Budgeting and financial control

1.  Rerealized by:
Jawad BOUDZA
Youness BENKIRANE
Soufiane DEHANI
Abir DAOUDI
Chaimae CHAKIRI

2. 01
Definitionand
purpose of
budgeting
02
importance of
budgeting
03
types of budgeting
04Theadvantages
anddisadvantages of
budgeting
05
Financial controlandits
Objectives
06
Financial control models

3. Budgeting is a process of projection of revenues and
expenses, cash flows, production lines, working capital
requirements, capital expenditure, etc. in respect of near
future years, which is based on some rationale logic about
the future prospects and using the experience in past till
date, presented to the management of the company for
decision making
Definitionandpurpose ofbudgeting

4.  The budget preparer needs to consider
internal as well as external factors relevant
for the budget preparation.
 The budget can be prepared for the whole of
the financial statement or any one of the
components of the financial statement.
 Budgets are prepared by the finance team &
presented to the management of the
organization.

5. purposeof
budgeting

6. Budgethelpstoaidtheplanning
of actualoperations byforcing
managerstoconsiderhowthe
conditions mightchangeand
whatstepsshouldbetakennow
and byencouragingmanagersto
considerproblemsbeforethey
arise.
ther essentials ofbudgetinclude:
•Tocontrol resources
•Tocommunicate planstovarious
responsibility center managers.
•Tomotivate managers tostrive to
achieve budgetgoals.
•Toevaluate the performance of
managers
•Toprovidevisibilityintothe company's
performance •Foraccountability
purposeofbudgeting

7. importanceofbudgeting
The budget serves the purpose of communicating
the common goal of the organization. If the units
do not have a common goal in place, there results
would be absurd
03
01
04
The budget is a formal estimate & it
contains figures to explain the situation. It
also provides a quantifiable goal to the
employees for production targets & sales
targets
Budgets are connected through numbers. With the cost-
cutting budgets, the departments can also prove their
achievement by cost saving on the unrequired expenses.
This approach helps cost-savings together with maintaining
the quality of work
02
This also becomes a basis for seeking bank finance or
preparing for the Initial Public Offer of the company

8. typesof
budgeting

9. Salesbudget– an estimate of future
sales, often broken down into both
units and currency. It is used to
create company sales goals
• Productionbudget-an estimate of the
number of units that must be
manufactured to meet the sales
goals
• Capitalbudget-used to determine
whether an organization's long-term
investments such as new machinery,
replacement machinery, new plants,
new products, and research
development projects are worth
pursuing.

10. Cashflow/cashbudget–a prediction of
future cash receipts and
expenditures for a particular time
period. It usually covers a period in
the short-term future.
Marketingbudget– an estimate of the
funds needed for promotion,
advertising, and public relations in
order to market the product or
service.
Projectbudget– a prediction of the
costs associated with a particular
company project. These costs
include labour, materials, and other
related expenses.

11. • Revenuebudget– consists of revenue
receipts of government and the
expenditure met from these
revenues. Tax revenues are made
up of taxes and other duties that the
government levies.
• Expenditurebudget– includes
spending data items.

12. Theadvantages
and
disadvantages of
budgeting

13.  The management can
have a small picture of
past performances
through the budgeted
figures
 It further helps the
management to rebound
or revamp the
organization before it’s
too late
 It further helps the
employees as a medium
of motivation.
 Management can also
take corrective actions
for the departments
which are not supporting
the common goal of the
organization.
Theadvantagesofbudgeting

14. Bisness in preparation of
the budgeted figures
can be a major turn off
for the organization. No
one can easily predict
the business implied in
any projection
a b
Too high is too difficult
to achieve. Budgets
should specify the
achievable targets. High
expectations can result
in miserable results for
the organization
c
Rigid budgets are
inception for a
downturn of the
growth of the
company as a whole
Thedisadvantagesofbudgeting

15. Financial
controland its
Objectives

16. Financial controls are among the tools that managers use to satisfy the
third and fourth aspects of their roles, tracking progress and evaluating
results, and they fall into the controlling category. Financial controls
enable you to take a proactive management position in your business
FinancialcontrolanditsObjectives

17. Theimportanceof financialcontrol
Strong financial controls help internal auditing and the operations team have
confidence in the numbers being reported to management and help protect the
organization's assets. As in any area of operations — whether it be gaming, food
and beverage, or the hotel — the financial controls need to be documented,
assessed, revised, and strengthened where necessary and tested regularly.

18. FinancialControlsModels
Financial reports are your financial controls. By analyzing your
business’s financial reports, you are able to determine how well your
business is doing and what you may need to do to improve its
financial viability.
The balance sheet : The balance sheet shows the financial position of
a business at a specific point in time, for example, the last day of the
month or the year.

19. Financial
ControlsModels

20. FinancialControlsModels
The profit and loss statement :The profit and loss statement shows
revenues, minus the cost of goods sold, minus operating expenses,
plus other revenues and expenses and the net income/loss before
taxes.
The cash flow statement :The cash flow statement is the detail of cash
received and cash expended for each month of the year. A projected
cash flow statement helps you determine if the company has positive
cash flow.

21. conclusion
We all need planning for the future. So does the organization, need a
plan for its survival in near future. The absence of budgets means a
journey without a destination. Budgets are the basic necessities for
decision making. Different budgets are prepared for each different
purpose. The basis of budget preparation varies according to the
current financial standing of the organization