Financial Reporting

Comparing budgeting techniques by Ann Irons 12 Mar 2010|  | The budgeting process is an congenital component of management control organizations, as it provides a system of planning, coordination and control for management. It is often an arduous process, however, and often strikes dread in the hearts of those involved in budget preparation. In the ordinary sector, the budgeting process can be even more unmanageable, since the objectives of the fundamental law are more difficult to outline in a quantifiable way than the objectives of a mystic company. For example, a private companys objectives may be to maximise profit. The meeting of this objective can then be set out in the budget by aiming for a percentage increase in sales and perhaps the cutting of various costs. If, on the new(prenominal) hand, you are budgeting for a public sector organisation much(prenominal) as a hospital, then the objectives may be mostly qualitative, such as ensuring that all outpatients are given an involution within eight weeks of being referred to the hospital. This is difficult to define in a quantifiable way, and how it is actually achieved is even more difficult to define. This leads onto the next reason why budgeting is particularly difficult in the public sector.

Just as objectives are difficult to define quantifiably, so too are the organisations outputs. In a private company the output can be heedful in terms of sales revenue, for example. There is a engineer relationship betwixt the expenditure that needs to be remark in order to achieve the desired level of output. In a hospital, on the other hand, it is difficult to define a quantifiable relationship between inputs and outputs. What is easier to compare is the relationship between how much cash is available for a particular heavens and how much cash is actually needed. Therefore, budgeting naturally focuses on inputs alone, quite than the relationship between inputs and outputs.The purpose of this article is to critically estimate the two main methods... If you want to get a rich essay, order it on our website: Orderessay

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