Friday, 14 April 2017

After the budget has been approved ... what comes next?

After the budget has been approved, what comes next?  Quite possibly nothing at all.

This is a pity but it does not mean that the budgeting exercise has been a complete waste of time.

  • The participants will have thought logically about the organization, its finances and its future.
  • Some of the detail will remain in their minds and influence their future actions.
  • Nevertheless, the budgets will be much more valuable if they are used in an active way.  

Regular performance reports should be issued by the accountants.

  • These should be in the same format as the budgets.
  • It should give comparable budget and actual figures.
  • Variances should also be given.
  • All levels of management should regularly review these figures and explain the variances.
  • Significant variances will pose the question of whether corrective action needs to be taken.

Budgets do not necessarily have to be done just once a year.

They may be updated, reviewed or even scrapped and redone as circumstances dictate.

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