CMA(Part1): Budgeting Concepts

15,317 views

Published on

Published in: Business, Economy & Finance
5 Comments
25 Likes
Statistics
Notes
No Downloads
Views
Total views
15,317
On SlideShare
0
From Embeds
0
Number of Embeds
210
Actions
Shares
0
Downloads
924
Comments
5
Likes
25
Embeds 0
No embeds

No notes for slide
  • 1. Hi Everyone. This is Iyad Mourtada and I would like to welcome you all here today on behalf of OpenThinking Academy. OpenThinking Academy is an online training company offering many online training programs which can help you improve your thinking process and allow you to take your problem solving and decision making skills to the next level.As for me, I have been teaching the Finance and Accounting for many years including the CIA and CMA review courses and I am excited to have more than 120 CIA students world wide studying with me this year. So, Our topic today is “Overview of the IPPF”. So let’s get started.
  • CMA(Part1): Budgeting Concepts

    1. 1. Budgeting Concepts<br />IyadMourtada, CIA, CMA, CFE, CPLP<br />IyadMourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    2. 2. Budgeting Concepts<br />Introduction to Budgeting <br />Role of the Budget<br />Budget Periods <br />Budget Participants<br />Cost Standards<br />Budget Preparation Tools<br />Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    3. 3. Anoperational plan and control tool that identifies resources and commitments needed to satisfy goalsover aperiod of time.<br />Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    4. 4. Budget Cycle<br /> International Budget Partnership<br />Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    5. 5. Resources<br />Budget<br />Goals<br />Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    6. 6. Budget = Planning Tool<br /><ul><li> A Written plan.
    7. 7. Anticipating problems (managers are proactive rather than reactive).
    8. 8. Defining the goals in quantitative terms. </li></ul>Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    9. 9. Budget = Control Tool<br /><ul><li> Setting cost guidelines.
    10. 10. Managers will understand the budgeted cost of their departments.
    11. 11. Measures the performance against established goals.
    12. 12. Personal self-evaluation tool.
    13. 13. Avoiding budgetary slack.</li></ul>Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    14. 14. Budget = Motivational Tool<br /><ul><li> Motivating employees to stay within budget.
    15. 15. Must be seen a realistic budget and not as a restriction.
    16. 16. Some degree of flexibility should be allowed.</li></ul>Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    17. 17. Budget = Communication Tool<br /><ul><li> Communicating the goals.
    18. 18. Making everyone in the organization working toward the goals.</li></ul>Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    19. 19. Budget = Coordination Tool<br />Motivating departments to communicate and coordinate their work to be able to create the budget. <br />Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    20. 20. Successful Budgeting<br /><ul><li> Aligned with corporate strategy.
    21. 21. Used to allocate resources effectively.
    22. 22. Used as planning, communication, coordinating, and motivating tools.
    23. 23. Buy-in at all levels.</li></ul>Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    24. 24. Controllability<br />vs. <br />Controllable Costs<br />Noncontrollable Costs<br />Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    25. 25. 1<br />2<br />4<br />3<br />“If you don’t know where you are going, any path will take you there.”<br />Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    26. 26. Mission Statement <br />Planning<br />Strategic Plan <br />Long-term Objectives<br />Capital Budget <br />Capitalize &<br />Amortize <br />Operating Budget<br /> Capital Investment <br />Short-term Objectives <br />Current Investments <br />Expense<br />Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    27. 27. Budget Periods <br /> Strategic Plan<br /> Long-term plans (budgets) Short-term plans (budgets)<br /><ul><li>Strategic 10-2 years
    28. 28. Intermediate 2-1 year
    29. 29. Operational Less 1year</li></ul>Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    30. 30. Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    31. 31. Authoritative (top-down budget) <br />Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    32. 32. Participative (bottom-up budget)<br />Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    33. 33. Budget Participants<br />Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    34. 34. Managers can underestimate the amount of income or revenue that will come in over a given amount of time, or overestimate the expenses that are to be paid out over the same time period.<br />This will create “Budgetary Slack”, which is the excess of amount budgeted over and actual amount needed. <br />Budgetary Slack<br />Amount Budgeted <br />Amount Needed<br />Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    35. 35. Budgetary Slack<br />Advantages<br />Provides flexibility for operating under unknown circumstances.<br />Offsets the costly setups from design changes and/or small lot size orders. <br />Disadvantages<br />Decreases the ability to highlight weaknesses and take timely corrective actions on problem areas.<br />Decreases the overall effectiveness of corporate planning. <br /> It limits the objective evaluation of departmental managers and performance of subordinates by using budgetary information.<br />Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    36. 36. Cost Standards <br />How much an operation or a service should cost?<br />Types of Standards:<br />Authoritative vs. Participative <br />Ideal vs. Reasonably Attainable<br />Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    37. 37. Cost Standards <br />Standard Costs of Direct Material (Quality - Quantity - Price) <br />Standard Costs of Direct Labor<br />Sources for Standard Setting:<br />- Activity Analysis - Historical Data <br />- Market Expectations and Strategic Decisions <br />- Benchmarking<br />Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    38. 38. Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    39. 39. Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    40. 40. Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    41. 41. Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    42. 42. Iyad Mourtada, CIA, CMA , CFE, CPLP Openthinkingacademy.com<br />
    43. 43. IyadMourtada, CMA, CIA, CFE, CPLP, M.A.<br />iyad.mourtada@gmail.com   <br />http://ae.linkedin.com/in/iyadmourtada <br />http://twitter.com/iyadmourtada<br />http://www.youtube.com/Iyadmourtada<br />http://www.iyadmourtada.com<br />http://www.facebook.com/iyad.mourtada <br />iyadmourtada<br />

    ×