Discussion on the Value of the Budget Cycle

b’Subject: Finance’
b’Topic: student reply’
b”1 d\nThe Assessment of the Value of the Budget Cycle\nA budget is a critical document in the operation of any modern public organization this includes both government and non-profit organizations. Budgets are financial plans that carries forward the financial implications of carrying out a particular planned response to the anticipated operating condition normally a year. Budgets are prepared to fit expenditure programs within the constraints of revenues available in that future period (Mikesell, 2018). Budgeting is one of the essential concepts in public administration that ensures every sector of the economy is allocated with enough capital to fund projects and other activities carried within that particular geographical region. It must follow a specific process to allocate the funds adequately. The first stage is budget estimation, where the budgetary committee is involved in identifying the objectives of a budget and requests relating to the account. A draft is then prepared from the budget office and meetings held to discuss the progress or how the allocation will be done. The finance director, therefore, estimates the required capital to be directed towards the budget (Mikesell, 2018).\n\nBudget Formulation\n\n Budget Formulation involves looking at the past budgets and deciding what should be done in the current account. The finance director can get such information from budgetary books and establish the goals that should be achieved in the long run. In this section, any difference between the fiscal constraints is highly considered to ensure adequate allocations.\n\nBudget Hearings\n\nStakeholder\xe2\x80\x99s views are considered to which the budget will directly affect. After drafting a budget formulation, multiple departments are incorporated to discuss their opinions so that all stakeholder requests to the budget can be implemented. It is important to note that any Federal Government budget will directly affect the public; that is why it is imperative for the stakeholder to be heard at the hearings to defend their request and to enhance its acceptance (Mikesell, 2018).\n\nBudget Adoption\n\nAfter going through budget hearings and making any necessary adjustments, the final budget must be adopted. The legislative body in charge is involved in approving the budget according to the specifications and changes that have been made, as this is believed to be accepted by most of them.\n\nBudget Execution\n\nThis is the final step of the budget. Agencies now can carry out their approved budgets. Appropriations are spent and services are delivered. The approved budget becomes an important device to monitor spending and service delivered (Mikesell, 2018). The approved budget should be amended according to the fiscal year requirements so as the necessary projects and sectors should be allocated funds to finance their activities. The budget should always run throughout the fiscal year and ensure no limitation to any industry.\n\nII. Assessment of the Value of Budgetary Planning Technique\n\nTrend Analysis\n\nThe economy is not always predictable because some changes may occur unexpectedly. This means that the trends of an economic performance should always be closely monitored so that long and short-term revenues and expenses are considered depending on the economy\xe2\x80\x99s behavior. Revenue and cost information from a company’s income statement can be arranged on a trend line for multiple reporting periods and examined for trends and inconsistencies (Mikesell, 2018). A sudden spike in expense in one period followed by a sharp decline in the next period can indicate that an expense was booked twice in the first month. Thus, trend analysis is quite useful for examining preliminary financial statements for inaccuracies, to see if adjustments should be made before the statements are released for general use.\n\nDriver-Based Planning\n\nBoth long and short-term revenues and expenditures of an economy always occur due to different drivers of the economy. The goal of driver-based planning is to focus business plans on the factors that are most critical to driving success, then creating mathematical models that enable managers to run scenarios based on these drivers to understand the impact on projected business results.\n\nDriver-based Modeling empowers business to:\n\nUnderstand the true value-drivers or levers of the business\nAnalyze how changes in drivers can impact future business outcomes\nPursue higher ROI activities\nProvide more confidence in you strategic decisions and plans\nSave time and effort in the planning and reporting process\nOptimize financial performance\nFinancial Modeling\n\nFinancial modeling is a tool for financial planning of the real economic situation of a particular country. It is a vital strategy, especially in the budgetary planning process, because it employs equations in support of the planning process. The equations represent the actual financial situation (Rubin, 2008).\n\nIn conclusion\n\nSomeone who plans well will foresee danger and avoid them, but the foolish person makes careless decisions, and end up paying the penalty. In Proverbs 21:5 it says, \xe2\x80\x9cThe plans of the diligent lead to profit as surely as haste leads to poverty\xe2\x80\x9d (KJV). \n\n \n\n \n\nReferences\n\nKing James Bible. (2017) Cambridge University Press. (Orginal work published 1769)\n\nMikesell, J. (2018). Fiscal administration (10th ed.). Cengage Learning.\n\nRubin, I. S. (2008). Public budgeting: Policy, process and politics (aspa classics\n\n (paperback)) (1st ed.). Routledge.\n\nWriter please reply to the student’s paper with agrnyzee or disagree and why”

 

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