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Q: budget ( Answered 4 out of 5 stars,   2 Comments )
Question  
Subject: budget
Category: Business and Money > Accounting
Asked by: smo-ga
List Price: $50.00
Posted: 01 Jul 2002 01:20 PDT
Expires: 31 Jul 2002 01:20 PDT
Question ID: 35387
what is the budget process?how do i evaluate an existing budget
system? how do i suggest recommendations for budget's improvements?
Answer  
Subject: Re: budget
Answered By: politicalguru-ga on 01 Jul 2002 02:54 PDT
Rated:4 out of 5 stars
 
Dear Smo, 

The annual Budget Process, if you are referring to the political
process, is a process within which the budget is approved. It is
based, first and foremost, on the Budget and Accounting Act (1921),
and on the Congressional Budget and Impoundment Control Act of 1974,
which established timetable for the process.

It begins with a submission of the budget by the President to the
Congress. Accodring to the Budget Act, the President's budget proposal
should be presented to the Congress on or before the first Monday in
February. The President's budget is quiet detailed: it contains a
"detailed outline of the Administration's policy and funding
priorities" (see [1]).

In the next step, the Congress discusses the budget. The process is
set by the Congressional Budget Act of 1974 (mentioned before). In
this step, the House and Senate Budget Committees Report the Budget
Resolution (see more here [2]). The Congress review the Presidential
Budget and may or may not adhere to it. However, since the Budget
reflectsthe President's agenda and priorities, and requires his
ultimate signature to implement spending, a dialectics of discourse
between the two sides developes - each side has something to lose.
 
The Congressional budget resolution provides the Congerss with an
opportunity to lay out it's fiscal and economic goals. Hearing on the
budget are ebing held at the The Budget Committees of the House and
the Senate. Experts on the subject, administration officials and
members of the congerss give testimony to the Committees. The
Comittees formate an initial text, based on these discussions. The
testimonies and views of other (Congessional) Committees must be heard
by February 25th. The law also specifies that the Senate Budget
Committee should hand out its version of the budget by April 1st;
there is no similar request from the House udget Committee, but it is
generally understood that "that House Budget Committee action will
proceed concurrently with that in the Senate." [1].

The budget resolution should include spending limits for discretionary
spending that serve as an internal control on spending through the
Appropriations process (see mroe here -
http://www.house.gov/rules_bud/app.htm). It may also include
instructions to Congressional committees to make changes in laws to
achieve the goal of a balanced budget.

After the budget resolution has been completed, full House and Senate
discuss the budget. After a separate discussions, the Hosue and Senate
meet to bridge over their differences in the resolutions. After its
approval, it doesn't have to be approved by the Presidential
sugnature.

Allocations are included in the bidget resolution, and sub-allocations
are then discussed by the House and Senate Appropriations Committees ,
and are accordingly developed into 13 different spenmding bills. The
13 bills are then discussed in Full House/senate settings. The House
discussions take place between May 15 and June 10. By June 30, final
House action on conference agreements for the 13 spending bills should
occur.

The appropriation bills are then brought to the President's approval
or Veto.

Reconcilliations (see http://www.house.gov/rules_bud/reconcil.htm),
created by the need to effect changes in existing law to modify
entitlement programs or tax policy, must be also discussed separately
by the House and the Senate, then together and then be approved by the
President, signed into a law.

Evaluation and scrutiny are important tools in any budget system.
Evaluation may be done using fiscal calculations; it adherence with
the administration's agenda. You can see a very bright explanation
here - http://www.whitehouse.gov/omb/budget/fy2002/guide02.html
There are also means to monitor the budget, which is the other side of
evaluation . See more about it here -
http://www.whitehouse.gov/omb/budget/fy2002/guide03.html#Monitoring%20the%20Budget
 
Individuals can influence the budget in several levels. The first is
influence on the President or the Congress, by organizing and
lobbying. The other is direct action of individual or a group with
specific Members of the Congress. The third is an attemp to influence
the administration, even before the proposal reaches the President, as
Smith (2002)[3] writes, "While individual citizens and national
organizations often devote a great deal of attention to trying to
influence the Congressional budget and appropriations process, many
forget that several months of internal budget negotiations occur
within the Administration before the budget request is ever presented
by the President to Congress."

