This document discusses the organizational functions and uses of budgets. It explains that budgets are used for planning, priority setting, resource allocation, responsibility allocation, and evaluation. It also discusses how budgets differ based on the type of organization, including governmental agencies, non-profits, for-profits, and startups. For for-profit enterprises specifically, it notes budgets allocate projected revenue rather than money, and performance against the budget determines rewards. The document also covers technology budgeting and planning horizons and incentives for different organization types. Finally, it discusses the role of accounting in providing useful financial information to various stakeholders.

1. BUDGET
 FPE 3253
 DR ZUL ARIFF ABDUL LATIFF

6. What are the organizational functions
of budgets?
1. Budgets as a planning process
2. Budgets as a priority setting process
3. Budgets as a resource allocation process
4. Budgets as a responsibility allocating
process
5. Budgets as an evaluation process

7. Uses of Budgets
Budgets can be useful
 To provide overview
 To help allocate resources
 To determine leverage points
 In financial control

8. Budgets reflect industry type
1. Governmental agencies & non-profits
2. For-profits
3. Startups

9. For-profit enterprises
1. Two flavors of money: revenue and
investment.
2. Budgets do not allocate "money," but allocate
revenue projections.
3. Quarterly review of revenue vs. projections,
continuous evaluation and problem solving.
4. Performance against the budget determines
rewards.

10. “Flavors of money”
 Source and restrictions
 One time and recurring

11. Technology budgeting
1. Startup: Defining the product
Differentiating brand
2. For-profit: Controlling/reducing costs
Analysis of what’s going on
New products
3. Agency & n-p: Improving service
Controlling/reducing costs
w/o reducing staff

12. Planning horizon: motivation
1. Startup: differentiating brand
creating market
2. For-profit: controlling costs and
maximizing profit for
shareholders
3. Agency & n-p: Quality of service, as
defined by professionals, not
customers

13. Incentives
1.Startup: Valuation of options
2.For-profit: Bonus
Raises
Promotion
3.Agency & n-p: Professional ethics, job
security

14. D. The Role of Accounting
 Provide useful information to
 Owners
 Managers
 Potential investors
 Regulators

15. What would be in the introductory parts
of a financial management course
• Background/Objectives
• Key Financial Accounting
Concepts
• The Financial Statements
• Interpretation and Analysis

16. What Are We Talking About?
What do accountants do? How do they do it?
Who cares about what they do and how it’s done?
• Financial Accounting
– Preparation of financial
statements
– Audit
– Control
• Managerial (or Cost) Accounting
– Budgets and variances
– Analysis for management
decisions
– Cost and profitability
assessment

17. QUESTION
 1. What is a budget?
 2. Tips for developing budget?