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Admn of Finance .ppt

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Admn of Finance .ppt

  1. 1. Administration of the Finance - Plan, prepare and send budget proposals Nirmala Roberts India
  2. 2. Finance • System of creating, circulating and managing money • Management of large amounts of money, especially by governments or large companies • Period - long term • Eg. – Bank accounts, credit cards, mortgages, lines of credits, taxes, savings, investments, spending…. • Types – Personal, corporate, public (Govt.), private
  3. 3. Financial Administration � The job of managing financial tasks for a company or organization Eg. Controlling the budget, writing financial reports, providing money for projects � The financial administration staff – responsible for overall fiscal management, accounting & financial reporting for the Dept.
  4. 4. Budget � “Bougette” (French) – A leather briefcase. � Budget – A numerical description of expected income and planned expenditure for an organization for a specified period of time. � An operational plan, for a definite period usually a year expressed in financial terms and based on the expected income and expenditure. – H M Donovan
  5. 5. Budgeting � Allocation of scarce resources acc to forecasted needs for proposed activities over a specified period of time. �A tool for planning, monitoring and controlling the income and expenditure �Involves setting short-term objectives and expressing them in the budgets �Includes sales, production, distribution and financial aspects of the firm.
  6. 6. Purpose of Budgeting… � To ensure effective use of scarce financial and non financial resources - �A useful format for communication of fiscal objectives �A mechanism for translating fiscal objective into projected monthly spending pattern �Enhance fiscal planning & decision making �Clearly recognize controllable and uncontrollable cost areas �Allow feedback of utilization of budget
  7. 7. …Purpose of Budgeting �Help identify problem areas & facilitate effective solution �Provide means for measuring & recording financial success acc to organizational objectives �Coordinate efforts of various departments �Establish a frame of reference for the managerial decision making �Provide a criterion for evaluating managerial performance
  8. 8. Importance of Budget � Serves as a guide for action � Helps to weigh the values and to make decision x sos � Helps plan future course of action & to have over-all control of activities in the organization � Facilitates coordination operation of various depts and sections for realizing organizational objectives
  9. 9. Characteristics of Budget � Flexible � Produce of joint venture & cooperation of HODs at different levels � Synthesis of past, present & future � In the form of statistical standard laid down in specific numerical terms � Supported by top mgt through the period of its planning and implementation � In the form of statistical standard, in specific numerical terms.
  10. 10. Classification of Budget � Acc to Coverage of functions – � Master B � Functional B � Acc to Natures of activities covered - � Capital B � Revenue B � Acc to Period of budgets - � Long term B � Short term B � Acc to Flexibility adopted - � Fixed B � Flexible B Has mainly 3 sections – � Manpower budget � Capital expenditure budget � Operating budget
  11. 11. Manpower budget - Wages & other benefits for temporary & regular workers � Capital expenditure budget - Purchase of land, buildings, equipment of great expense & long life � Operating budget – Cost of supplies, minor equipment, repairs & overhead expenses
  12. 12. Types of Budget � Incremental � Flexible � Rollover � Open ended � Fixed ceiling � Performance � Programme � Production � Revenue & expense � Capital expenditure � Zero-based/ Sunset � Sales � Cash
  13. 13. Steps in Budgeting � Determine the requirements – Inputs from all levels of hierarchy � Develop plan – Budget for 12 months  based budget � Analyze and control the operations – Continuous monitoring � Review the plan – Periodic revision & modification
  14. 14. Planning the Budget � Budget estimates for the ensuing year – Prepared in Sep-Oct of current year � Submit by end of Oct � Every head of office prepares budget estimate – Salaries, contingent expenses � Only costs of sanctioned posts & existing budget items are included � For new items – separate proposals are made (=schedule of new demands) � All likely factors to be taken into consideration
  15. 15. Budget preparation includes… � Sound forecasting � Adequate & well conceived accounting system � Well devised cost accounting system � Fixed lines of authority & responsibility � Budget committee � Business policies � Statistical information � Period of budget – Usually a year
  16. 16. Steps in Budgeting… � Establish operational goals, objectives & policies of the orgn. � Translate the goals into quantifiable objectives for organizational units  i.e. goals � Review the existing programs - assignment of responsibilities, preparation of timetable � Revise budget and prepare master budget. � Compute manpower, capital, operating expenses � Test financial feasibility of master budget, approve final document and distribute to all parties involved.
