Comprehensive Report on Budgeting and Forecasting Procedures

This report delves into the procedures for preparing budgets and forecasts, crucial components of financial planning. It outlines the steps involved in forecasting, including creating and populating templates, reviewing and adjusting forecasts, and distributing the final product. The report also details the budgeting process, from defining goals and objectives to establishing a budget calendar, defining roles, gathering requests, and developing the budget document. Key aspects such as transparency, coordination, and flexibility are emphasized. The report concludes that adhering to these procedures enables organizations to achieve their goals efficiently and effectively, serving as a guide for navigating future challenges. References include books and journals that support the information presented.

Preparing forecasting and
budgeting

Table of Contents
INTRODUCTION...........................................................................................................................1
Procedure for preparing budget and forecasting.........................................................................1
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
A budget is a quantitative statement for a defined period, which may include planned revenues,
expenses, assets, liabilities and cash-flows. A forecast is a prediction of future events and their
quantification for the purpose of planning. Forecast is simply a prediction, a plan is similar to
budget as it shows what is to be done with the forecast. The present report includes the procedure
followed for preparing the budgets and the forecast.
Procedure for preparing budget and forecasting
Procedure of forecasting-
1) Creating template- a template of the previous cash forecast is to be created. This template
contains the information regarding extend to which the forecast to be included in the new
period of forecast (Ríos and et.al., 2018). Removing the past dates that are present in
current and labeling the new forecast template with future dates. Clearing all the numbers
from the line items of the forecast.
2) Populate the template- Entering the information relating to the current cash and cash
equivalent balance and estimating the cash receipts and cash expenditure from the
account receivable and payroll. The projected timing of dividend payments and expenses
for capital projects are also included in the information.
3) Review the forecast template- Revising the forecast by printing a copy of the formulated
template so that if any inflows and outflows of cash are not usual then appropriate
changes can be made by the person. It helps in building the reasonableness of the forecast
prepared and unnecessary expenditure can be avoided by proper review and revision of
the template.
4) Adjusting the changes in the funding- If the cash forecast states that firm can make
further investment or must borrow the funds to meet the disbursements then these issues
need to be discussed with the treasurer so that necessary changes can be made.
Withdrawing the cash for making new investments or reducing the loan has to be
mentioned in the forecast (Ibrahim, 2018). A note is to be framed for any loan taken to
meet the future cash requirements. At a final note, the treasurer will approve the cash
forecasts as if any flaws discovered in the future then he will be held accountable.
5) Forecast distribution- After following all the above steps, finally the forecast will be
distributed to all the parties which are mentioned in the list like controller, chief financial
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officer etc. If the forecast template is distributed by e-mail or any other source then it is to
be send as a locked spreadsheet or as a document so that tempering cannot be made.
Procedure of Budgeting-
1) Defining goals- goals are the ends that the enterprise wants to reach. They are
established as the desired outcome that are attainable in nature. Goals should be
concise and defined.
2) Establishing objectives- objectives are the specific targets that are to be met
within a particular time period. They must specify what is to be achieved, for
whom and by what time (Henttu-Aho, 2018). Objectives should indicate the
planned accomplishments in quality service. Quantifiable goals and objectives can
be created for a specific area, departments and the overall organizations.
3) Framing a budget calendar- the calendar includes the processes and schedule that
the organization should follow in preparing the budget. It helps in enacting the
budget in an effective time. The calendar should be prepared in such a way that it
indicates all the information in context of distribution of budget worksheets and
guidelines to the departments. The revenue estimates and budget requests should
be compiled in single document. The finance committee should revise and review
the budget and if required then necessary adjustments should be made to the
proposal. The chief executive officer should adopt the budget prepared.
4) Defining the roles- the three roles should be described in the budget that are firstly
the proposal should be prepared in accordance with the CEO (Khodachek, and
Timoshenko, 2018). Secondly the present fiscal conditions, prospects and
proposal should be explained to the board. Thirdly, execution of the budget
should be as per enacted by the officer and monitoring the performance to ensure
that policies are followed.
5) Gathering and reviewing the requests- the revision of budget should be made that
it is developed with compliance of all the policies established in the beginning of
the process. The sum of budget requests should be more than the sum of estimated
revenues or surplus in the current year.
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6) Developing the document- the budget document should be developed in
consideration of several aspects such as transparency, co-ordination, co-operation,
management, integration, flexibility, discipline, accountability and credibility. A
document should be comprehensive and enables the firm in performance
management.
7) Key budgeting aspects- A well- formulated budget should be implemented by
adapting the changing conditions and promoting the operational efficiency. A
proper procedure is needed for controlling the budget and should not hamper the
efficiency nor lead to any alterations in the composition of budget (Jjemba and
et.al., 2018). The controls should facilitate flexibility to the agencies in executing
their programs and must focus only on the essentials required.
CONCLUSION
From the above report it is concluded that forecasting and budgeting should be implemented by
following the appropriate procedure so that firm can attain its goals optimally and with high
efficiency. The procedure acts as the guidelines that should be followed by the business to meet
any challenges in the future.
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REFERENCES
Books and jounals
Henttu-Aho, T., 2018. The role of rolling forecasting in budgetary control systems: reactive and
proactive types of planning. Journal of Management Control. pp.1-34.
Ibrahim, U. A., 2018. Impact of Budgeting and Budgetary Controls on the Accountability of
Government Parastatals. Nile Journal of Business and Economics. 4(8). pp.13-22.
Jjemba, E. W. and et.al., 2018. Forecast-Based Financing and Climate Change Adaptation:
Uganda Makes History Using Science to Prepare for Floods. In Resilience (pp. 237-242).
Khodachek, I. and Timoshenko, K., 2018. Russian central government budgeting and public
sector reform discourses: Paradigms, hybrids, and a “third way”. International Journal of
Public Administration. 41(5-6). pp.460-477.
Ríos, A. M. and et.al., 2018. The influence of transparency on budget forecast deviations in
municipal governments. Journal of Forecasting. 37(4). pp.457-474.
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