CIMA BA2 Syllabus C. PLANNING AND CONTROL - The Budget Process - Notes ^{1 / 6}

Budget Outlines

are concerned with organising and administering a budget system and the following characteristics may apply:

• a) Budget period

  This is the accounting year normally. 

  This can be subdivided into control periods.

• b) Budget manual:

  This document is usually prepared by the management accountant at the beginning of the budgeting process.

  It includes

  • Organisation chart

  • Details the budget procedures

  • Copies of the budget forms

  • Budget timetable

  • Key assumptions in the budget

• c) Responsibility

  Senior managers are responsible for the budgets

  • The sales / purchasing / production managers will also be responsible for their budgets, as will various cost centre managers be. 

    The cost accountant will determine whether all of the absorption rates etc that are used are correct.

• d) Budget committee:

  This may consist of senior members of the organisation, e.g. departmental heads and executives (with the managing director as chairman). Every part of the organisation should be represented on the committee, so there should be a representative from sales, production, marketing and so on. Functions of the budget committee include:

  • Coordination of the preparation of budgets, including the issue of a manual

  • Issuing of timetables for preparation of budgets

  • Provision of information to assist budget preparations

  • Comparison of actual results with budget and investigation of variances