Budget Preparation Skills

Introduction:

Budgets are a vital financial tool for management, facilitating effective planning, decision-making, resource allocation, coordination, and control. Mastery of budgeting skills is essential for maximizing resource utilization and achieving optimal decision-making. Inadequate budgeting skills, however, can result in resource wastage, ineffective management, and missed opportunities. This course on Financial Planning and Budgeting aims to equip participants with the skills necessary for creating and implementing effective budgets, utilizing key budgeting and financial tools.

Objectives:

By the end of this budgeting training course, participants will be able to:

• Allocate budget resources aligned with strategic objectives.
• Prepare budgets using managerial and quantitative forecasting principles, including time series models.
• Apply techniques such as exponential smoothing, regression, correlation analysis, and activity-based costing (ABC).
• Implement budgets effectively.
• Identify constraints and factors that enhance successful budgeting.
• Align budgeting efforts with the company’s long-term strategic vision.

Training Methodology:

• Case Studies
• Group Discussions
• Interactive Workshops
• Simulation Exercises
• Excel Modeling
• Role Playing

Course Outline:

Unit 1: Budgeting and Its Role within the Management Process

• The budgeting process in management accounting.
• Connection between costing, budgeting, strategy, and performance.
• Value creation and its impact on budgeting.
• Definition and need for budgets and cost investment.
• Coordination of financial and non-financial matters.
• Impact of budgets on organizational behavior.

Unit 2: Costs Analysis for Budgetary Purposes

• Linking costing to budgeting.
• Cost concepts and distinctions between fixed and variable costs.
• Cost, Volume, and Profit (CVP) analysis.
• Contribution margin and cost allocation.
• Conventional costing systems vs. Activity-Based Costing (ABC).

Unit 3: The Framework for Budgeting

• Key components of budgeting structure.
• Terms and definitions.
• Benefits and drawbacks of budgeting programs.
• Introduction to financial statements: position, comprehensive income, and cash flow statements.
• Cost-benefit approach for investment decisions.

Unit 4: Flexed Budgets and Variance Analysis

• Rational model of budgeting for organizational control.
• Purpose of standard costs in variance analysis.
• Differences between inelastic and flexible budgets.
• Preparing and analyzing flexed budget and sales volume variances.
• Importance and use of variance analysis.
• Need for continual improvement in variance analysis.

Unit 5: Beyond Budgeting: The Lifespan and Horizons of Performance Measurement Systems

• Issues with traditional budgeting and performance measurement mechanisms.
• Relationship between financial and operational aspects.
• Performance measurement in relation to strategy.
• Six Sigma and Balanced Scorecard.
• Perspectives: Financial, Customer, Internal Business Process, Learning and Growth.
• Creation and evolution of the scorecard.