1. P R E S E N T A T I O N G R O U P :
S A F I A B I B I
F A R Z A N A A K B E R A L I
N A I K M O H D
M U M T A Z B A S H I R
M U M T A Z N A Z I R
Budgeting & types of Budgeting
unit #02
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2. budgeting
 Budgeting is an estimate of income and expense
(operational and capital) for any future planned
activity.
 Identifies the constraints under which an organization
operates –reorganizing what can and can not be
achieved with in given resources and optimizing their
use.
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3. Types of budgeting
 Operating Budget
 – Combination of revenue and expense budgets. Often prepared
 using accrual accounting methods
 • Cash Budget
 – Estimated future cash receipts and payments tabulated to
 show the forecasted cash balance
 • Capital Budget
 – Significant purchase price; typically land, buildings &
 equipment with useful life >2 years (varies by institutional
 policy)
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4. Capital budget
 Capital Budget is also known as "Investment
Decision Making or Capital Expenditure Decisions"
or "Planning Capital Expenditure" etc. Normally
such decisions where investment of money and
expected benefits arising therefrom are spread over
more than one year, it includes both raising of long-
term funds as well as their utilization.
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5. Examples
Capital budget
 Medical equipment
 Non-medical equipment
 Teaching & research equipment
 IT equipment
 Facility renovation
 Construction
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6. Capital budget uses in nursing
 Capital budget is a plan for the acquisition of long-term
investments.
 The key is the expected life-time of the item purchased
extends beyond the year of purchase.
 Examples of capital budget include: renovation of a major
wing in the hospital,
 purchasing equipment as call-light system, hospital beds etc30.
All proposals for
 capital equipment need to be fully evaluated for amount of
use, payment
 methodology, safety, replacement, depreciation of service and
every conceivable
 angle, including the need for space, personnel and
renovation31.
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7. Cash budget
 Cash budget is a financial budget prepared to
calculate the budgeted cash inflows and outflows
during a period and the budgeted cash balance at the
end of the period.
 Cash budget helps the managers to determine any
excessive idle cash or cash shortage that is expected
during the period. Such information helps the
managers to plan accordingly.
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8. Operating budget
 The operating budget is a plan to monitor
anticipated day-to-day activities, resources,
personnel, and supplies, typically over a one-year
period (Finkler, 2001)
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9. Fixed budget
 A fixed budget is one that is drafted on the basis of
specific criteria without any provision for any
changes at any point during the period of time
covered by the budget.
 The budget lets those involved know how much they
have to spend during a given time frame, regardless
of any eventualities such as a slump in sales or
increased profits.
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10. Budget
AN ESTIMATION OF REVENUE
INCOME PROFIT AND
EXPANSES DAILY
EXPENDITURE OVER A
SPECIFIED FUTURE PERIOD OF
TIME.

11. Purpose of Budgeting
Budget should help manage limit resources.
Budget coordinates resources production and
expenditure.
Budget help predict the out come of an adjustment
before you act or change any action.
The usefulness of budget depend on accuracy of
information.
For example before saleing any thing you can predict
profit or tear.

13. The process of collecting the data and preparing the budget
for future activities of an entity r activity. This process may
include money or time and is aimed at achieving the desired
result.
Section Header Layout
BUDGETING PROCESS

14. BUDGETARY PROCESS STEPS
1 Setting objectives.
2 Analyzing available resources.
3 Negotiation to estimate budget components.
4 Coordinating and reviewing components.
5 Obtaining final approval.
6 Distributing the approved budget.

15. BUDGET AS STANDRAD
Standard budget is a list of good services that a family of
specialize size and composition.
Would need to live at a designated level of well being with
the cost of good and services.
Budget have not been used to develop official poverty line.
And in most cases have not been used to calculate the
size of a nation low income population.

16. BUDGET AS STANDRAD (PRINCIPALS)
 Realistic and quantifiable.
 Historical
 Period specific
 Standardized
 Inclusive
 Excessively reviewed
 Formally adapted and disseminated
 Frequently evaluated

17. Effective Budget Preparation
17
2. Set up
program/project
goals
and objectives
4.Translate
strategy into
dollars
6. Set up
budget control
process
7. Compare budget to
actual
3. Decide
strategy to
accomplish
goals
1. Determine
needs of community
being served
5. Prepare budget
8. Budget modification
for realisticscenario

18. Effective Budget Preparation
Techniques
18
REALISTIC
CONSISTENT
WITH ORGANIZATIONAL
OBJECTIVE
FLEXIBLE
(amendable if
conditions are not as
expected)
“QUALITIES OF
EFFECTIVE
BUDGET”

19. Summary
Budgeting: The Road Map to
Success
Bumps Along
the Road
Preventive and Regular
Maintenance Check-ups
Keep You in the
Driver Seat
Know the Rules
of the Road
Drive
Defensively
Are We There Yet?
Where Are
We Going?

20. FIANANCE
 Science that describes the management,
creation and study of money, banking, credit,
investments, assets and liabilities. Finance
consists of financial systems, which include the
public, private and government spaces.

21. Financial management:
Is defined as "a series of activities designed
to allocate resources and plan for the efficient
operation of the organization".
 The overall goal of financial management is
to meet the total financial needs of the
organization.

22. STAFF BUDGET
 A staff budget outlines the money a business
plans to spend on employees and independent
contractors , the staff budget is one of the
largest expenses for the organization. A staff
budget to ensure that you're using company
resources efficiently.

23. Budget Preparation
 Budgets are generally developed for a 12-month
period, or yearly cycle.
 Calendar year is the regular year on the calendar,
January 1 through December 31.
 Shorter- or longer-term budgets also may be
developed.

24. Service budgeting preparation

25. Supplies including Drugs
 Expenses are commonly broken down into line
items.
 Line items represent specific categories that
contribute to the cost of the procedure or activity,
e.g., paper supplies, medical supplies, drugs, etc.
 Zero-based budgeting details every supply item and
quantity of items typically used.

26. Labor
 Health care services are very labor-intensive.
 Estimates are that salaries and benefits account for
50% to 60% of operational costs.

27. Direct and Indirect Expenses
 Direct expenses are those expenses that are directly
associated with the patient, e.g., medical and surgical
supplies and drugs.
 Indirect expenses are items such as utilities (gas,
electric, phones) that are not directly related to
patient care.

28. To successfully accomplish your program or project
objectives within budget, all of the organization’s staff
must be on the same road, moving in the same direction

29. References
 ANN Marrinerm Tomey : Nursing Management
and leadership 8th Edition
 http://smallbusiness.chron.com/five-types-
budgets-managerial-accounting-50928.html

30. FIANINCAL CONTROL
 Management control (as exercised
in planning, performance evaluation,
and coordination) of financial activities aimed
at achieving desired return on investment.