  17. 17. …Steps in Budgeting � Every HOD prepares budget estimate in r/o salaries of establishment, contingent expenditure and others. (eg. Telephone, office expenses, rent of building…) � Review of objectives of existing program & writing objectives for proposed program � Identify alternate methods with objectives & price of each � Make budget request � Make comparisons for most cost-effective budget
  18. 18. � Salaries for professional, clerical and domestic staff & drivers � Stipends for students � New equipments and repairs � Linen and other household supplies � Maintenance of transport and cost of petrol/ diesel � Library - Setting-up/ maintenance; purchasing books, journals & daily newspapers, stationary, furniture & other items
  19. 19. � Office supplies including stationary and postage � Contingency fund - for educational tours, professional activities, capping and graduation ceremonies, prizes, entertainments etc � Office supplies- stationary items � External lecturers- for payment in accordance with the policy of the controlling authority
  20. 20. � Done by the principal � In conference with the President/ Chairman and other budgetary unit heads � Assisted by office staff and College staff � The budget allotment is made known to the staff � The staff establish priorities among items with plans for proper accounts to be maintained Preparation of Budget statement
  21. 21. Preparation…. � Collect the requirements from the HODs & confer with them � Review the budget expenditure of current year against the statistical data (of manpower, capital & operating budget) � Ascertain if any changes contemplated
  22. 22. …Preparation � Prepare the program to be covered by the new budget � Estimate the req for the ensuing year, from info gathered � Determine the % of allocation for each aspect � Prepare a summary of new needs � Present the proposal with justification
  23. 23. � Summary of estimated costs for an upcoming project in order to secure funding from project stakeholders. � The cost elements are broken down for clarity � The stakeholders see the benefits and/or drawbacks of getting involved � Includes - Budget approved in the previous year, the actual expenditure and projected budget. The proposal with all the enclosures is forwarded to the Finance director. BUDGET PROPOSAL
  24. 24. Budget presentation Item No Actual Budget of last year (2020-21) Approved Budget of current year (2021- 2022) Proposed Budget of coming year (2023 - 2024) Income Exp Income Exp Income Exp 1 2 3 4
  25. 25. � Managers present the budget to the Finance Committee for review and approval � The worksheets are scrutinized by the stake holders � A comparison is made with previous budget � Justification sought on the budget request � Adjustments made as required � The budget is passed Passing the Budget proposal
  26. 26. ADVANTAGES OF BUDGETING.. 1. Fixes accountability along with responsibility and authority. 2. Encourages managers to make careful analysis of operation & make careful decisions/ corrective measures 3. Weakness in the organization is revealed, corrective measures taken. 4. Supply needs can be projected and waste minimized
  27. 27. ..ADVANTAGES OF BUDGETING 5. Financial matters can be handled in an orderly, coordinated and balanced manner 6. Clarity in identification of financial and service goals 7. States goals for all units and their standards of performance 8. Stresses on continuous nature of planning and control process.
  28. 28. DISADVANTAGES OF BUDGETING 1. All aspects of org. al performance converted into monetary values for a single comparable unit of measurement 2. Danger of over budgeting 3. Forecasting though required can be uncertain 4. Need for skill and experience for successful budgetary control. 5. Budget planning is time- consuming and expensive 6. Budgetary goals can gain autocratic control of the organization 7. May become an end in itself instead of means to end.  Budgetary goals may supersede agency goals
  29. 29. Problems in Budgeting � Lack of specific goals and objectives � Lack of training and motivation � Departmental goals may be at variance with the corporate goals � Disproportionate allocation of funds � Short term vs long term planning