Optimizing Budgeting, Planning, and Control

Introduction:

Budgets are indispensable financial instruments that enable organizations to plan, make decisions, allocate resources, coordinate, and control activities within organizations as well as across their various levels. However, given the absence of the corresponding skill sets, budgetary aspects may be prepared and implemented in such a manner that ineffective decisions are taken, and resources are mismanaged as coordination and control are lacking, or, in the inverse, control is exercised in such a manner that opportunities are limited.

In this course on Optimizing Budgeting, Planning, and Control, participants will learn the effective use of budgeting as a management tool for planning and control.

Objectives:

At the completion of this Optimizing Budgeting, Planning, and Control course, participants will be able to:

• Create appropriate skill sets that will ensure budgeting is carried out in accordance with the strategic plan.
• Prepare budgets using enhanced forecasting skills such as:
  • Time Series Models
  • Exponential Smoothing
  • Regression and Correlation Analysis
  • Activity-Based Costing
• Efficiently enforce budgets to guarantee enhanced accountability for monetary resources.
• Understand the bigger picture and potential pitfalls of the budgeting process and the conditions under which those challenges would not arise.
• Embed the budgeting process within the orientation of the company’s long-term strategic plan.
• Provide decision-making with focus by engaging the key performance indicators involved.
• Analyze potential changes in major production and consumption factors by performing What-If Analysis and Sensitivity Analysis.
• Take calculated outcomes in terms of What-If and Sensitivity Analyses.
• Use state-of-the-art methods to execute budget planning and control processes.
• Coordinate and manage budgeting and cost control processes efficiently and accurately.

Training Methodology:

• Situation Analysis and Role Play
• Real Cases
• Peer Review
• Presentations by Experts
• Questions and Answers

Course Outline:

Unit 1: Basic Necessities in Budgeting;

• Strategic Planning, Forecasting, Budgeting, and Costing—Conceptualized
• Understanding the inter-relationship of Strategic Planning, Forecasting, Budgets, and budgets as control and plan.
• The Limitation, Benefits, and Essentials of Budgets: Features, Characteristics, and Conditions.
• Analytics of the Different Types of Budgets Description:
  • Fixed
  • Variable
  • Zero-Based
  • Activity-Based
  • Capital
• Parameters of Activity-Based Budgeting
• Formation of Process Model of ABB Application
• Budgeting Processes Instead of Departments
• Identifying Major Cost Drivers
• Identifying Major Activities
• Remolding of ABB Standard Costs
• Formulating the Activity-Based Budget
• Using Excel to Prepare a Master Budget
  • Sales Budget
  • Production Budget
  • Cash Budgets
  • Capital Budget
  • The Master Budget

Unit 2: How to Estimate Future Sales, Costs, Exchange Rates, Interest Rates;

• Understand the Purpose or Objective of Forecasting
• Summarize Available Methods of Forecasting Reconciling Qualitative and Quantitative/Statistical Analysis
• Including Some of the Exploratory Data Analysis Tools Available in Excel:
  • Their Application & Limitations
  • Understanding the Basic Patterns Associated with the Trends of Historical Data
  • Analysis of Time Series and Exponential Smoothing
  • Adjusting and Figuring Relationships Between Various Entities of Information
• Making Available to Key Decision-Makers the First Responses of Modeling Activities
• Market Sector Outlook by Means of Qualitative Forecasting—SWOT Analysis and LEPESTE & Co.
• Incorporating Forecasts into the Budgetary Control System
• Hedging Strategies for Variables Like Exchange Rates and Interest Rates
• Forward and Forward Rate Agreements

Unit 3: Elaboration and Execution of Budgetary Decisions in Terms of Forecasts:

• Market Demand Planning and Sales—The Sales Budget
• Setting the Price, Credit Terms and Policies, Discount Policies, Currency
• Planning of Production—The Production Budget
• Preparation of Budget for Finance—Cash Budget
• Execute Financing and Investment Policies
• Planning and Control of Capital Expenditure Budgets
• Calculate and Analyze the Present Value of Various Capital Projects with Excel
• Valuing, Forecasting, the Net Present Worth, Internal Rate of Return, Modified Internal Rate of Return, and Other Models
• Introduction to Evaluating What-If and Sensitivity Analysis to Understand the Impact of Changes in Key Production Factors
• Budgets Implementation Effectiveness
• Conditions Necessary
• Management Competencies Necessary

Unit 4: Break-Even, Sensitivity, and What-If Analysis:

• Break-Even, Cost, and Sensitivity Analysis
• Classification of Fixed, Variable, and Semi-Variable Costs
• Determination of Sales/Profit Level at Which No Loss or Gain Will Be Affected
• Determination of Key Costs
• Determining the Resources Needed
• What-If Analysis Using Excel and Other Advanced Software
• What-If and Sensitivity Analysis to Estimate the Effect on Cash Budget and Profit and Loss Account from Changes to Key Production and Consumption Parameters
• Incorporating Measurement of Critical Success Factors to Ensure Accurate Decision-Making
• Advising Diverse Strategies to Contain the Implications of What-If and Sensitivity Analysis
• Creating Management Information System (MIS) and Information Projection
• Information Collection, Processing, and Analysis
• Formulating Recommendations
• Generating Scenarios with Emphasis on Scenario Planning
• Constructing a Risk Analysis Model with Probabilistic (Monte Carlo) Simulation Techniques
• Developing a Deterministic Approach of the Economic Model

Unit 5: Variance Analysis, Reporting, Control, and Decision Making:

• Management Accounting Information Systems, Responsibility, and Control
• Structures and Components of a Costing System
• Definition and Organization of a Costing System
• Analysis of Variance and Variance Presentation to Management
• Addressing Issues Determined by the Variance Report
• Assessing Outcomes and Reporting Evaluations
• Taking Business Practical Steps as Determined by the Variance Report/Business Planning