change in
policies or priorities; business as usual.
Zero based budget – starts budgeting with the priorities of an organization and allocates resources to those priorities according
to their order of importance.
Comparing actual and budgeted
Actual – supportable by audit trailed documentary evidences such as invoices, receipts, staff
time sheets etc.
Total – sum of actual figures.
Budget – approved budget for a given financial period.
Variance – difference between total and budget.