Budgeting

Old croissants on Sunday ..., budgeting is one of the questions that we would rather avoid, but on business, it is an absolute necessity. A reasoned and thoughtful budget preparation, should an auditor to start with a broad range of critical analysis of the latest actual financial position and results of the company executives who are responsible for the results. Then determine managers on specific and concrete goals for the coming year. It requires a fair amount of management time and energy. Budgets should be worth the time and effort. It is one of the most important elements of a Manager task.

Construction of the financial year, account must be a manager with good models of profit, cash flow and the financial situation of your company. Models are drawings or diagrams of how things work. Activity is a budget, kernel, an economic plan for the company. Budgeting, depends on financial models that form the basis for drawing up a budget account. These statements are:

--The budgeted income statement (or profit report): this Declaration emphasizes the essential information that managers needed to make decisions and control. Much of the information contained within a single profit report is confidential and not outside of the company must be disclosed.

--A projected balance sheet: connections and relationships between sales revenues and expenses and their corresponding assets and liabilities are part of the basic model of a projected balance sheet.

--Budget statement of cash flows: changes in assets and liabilities in their balance sheets at the end of the year just closed until the projected balances at the end of next year to determine the cash flow from profit for the year ahead.

Budgeting requires good functioning models of profit performance, financial position and cash flow from profit. Construction of good budgets is a strong incentive for companies to work in financial models that not only makes in the budgetary process, but also help managers to make strategic decisions.

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