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Recommended: Budget analysis process
The budget process can be seen as daunting and tidies when organizations work to adhere to the many codes of financial ethics. From a layman’s perspective the budget allocation process can appear to be logically, simple and straight forward however there must be guidelines in place which organizations can use to guide and judge their fiscal management process. Weak internal controls can potentially worsen the information irregularity between the organization and the stakeholders and other investors by leading to lower quality of accounting and less reliable financial information (Bardhan, Shu, & Shu-Ling, 2015). Many organization implement internal controls to aid in this process. Author Mikesell suggests a few basic steps to implement when addressing internal control factors:
1. Provide qualified personnel, rotate duties, and enforce
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Founded in 1695, per the 2014 census, Prince George’s County has a populous of little less than a million residents. The 2014 census reports that Prince George’s County is 66 % black with a median income of about 79k annually making the county one of the most affluent black counties/communities in the United States of America. Although majority Black, Prince Georges County is very diverse with a mixture of other racial makeups: White, Native American, Asian, Native Hawaiian or Pacific Islander, Hispanic or Latino to include other unidentified races.
The budget document I will be illuminating on is the approved operating and capital budgets for Prince George’s fiscal year 2015. This document is the projection of expenses and incomes for the forthcoming year to include a detailed breakdown of expense allocation and strategic plans for the county for the county’s 3.43 billion dollar adopted budget. Currently Prince George’s County breaks down their budget in the following:
- General
Internal controls is defined as a process, effected by an entity’s board of directors, management, and other personnel, designed to provide reasonable assurance
Without such controls it would be difficult for most business organizations like Trinity Industries with numerous locations, operations, and processes to prepare timely and accurate financial reports. Since no control system can guarantee that financial statements will not contain material errors or misstatements, an effective internal control system can reduce the risk of misstatements. Internal Controls should therefore be designed and implemented with the risk of fraud in mind and tailored to the circumstances of the company. In the case of Trinity part of the SOX project was to identify key process, by interviewing organizational members to understand how the processes and controls worked within the company, and who was responsible. With guidance from PCAOB AS No.5 they identified the gaps of controls and took steps to close them.
What is internal control? According to University of Phoenix, Axia College Internal Control and Cash (2009), internal control is all of the related methods and measures adopted within an organization to safeguard its assets and enhance the accuracy and reliability of its accounting records. The primary reasons for internal control are help companies protect their investments and merchandise against theft from everyone, including employees and to make sure that the accounting is done correctly and truthfully.
On January 14, 2015 the Local Finance Board (LFB), which is part of the Division of the Local Government Services in the State of New Jersey adopted Rule: N.J.A.C. 5:30-3.8, which requires municipalities in the State to complete on an annual basis a User-Friendly Budget document. As a result of this new requirement, for fiscal year 2015 beginning with calendar year municipalities (January 1 to December 31), New Jersey municipalities must submit as part of their annual budget package to the State, a User-Friendly Budget document. Additionally, the State of New Jersey is requiring that municipalities incorporate the User-Friendly Budget into the introduced municipal budget, as well as the final adopted municipal budget. Therefore with this requirement
When considering the nature of the federal budget, indeed one can trace the foundations of budgeting back to biblical principles. Inside the community of faith, the bible has often been considered the cornerstone and reference point for authoritative declarations. Thus, when applying a biblical perspective to the nature and context of the federal budget, one must begin with the nature of property and stewardship within biblical context. As conveyed in the lecture notes, “God delegated to man the authority over external things, and hence, one could conclude stewardship and ownership from Genesis… God also has authority over all humanity, in the sense that we ‘are not our own,’ and what we own is not to be ‘privately’ administered in exclusion of God.” Therefore, when discussing the federal budget in correlation to the biblical text, indeed the allocation of resources, the distribution of wealth and the overall stewardship of believers are controlled by God. As scriptures states, “God blessed the and God said to them, “Be fruitful and multiply and fill the earth and subdue it, and have dominion over the fish of the sea and over the birds of the heavens and over every living thing that moves on the earth” (Genesis,1:28,ESV).
