Budgeting: Reasons, Responsibilities, and Process Improvement

This essay elucidates the critical role of budgeting in managing finances and achieving financial goals, both for individuals and organizations. It emphasizes that a budget serves as a financial roadmap, enabling sound economic decisions, performance evaluation, and appropriate resource allocation. The essay also highlights the responsibilities of a budget manager, who ensures resources are appropriately distributed, utilized, and safeguarded. Furthermore, it discusses the importance of flexibility in the budgeting process, effective communication of the budget plan, and regular monitoring and revision to accommodate internal and external changes. The essay concludes by referencing relevant literature that supports the discussed concepts, offering a comprehensive overview of budgeting and its significance in financial management. Desklib provides access to this and similar solved assignments to aid students in their studies.

Running Head: A Budget and Its Need
Budget

A Budget and Its Need 1
A budget is a statement containing the estimated revenue (incomes) and
expenses (costs) over a particular period of time (DRURY, 2013). It helps in ensuring
the availability of funds whenever funds are required. Budgets are the most important
part of future financial planning. It basically helps in keeping a proper track of all the
spending of the budget making person or organization thereby managing their cash
flows.
Need of budget:
 To meet the financial goals:
Without a concrete budget plan a person or a business organization might spend their
funds in activities that are not so necessary consequently ending up with shortage of
funds for the necessary areas. Thus, it helps in appropriate distribution of funds to
achieve the key financial goals.
 To take sound economic decisions:
Budgets provides the true picture of the financial position of an entity, thereby
enabling them to prioritize the needs according to the funds possessed by them.
 To evaluate the overall spending or performance
Budgets helps in evaluating the performance by comparing actual results with the
planned results. If excessive funds are used in comparison to the budget plans than it
will help in preventing wastage of funds in future.
The roles and responsibilities of a budget manager in an organization

A Budget and Its Need 2
The basic responsibility of budget manager is to ensure that the resources of the
organization are appropriately distributed between the various departments and they
are adequately utilized and safeguarded in accordance with the budgeted plans. The
other responsibilities are:
 To prepare the statement of budgets periodically and revise them according to
the changing needs of organizational environment of the company.
 Evaluate the actual results by comparing them with the budgeted plans so as to
understand the root causes of over spending of resources of the company, if
any (Ahid & Augustine, 2012).
Following aspects must be changed in the budgeting process:
 The budgets must not be very rigid to follow and therefore, a budget must be
prepared in such a way that if any changes are required as per the
organizational processes and policies, they can be incorporated.
 The implementation of budget is the most important aspect of the budgeting
process where the budgeted plan must be communicated adequately among all
the organizational personnel so that they can carry out the business operations
in accordance with the budgeted plans.
 Moreover, a budget must be monitored and revised within reasonable time
intervals so that any change whether internal or external can be taken into
consideration while carrying out the business activities.

A Budget and Its Need 3
References:
Ahid, M. & Augustine, A., 2012, The Roles and Responsibilities of Management
Accountants in the Era of Globalization, Global Journal of Management and
Business Research, 12(15), pp. 43-53.
DRURY, C.M., 2013. Management and cost accounting. Springer.