Financial Report: Budget Preparation and Monitoring at Western Health

This report focuses on the budget preparation and monitoring procedures for Western Health, a healthcare organization. It outlines the importance of budgeting for various organizational units, including employees, supplies, and consumables. The report details the budget preparation process, including obtaining estimates, coordinating estimates, communicating the budget, implementing the budget plan, and providing interim progress reports. It emphasizes the alignment of the budget with the organization's strategic objectives, such as improving care services and sustainable resource use. The report also discusses essential costs to consider, such as variable and fixed costs, and sources of information for budget preparation, including past expenses and future forecasts. It explores pricing strategies, budget monitoring through key questions, and methods to motivate staff to achieve budgetary goals. The report concludes that effective budget preparation and monitoring are crucial for achieving organizational goals and objectives.

REPORT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
CHANGES TO ACCOUNTING REQUIREMENTS.....................................................................1
Data Collection...........................................................................................................................1
REFERENCES................................................................................................................................2
Research Methodology...............................................................................................................2
Customer Segmentation..............................................................................................................2

INTRODUCTION
Preparation of budget is an important activity of any organisation whether form service
sector or from manufacturing sector. Budget is prepared for different organisational units in
order to attain their specific goals and objectives. The present report is based on the budget
preparation and monitoring procedure that will be useful for western Health organisation. The
report discusses process that can be used by the organisation for making budget along with
various other factors like relevant costs that need to be considered while making budget plan.
Budget preparation and monitoring procedure
Preparation of budget is primary function of every organisation. These are also used for
evaluation and comparison of actual results and budgeted results. Thus, it is essential for western
health organisation to prepare budgets for its various functions like, employees expenses,
payments for supplies and consumables, etc. the process used for the preparation of budget must
be controlled by the organisation and must follow the set schedules so that budget can be
completed efficiently and is ready for use for the next year. Budget prepared must be regularly
monitored so that the deviations can be determined and rectified.
Western Health organisation can use following steps in order to prepare its budget for the
year:
Obtaining estimates:
First step to be considered before making a budget is to obtain estimates regarding
production level, sales, expected costs and the available resources for each department of the
organisation. Estimates can be obtained from the past expenses and the future expectations of
cash flow. Head of the various departments of the organisation are required to estimate and
provide the expenses that may be incurred in the future and may have an impact on the functions
of the company (Cooper, Ezzamel and Qu, 2017). These estimates are then communicated to the
budget committee, by way of informal discussion or a detailed written report.
Coordinating estimates:
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Submitted different budget plans of different organisational units is then evaluated by the
budget committee in order to determine the potentiality of plans that would be beneficial for the
overall interest of the company. Estimation of the available resources is then made that can be
fairly allocated to the different units of the organisation.
Communicating Budget:
It is the responsibility of managers and head of the concerned departments to
communicate the prepared budget. Budget is communicated to the concerned managers and
departments after the budget has been approved in the light of available resources and
organisational objectives. Any changes and modifications made in the original budget to reach
the final budget, by the budget committee must be communicated in order to obtain cooperation
and support of managers for the budget. It is the role of budgeting committee to effectively
communicate and convince managers about the changes made in budget.
Implementing the budget plan: After the final budget that has been communicated to
the department managers, these are now adopted as the plan for operations for the coming
period. Other units of the organisation are then required to provide necessary resources like cash,
labour, material etc. to the departments in order to carry out the budget.
Providing interim progress: After the successful implementation of budget, results
about the achieved performances in terms of budgeted figures are then communicated to the
departmental managers and top level management (Greer, and et.al., 2016). Then responsible
heads are required to review the actual results with budgeted results and also require to identify
the deviations and their reasons. Lastly modifications are done and revised budget is prepared.
It is also necessary that budget aligns to the organisational planning, objectives and
strategies. A budget will be effective only if it can help the organisation in attaining its
organisational goals. Different organisations have different goals and objectives. Likewise, main
strategical aims of Western Health organisation is to grow and improve their delivery of safe and
high quality care services, communicating their patients with transparency and purpose and
sustainable use of resources (Yagudina, Kulikov, Serpik and Ugrekhelidze, 2017). Therefore,
budgets of the organisation must be approved only if they are in align with theses strategical
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objectives of Western Health. The ultimate purpose of preparing budgets should be supporting of
organisational strategies, planning and goals.
Budget preparation is a lengthy process. In order to prepare efficient budget long time
frame is required because proper analysis of past years costs is required, future activities are to