Budgets has been widely used by a lot of organizations since it was first introduced, because it can helps managers to properly plan and control the business’s resources. Successful control mechanisms as Schick believes are the essential to budgetary development (Gray, Jenkins, and Segsworth, 2002, p.11). However, recently the use of budgets to control organizations has been the subject to criticise and debate (Hansen et al., 2003 cited in Libby and Lindsay, 2010). In this era that full of unpredictable environments has make it even harder for a business to achieve the targets set in the budgets. In fact, European surveys also reported that there has been a growing dissatisfaction among organizations about their budgeting system (Neely et al.,
The department of Developmental Education is tasked each year with coming up with the following years budget and this year I was given that task. The Dean has given us a very hard task and that is that we have to cut 10% of our budget for next year. My task is to come up with five strategies that help in reducing our budget by 10% just for the following year, two of them will have to present a permanent change to our current budget and the ones to follow. This was a very tough decision, as many items have to be considered. I have given it a lot of thought and this is what I came up with, I will also explain which one of the strategies I think works best for our department and the institution.
Is having a strict yearly budget for the government so crucial for the growth of an economy? The short answer is yes. But what is a budget? What are the numerous positives to a federal/state budget? What is Public Administration’s role in enforcing and supervising a budget?
A company's budget serves as a guideline in planning and committing costs in order to meet tactical and strategic goals. Tactical goals such as providing budgetary costs for daily operations, and strategic objectives that include R&D, production, marketing, and distribution are all part of the budgeting process. Serving as a guideline rather than being set in stone, the budget is a snapshot of manager's "best thinking at the time it is prepared." (Marshall, 2003, p.496) The budget is a method in which to reign-in discretionary spending, and will likely show variances between what costs have been anticipated and what costs are actually incurred.
Since the implementation of SOX, companies are required to establish effective and efficient internal controls in order to be in compliance with the SEC requirements (Jahmani & Dowling, 2015, p. 129). According to COSO internal control is defined as “a process, effected by an entity’s board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of the following objectives: 1. Reliability of financial reporting, 2. Compliance with laws and other regulations, 3. Efficiency and effectiveness of business operations, and 4. Protection of property” (Kanagaretnam et al., 2014, p. 30 & Kapic, 2013, p. 63). Additionally, Kapic notes internal controls contain policy and procedures that assist the company and management with smooth operations of all daily business
According to Williams and Calabrese, the term budget is ambiguous (Williams and Calabrese, 2013, 2). To me, the term ambiguous can have a negative connotation, meaning obscurity. Today, a myriad of budget theories exist; some divergent, while others homogeneous. Fiscal policy that creates public value is noteworthy. Admirable budgeting processes are transparent, efficient and exist to “eliminate deficits and control unethical legislator behavior” (Williams and Calabrese, 2013, 4). This paper aims to investigate the ambiguity & interpretive theory, as well as develop implications as I assess the correlation, similitudes, and disjoints amongst Williams’ and Calabrese’s suggested budget theories.
Participative Budgeting is the situation in which budgets are designed and set after input from subordinate managers, instead of merely being imposed. The idea behind this sort of budgeting is to assign responsibility to subordinate managers and place a form of personal ownership on the final budget. Nearly two decades of management accounting research has resulted in equivocal findings on the consequences and effects of participative budgeting (Lindquist 1995). Participative budgeting certainly has various advantages, these include the transferral of information from subordinate to superior increased job satisfaction for the subordinate, budgetary responsibility and goal congruence. Its disadvantages include budgetary slack and negative motivation, however it is the conditions in which participative budgeting takes place determines whether the budgeting process is successful. The conditions are dependent on various factors such as the level of participation, level of subordinate influence, the extent to which budgetary slack takes place, volatility, job related information, and the complexity of the budget.
Capital budgeting is one of the primary activities of a company. Most of the company uses capital budgeting for decision making process of selecting and evaluating long-term investment. The company have to make a right decision with respect to investment in fixed asset such as purchasing of new equipment and delivery vehicles, constructing additions to buildings and many more. The decision must be right because of the project involve huge amount of cash outflow and it is committed for many years.
The role of internal control to restrain the corruption in organisation is to adopt the integrated control framework to institute the internal written policies and procedures in offer to provide reasonable assurance to management and ensure compliance with the applicable rules and regulations (National Internal
Since the company is busy in the downsizing, it seems that effective internal controls are not in place and therefore it is recommended that there should be written policy regarding the implementation of internal controls by the employees. This trend should be set by the management from top to bottom so that every employee must be aware of its role.