This document discusses managing finances through budgeting and auditing. It has two main parts. Part 1 discusses budgets and finance, including defining a budget, the aims of budgeting, prerequisites for successful budgets, and the budget process. It explains stages like identifying resources, costing resources, presenting the budget, approval, and functions/processes of budgets. Part 2 defines auditing and its objectives like substantiating financial statement accuracy and detecting errors/frauds. It describes auditing features such as it being done by independent qualified persons through verification of financial statements and satisfying they show a true and fair view.

1. “Managing Finances: Budgeting and Auditing
“Managing Finances: Budgeting and Auditing”
Name:
Submitted To:
DIVISION OF EDUCATION
UNIVERSITY OF EDUCATION LAHORE
Managing Finances: Budgeting and Auditing has two parts

2. “Managing Finances: Budgeting and Auditing
Part 1: Budgets and Finance
Part 2: Audit
1. Budgeting and Finance
A budget is a comprehensive and coordinated plan, expressed in financial terms for the
operations of a system or an organization for specific period to achieve the predetermined
goal (Shami, P.1)
2. Aims of Budgeting
1. To state the targets of system in clear and formal terms to avoid confusion and wastage of
resources and to facilitate
2. To communicate the targets to all concerned, so that they are understood, supported and
achieved.
3. To provide a detailed plan of action for reducing uncertainty and for the proper direction
of the individuals and group efforts to achieve the goals
4. To coordinate the activities and efforts in such a way that the wastage of resources is
minimized
5. To provide means of measurements and controlling the performance of individuals and
sections to simply information, on the basis of which the necessary corrective action is
taken
6. To adopt organization, systematic and the most economic methods of using financial
resources to run the system in an effective manners (shami,P.2 )
3. Pre Requisites of Successful and Sound Budgets
• Management Attitude
• Organizational Structure

3. “Managing Finances: Budgeting and Auditing
• Managerial Approaches
Are the necessary for the effective and efficient application of budgeting?
4. Budgets Performance and Procedure
Stage 1: Identification of the Resources
1. Manpower
2. Materials and
3. Time
Stage 2: Costing of the Resources: It is the most important activity in budgeting is basically a
financial statement
Stage 3: Presentation of the Budgets: As per budgetary guidelines formulated by the
government or funding agencies
Stage 4: Approval of Budgets: Obtaining approval of the budget by the authorities
Activity Time
Take some time to do that
• What are main reasons why you make your school budgets?
• ________________________________________________________________________
• Explain how the budget is assisting you to run your school?
• ________________________________________________________________________
5. Function and Processes ofBudgets:
It has Four (4) Areas
1. Planning Base: where are we now?
External Assessment, Internal Assessment and Priority Issues

4. “Managing Finances: Budgeting and Auditing
2. Objects: Where do we want to be?
3. Action Plan: We must do? What?
4. Review: How do we get the resources to do it?
Existing Financial practices, Expenditure Proposals and Revenue Proposal
6. Budgets:Allocation of Resources
I. Salaries
II. Repair and maintainers of asserts
III. Purchase of assets
IV. Development of new programs
V. Construction of building
VI. Type of Budgets
VII. Long Budget Period
VIII. Medium Budget Period
IX. Short Budget Period
7. Financial Policies
Financial policies describe the principle and goals that guide the Financial Management Practices
Financial policies are statements created by policy makers to clear future direction and overall
Financial Management Plan
8. Referance:Shami,P.Aslam,Waqar”Financial Management”AEPM, Islamabed
Part 2: Auditing

5. “Managing Finances: Budgeting and Auditing
1. Introduction (Definition)
Auditing is a systematic and scientific examination of the books of accounts and records of
business(Educational Institute) to satisfy himself that the profit and loss account and the balance
sheet are properly drawn up, so, as to exhibit a true and fair view of the financial state of affairs
of the business (Educational Institute) for the financial period.
2. Objectives of audit
It is broadly classified into
a) Primary Objective
The Primary Objective of audit is to substantiate the accuracy of the financial statements
prepared by the accountant
b) Secondary Objective.
The Secondary Objective is to detect and prevent errors and frauds.
3. FEATURES OF AUDITING
Who do that???
Audit is undertaken by an independent person or body of Persons who are duly qualified
for the job.
What he/they Do???
Verification of the results shown by the profit and Loss account and the state of affairs as
shown by the balance sheet.
How it works???
Audit is done with the help of vouchers, documents, information and explanations
received from the authorities.
For Whom???

6. “Managing Finances: Budgeting and Auditing
The auditor has to satisfy the authenticity of the financial statements and report that they
exhibit a true and fair view of the state of affairs of the concern.
The auditor has to inspect, compare, check, review, scrutinize the vouchers supporting
the transactions and examine correspondence, minute books of share holders, directors,
Memorandum of Association and Articles of association etc., in order to establish correctness of
the books of accounts.