- Budgeting is an operational plan for a defined period, usually a year, expressed in financial terms based on expected income and expenditures. - The purposes of a budget include facilitating planning and decision making, recognizing controllable and uncontrollable costs, and allowing for feedback on utilization of funds. - Key aspects of developing a budget include ensuring flexibility, synthesizing past, present and future factors, and gaining support from top management.

1. • PRESENTED BY: - Mr.
MADAN MOHA
GUPTA, ASSISTANT
PROFESSOR, FACULTY
OF NURSING, RAMA
UNIVERSITY, KANPUR
BUDGETTING

2. introduction
• Budgeting, though primarily recognized as a
device for controlling, becomes a major part of
the planning in any organization.
• Literally the word “Budget” means a leather bag
or sachet to carry official papers in form that
association, it came to mean those papers
themselves, more particularly the papers
containing the financial proposal for the year.

3. definition
Budget is an operational plan, for a definite
period usually a year. Expressed in financial
terms and based on expected income and
expenditure.

4. Purposeofthebudget
• Budget supplies the mechanism for translating fiscal
objectives into projected monthly spending pattern.
• Budget enhances fiscal planning and decision-
making.
• Budget clearly recognizes controllable and
uncontrollable cost areas.
• Budget offers a useful format for communicating
fiscal objectives
• Budget allows feedback of utilization of budget.
• Budget helps to identify problem areas and
facilitates effective’s solution.
• Budget provides means for measuring and
recording financial success with the objectives of the
organization.

5. Featuresofbudget
• It should be flexible
• It should be synthesis of past, present and
future.
• It should be in the form of statistical standard
laid down in specific numerical terms.
• It should have support of top management
throughout the period of its planning.

6. Importanceofbudget
• Budget is a numerical description of expected
income and planned expenditure for and
organization for a specific period of time.
• Budget is needed for planning for future course
of action.
• Budget facilitates co-ordination operation of
various departments and section for realizing
organizational objectives.
• Budget serves as a guide for action in the
organization.
• Budget helps to make decision when necessary.

7. Principlesofbudget
• Budget is an operational plan for a definite period,
usually a year, expressed in financial term and based
on expected income and expenditure.
• Budget should provide sound financial management
by focusing on requirement of the organization
• Budget should on focus on objectives and policies of
the organization.
• Budget should ensure the most effective use of
financial and non-financial resources.
• Budget requires that programme actives planned in
advance.
• While developing a budget, the provision should be
made for its flexibility.

8. • Setting budget target requires an adequate
checks and balance against the adoption of too
high or low estimate
• Budget period must be appropriate to the nature
of business or service and to the type of budget.
• Budget is prepared under the direction and
supervision of the administrator or financial
officer.
• Budgets are to be prepared and interpreted
consistently throughout the organization in the
communication of planning process.

9. Classificationofbudget
• Incremental budget:- Incremental budget is one
based on estimated changes in present operation, plus
a percentage increase for inflation, all of which is added
to previous year budget.
• Flexible budget:-It consists of several financial plans,
each for a different level of programme activity. It is
based on the fact, that operating condition rarely
conforms to expectations.
• Rollover budget:-It is one that forecasts programme,
revenues and expenses for a period greater than a year,
to accommodate programme that are larger than annual
budget cycle.

10. • Zero base budgets:-It requires the nurse manager
to examine, justify each cost of every programme
both old and new, in every annual budget
preparation.
• Cash budget:-It is prepared by way of projecting
the possible cash receipts and payments over the
budget period.

11. Budgetingprocess
• Forecasting:- Sound forecasting may be related to
making decisions on purchases, expansion advertising,
services, working capitals needs etc.
• Accounting:- Well conceived accounting system must
be needed to compare the budget information with
actual accomplishment. The cost information tells as to
how much it will cost to produce or give service.
• Lines of authority: - Budget preparation, operation and
supervision need/ require clearly defined lines of
authority.
• Budget committee: - Budget needs budget committee
in an organization

12. • To receive and approve all forecasts, departmental
budgets, periodic reports showing comparison of actual and
budgeted income and expenditure
• To request for special studies of deviations from the budget
and consider revision of budget to meet changed conditions
• Business policies:- clearly defined policies serve as basis
for budget preparations
• Statistical information:- in the forms of figures i.e.
estimates regarding the budget terms are essential for
budget
• Top level management support is essential to ensure
successful installation of budget programme.
• Period of budget-length of budget period (usually a year)
should be specified.

13. Steps in budgeting
While designing and implementing a planning programme, the
nurse administrator/ manager should follow steps which are
following :-
• Review the goals of the agency or hospital to identify
activities of highest priority, because these are most likely to
receive funding.
Review the objectives of the existing programme and written
for proposed programme to ensure the achievement of these
objectives will support agency.
Existing programme are revised and proposed programme
designed to maximum goal accomplishment.
Manpower, capital and operating expenses are computed for
each programme, old and new.
Alternative methods are identified for releasing designated
objectives and price of each alternative is determined