Budgeting Process: A Case Study

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According to Edafalje (2011), budget represents the accounting instrument used by an organization to plan and control the operation of the organization. The budgeting process may be carried out by companies to estimate whether the company can proceed with its projected income and expenses. Holding a formal and structured budgeting process is the basis for good business management, growth and development of an organisation. Planning should be the major component of the business budgeting process to ensure the organisation achieve both short and long term goals. Research shown that good planning will typically reduce the cost of a project by about a factor of ten (10).
Typically, the budget process should involve all of the staff in the organization. The team of managers who is at the highest levels of the organization should play their roles to ensure that the budget is linked to the strategic plan of the organization. The communication between the managers and other stakeholders is crucial to produce a
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Participation of the entire staff in budgeting process had progressed to the budgeting process slicker, placing more emphasis on rolling forecasts and bringing out new methods such as the balanced scorecards (BSC) which is a performance measurement system containing both financial and non-fiscal criteria. The BSC covered four areas: financial performance, customer relations, internal business processes, and the organization’s learning and innovation activities. BSC is being taken by this organization for goal setting, compensation, resource allocation, planning and budgeting, and strategic feedback and learning. The scorecard is an excellent instrument for educating and engaging staff in the company in the strategy and budgeting process. It is the feedback loops from the staff that tell managers what to do next rather than remain stuck with predetermined
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