BUDGETING AND CONTROLLING

AIESEC International 1516

 Budget

The budget is a management instrument used by any entity, financially

ensuring the dimension of the objectives, revenues, expenses and results at
the management centers level and finally evaluating the economic efficiency
through comparing the results with those budgeted for.

A major component of the managerial control, the effectiveness of the

budgeting process is reflected in the fact that: requires the strategic planning
and implementing the plans, offers a frame of reference for performance
evaluation, contributes to personnel motivation, encourages the
coordination and communication.

AIESEC International 1516

 AS A SUMMARY

• The budget is the quantitative expression of the plan framed by the administration
for a specified period and a support for the coordination of the necessary activities in
implementing that plan

• One of the easiest methods of tracking performance is to compare actual results with
your budgeted expectations. As the year progresses you're sure to notice how things
differed from your original budgeted expectations. This is where making adjustments
comes in.

• The budget contributes to maintaining a permanent balance between receivables

and payments and also ensures a continuous capacity of payment.

AIESEC International 1516

 EFFECTIVE Budget Management

.•Managing the budget is the real challenge. The easiest way to

begin this process is by setting up monthly budget meetings among
your team after your own monthly closing and review.
• As you have tbese budget meetings and go through the process,
you will have an opportunity for continuous improvement; always
comparing actual results with expected results. In this way you will
be constantly benchmarking performance against your best levels
of expectation.

AIESEC International 1516

10 STEP
ANNUAL
BUDGETING
CHECKLIST
1. Determine Timeline
• Set target date for board approval
• Allow time for each step and for review
and discussion
• Approve before beginning of fiscal year
2. Agree on goals
• Prioritize programme delivery goals
• Set organizational financial goals
• Clarify annual goals from strategic plan
3. Understand current financial status
• Review current year income and expense
compared to budget
• Forecast to the end of the year
• Analyze and understand any variances
4. Agree on budget approach
• Assign roles and responsibilities
• Agree on authority to make decisions
• Agree on how much uncertainty can be
included (how many unknowns)
5. Develop draft expense budget
• Determine costs (expenses) to reach
program goals
• Determine costs to reach organizational
and strategic goals
6. Develop draft income budget
• Project income based on current
fundraising and revenue activities
• Project new income based on new
activities
7. Review draft budget
• Verify that the draft meets program and
organizational goals
• Review and discuss all assumptions
• Make adjustments, based on goals and
capacity, to match income and expenses
• Review final draft for all goals and
objectives
8. Approve budget

• Present to any committees as needed

• Present to the board
• Finally, present it to the General Assembly
for aproval
9. Document budget decisions
• Create a consolidated budget spreadsheet
and file
• Write down all assumptions
10. Implement budget
• Assign management responsibilities
• Incorporate into accounting system
• Monitor and respond to changes as needed:
DO EFFECTIVE CONTROLLING!
 At the end, there are 2 strategies to better
financial performance

Cost Cutting Increasing Revenue

• Check internal efficiencies • Get more market share
on operations • Review your pricing
• Use the system and do • Higher quality experiences
process standarsization provided mean more
• Knowledge management customers

AIESEC International 1516

To start cost cutting, management usually asks: "How can we
make this operation more efficient?" It is the wrong question.
The question should be: "Would the roof cave in if we stopped
doing this work altogether?" And if the answer is "probably
not," one eliminates the operation. It is always amazing how
many of the things we do will never be missed. But businesses
that actually succeed in cutting costs don't wait until they
have to cut costs. They build cost cutting into normal
operations.