Budgeting And

Financial Control

 Rerealized by:
Jawad BOUDZA
Youness BENKIRANE
Soufiane DEHANI
Abir DAOUDI
Chaimae CHAKIRI
01 03
Definition and 05
types of budgeting Financial control and its
purpose of
budgeting Objectives

02 04 The advantages 06
importance of and disadvantages of Financial control models
budgeting budgeting
 Definition and purpose of budgeting
Budgeting is a process of projection of revenues and
expenses, cash flows, production lines, working capital
requirements, capital expenditure, etc. in respect of near
future years, which is based on some rationale logic about
the future prospects and using the experience in past till
date, presented to the management of the company for
decision making
 The budget preparer needs to consider
internal as well as external factors relevant
for the budget preparation.

 The budget can be prepared for the whole of

the financial statement or any one of the
components of the financial statement.

 Budgets are prepared by the finance team &

presented to the management of the
organization.
purpose of
budgeting

Budget helps to aid the
planning of actual operations
by forcing managers to
consider how the conditions
might change and what steps
should be taken now and by
encouraging managers to
consider problems before they
arise.
purpose of budgeting
ther essentials of budget include:
•To control resources
•To communicate plans to various
responsibility center managers.
•To motivate managers to strive to
achieve budget goals.
•To evaluate the performance of
managers
•To provide visibility into the
company's performance •For
accountability

01
The budget serves the purpose of communicating
the common goal of the organization. If the units
do not have a common goal in place, there results
would be absurd
03
The budget is a formal estimate & it
contains figures to explain the situation. It
also provides a quantifiable goal to the
employees for production targets & sales
targets
importance of budgeting
02
This also becomes a basis for seeking bank finance or
preparing for the Initial Public Offer of the company
04
Budgets are connected through numbers. With the cost-
cutting budgets, the departments can also prove their
achievement by cost saving on the unrequired expenses.
This approach helps cost-savings together with
maintaining the quality of work
types of
budgeting
Sales budget – an estimate of future
sales, often broken down into both
units and currency. It is used to
create company sales goals
• Production budget - an estimate of
the number of units that must be
manufactured to meet the sales
goals
• Capital budget - used to determine
whether an organization's long-term
investments such as new
machinery, replacement machinery,
new plants, new products, and
research development projects are
worth pursuing.
Cash flow/cash budget – a prediction
of future cash receipts and
expenditures for a particular time
period. It usually covers a period in
the short-term future.

Marketing budget – an estimate of

the funds needed for promotion,
advertising, and public relations in
order to market the product or
service.
Project budget – a prediction of the
costs associated with a particular
company project. These costs
include labour, materials, and other
related expenses.
• Revenue budget – consists of
revenue receipts of government and
the expenditure met from these
revenues. Tax revenues are made
up of taxes and other duties that the
government levies.
• Expenditure budget – includes
spending data items.
The advantages
and
disadvantages
of budgeting
 The advantages of budgeting

 The management can  It further helps the

have a small picture of management to rebound
past performances or revamp the
through the budgeted organization before it’s
figures too late
 Management can also
take corrective actions  It further helps the
for the departments employees as a medium
which are not supporting of motivation.
the common goal of the
organization.
 The disadvantages of budgeting

a b c

Bisness in preparation Too high is too difficult Rigid budgets are

of the budgeted figures to achieve. Budgets inception for a
can be a major turn off should specify the
downturn of the
for the organization. No achievable targets. High
one can easily predict expectations can result growth of the
the business implied in in miserable results for company as a whole
any projection the organization
 Financial
control and its
Objectives
 Financial control and its Objectives

Financial controls are among the tools that managers use to satisfy the
third and fourth aspects of their roles, tracking progress and evaluating
results, and they fall into the controlling category. Financial controls enable
you to take a proactive management position in your business
 The importance of financial control

Strong financial controls help internal auditing and the operations team have
confidence in the numbers being reported to management and help protect the
organization's assets. As in any area of operations — whether it be gaming, food
and beverage, or the hotel — the financial controls need to be documented,
assessed, revised, and strengthened where necessary and tested regularly.
 Financial Controls Models

Financial reports are your financial controls. By analyzing your

business’s financial reports, you are able to determine how well your
business is doing and what you may need to do to improve its financial
viability.
The balance sheet : The balance sheet shows the financial position of
a business at a specific point in time, for example, the last day of the
month or the year.
Financial
Controls
Models
 Financial Controls Models

The profit and loss statement :The profit and loss statement shows
revenues, minus the cost of goods sold, minus operating expenses,
plus other revenues and expenses and the net income/loss before
taxes.
The cash flow statement :The cash flow statement is the detail of cash
received and cash expended for each month of the year. A projected
cash flow statement helps you determine if the company has positive
cash flow.
 conclusion

We all need planning for the future. So does the organization, need a
plan for its survival in near future. The absence of budgets means a
journey without a destination. Budgets are the basic necessities for
decision making. Different budgets are prepared for each different
purpose. The basis of budget preparation varies according to the
current financial standing of the organization
thank you for your
attention