be estimated, available resources can be aligned to the budget or not is to be identified, effective
communication is to be made among different organisational units (Nas, 2016). All these
procedures require a quality time and so process of budget making takes a long time frame. It is
the responsibility of budget committee to look after the budget process. They need to control the
time frame, this is their responsibility that time require in overall process should not increase
nominal time frame. In order to control time frame, quality and effectiveness of budget must not
be hampered.
Essential costs in budget making process
Budget is the estimation of expenses that is required to be incurred for completing a
function. These expenses are nothing but costs of different variables, following costs and
revenues are to be considered while preparing budget:
Variable costs: Different organisational units have different costs of variable nature,
while preparing a budget these are costs are required to be considered as these occurs only if the
production occurs. Variable cost changes with the change in the production quantity. In case of
Western Health, their variable costs of will be those cost that are directly related to their main
services like operations, providing care units, etc.
Fixed cost: Another important type of cost that needs to be considered while preparation
of budget is fixed costs. These costs are fixed to the organisation, these occurs even there is no
production or no selling of services. Main part of the budget includes fixed assets as alteration of
these costs is hard and after these costs, there remains a low scope for other costs.
Information to be gathered for preparing Budget
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Before determining relevant budget process and assessing relevant costs to the budget,
information that is required need to be sourced (Otley, 2016). From the following sources'
information may be gathered for preparing budget:
 By Assessing actual expenses incurred in past years.
 By assessing any extra cost and unexpected expenses incurred in the last years.
 By forecasting required expenses to be incurred in future.
 By providing a space of healthy communication within the organisation so that
employees can provide suggestions and information about the expected costs to be
incurred for a particular business activity.
In order to determine costs of various business activities, Western Health organisation
can use different cost pricing models such as:
Cost plus pricing: It is the method used for setting prices of goods and services. Under this
method all the associated costs are added and a markup percentage is added over it (Pathurahman
and Hidayat, 2017). Through this method, organisations expects fixed percentage of profit. This
method is not much effective for western health organisation, as it wont be feasible for the
management to determine the actual cost of services.
Following pricing strategies must be used by health care organisations:
 Health care organisations need to consider that competition may lower their prices.
However, in the healthcare industry, better services are preferred than the lower prices.
Therefore, prices of the services must be align with the value and quality of services.
 Price transparency is important in order to communicate the value of services. Many
healthcare organisations often don't clear the amount they are charging for what services.
Preparation and implementing of budget is not just enough, monitoring the performance of
budget is also essential. It is the key responsibility of budget committee to measure and monitor
the performance of budget. Budget committee of Western Health organisation can monitor its
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budget by getting answers to the following questions (Questions to Help You Effectively Monitor
Your Budget, 2017):
 How close are the actual results to the budgeted results?
 Is there any requirements of adjustments to be made in the current year's budget?
 Is there any requirement of adjustments to be made in the budgets of future year?
 In order to improve the performance what changes need to be implemented?
Answers to the following above questions will enable the budget committee to determine
and monitor the performance of budget plans.
In order to achieve budgeted results effectively, staff and overall employees of the
organisation must be motivated and encouraged to meet to deadlines of budget. Management can
encourage staff in the following ways:
 Providing staff with more flexible schedule on meeting of a certain quota or on achieving
a specific goal.
 By taking suggestions from the staff and not preaching them.
 Motivating by providing special incentives that could be monitory incentives or by
providing growth opportunities.
CONCLUSION
From the above study it has been concluded that in order to attain overall organisational
goals and objectives, budgets for different business activities must be in align with. Preparation
of budget involves detailed procedure and various different costs to be considered. The above
report, is based on the budget preparation process of Western Health organisation. It also informs
that preparation of budget is important but monitoring and measuring its performance is more
essential.
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REFERENCES
Books and journals
Cooper, D. J., Ezzamel, M. and Qu, S. Q., 2017. Popularizing a management accounting idea:
The case of the balanced scorecard. Contemporary Accounting Research.
Greer, J.A., and et.al., 2016. Cost analysis of a randomized trial of early palliative care in
patients with metastatic nonsmall-cell lung cancer. Journal of palliative medicine. 19(8).
pp.842-848.
Nas, T.F., 2016. Cost-benefit analysis: Theory and application. Lexington Books.
Otley, D., 2016. The contingency theory of management accounting and control: 1980–
2014. Management accounting research. 31. pp.45-62.
Pathurahman, T. and Hidayat, A., 2017. Procedure Ordinance Making Budget Revenues and
Expenditures in the District Ciamis Associated with the Laws and Regulations in the
Field of Financial Management.
Yagudina, R. I., Kulikov, A. U., Serpik, V. G. and Ugrekhelidze, D. T., 2017. Concept of
Combining Cost-Effectiveness Analysis and Budget Impact Analysis in Health Care
Decision Making. Value in Health Regional Issues. 13. pp.61-66.
Online
Questions to Help You Effectively Monitor Your Budget, 2017. [Online] available through
m:<http://fasttrac.org/blog/4-questions-to-help-you-effectively-monitor-your-budget-and-what-
to-do-if-your-budget-isnt-met/>.
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