Sources: 
[1] House.gov (US House of Repersentatives), "The Annual Budget
Process" http://www.house.gov/rules_bud/annual.htm
[2] House.gov (US House of Repersentatives), "Budget Resolution" 
http://www.house.gov/rules_bud/budres.htm
[3] Smith, Toby, (2002) "FY02Research Spending Levels Being Set, FY03
Budget Process Nears Kickoff" Research Reporter, Research Information
from the University of Michigan,
http://www.research.umich.edu/news/research_reporter/fy02/jan2002/update.html


Further Reading
---------------
www.senate.gov/~budget/republican/reference/cliff_notes/clifftoc.htm
http://www.thisnation.com/budget.html 
http://www.political-tips.com/TipCat.asp?id=9322 

My search terms included: 
------------------------
budget process
influence budget process
impact budget process
evaluation budget process
evaluating budget process

I hope that helped, please contact me for any further information

Request for Answer Clarification by smo-ga on 01 Jul 2002 03:09 PDT
i didn't mean political budget process, i meant any private firm.
thanks

Clarification of Answer by politicalguru-ga on 01 Jul 2002 07:37 PDT
Oops, apologies. 

I will answer you shortly.
smo-ga rated this answer:4 out of 5 stars
Helped a lot, thanks so much

Comments  
Subject: Re: budget
From: seedy-ga on 01 Jul 2002 06:12 PDT
 
Websites that describes small business budgeting processes are:
   http://www.onlinewbc.gov/docs/finance/budget1.html
   http://www.bzone.co.nz/knowledge_zone/0,,1921-489429,00.html
   http://www.peoplesoft.com/corp/en/products/line/epm/biz_plan_bdgt/features.asp

This process neglects one element which is crutial to any business
that being cash flow.  You must anualize your budget by month or even
by week to determine if you will run out of "real" money which will
necessitate a line of credit or loans bot get over those periods.  A
good spreadsheet layout will assist you in determining your periodic
cash flow.

OK...for the process.   If you are a very small business, I like to
ask the question, how much do you wish to earn the first year?  People
often balk at this question saying that that will depend on the amount
the business sells.  I like to work backwards from the amount you
would like to make to what business you would need to sustain that
amount of income so that you can then set up the business to achieve
that amount of income. (sales volume, pricing, fixed and variable
costs, taxes, etc...)  Often, you find that the business concept would
require the small business owner to work 30 hours a day to achieve the
desired income.  Using an interactive process from the bottom up is a
quick way to determine how the business must be constituted.  Simple
spreadsheet comparisons on a periodic bases of actual results to
expected results will give you the clues as to where you are not
hitting your targets.

If your company is more than a very small business, you probably want
to start the budget process with an evaluation of the market you are
in and how much market share you think you can achieve.  Again, I like
to have detailed discussion about strategy and tactics before the
budget process begins.  The focus of the budget process should be on
the overall strategy and tactics prior to developing the numbers. Once
that element is agreed, a sales volume/pricing model by month needs to
be developed, then each department should develop an expense plan to
fit that projected sales model. (the sales volume will be too low, the
expenses will be too high in the first go around)....Some cajoling,
exploration, discussion, will be done at this stage to find the real
"center".  These numbers will be annualized then put on a spreadsheet
(you may use some commercial budget software at this point) to track
results and provide variances.
Commerical software sources are:

   http://www.peoplesoft.com/corp/en/products/line/epm/biz_plan_bdgt/features.asp
 http://www.amazon.com/exec/obidos/ASIN/0942061411/americancampinga/102-9978491-2152100
http://www.acacamps.org/knowledge/business/budgeting.htm
http://www.comshare.com/mpc/index.cfm

This topic, budgeting and follow up, is one that inspires great
schemes, great process, and great strategy but can be grossly
overdone.  I managed a $40MM division of a public company where the
budget process resulted in a 400 page document to satisfy the
corporate requirements and that document was not referenced again
until the next budget excursion. I've also managed a $150MM cmopany
where the budget process concentrated one the strategy/tactics with
the number fall out being handled by the accountants.  The second
company was much more successful. Argueing over baloney results in the
baloney going stale.  The process should be short, sweet, and active
throughout the year.  It is important to be able to react to changes
since the budget document represents a point in time which will change
the minute it is finalized.

If you need more information or clarification, please don't hesitate
to ask.

seedy

Thanks for googling with GA.  Great questions stimulate or community.
Subject: Re: budget
From: seedy-ga on 01 Jul 2002 06:18 PDT
 
You may also wish to consult with the Service Corps of Retired
Exectives (SCORE) which could help you with the budget process and
follow up.
  http://www.score.org/  

Whoops...forgot my search strategy:

Personal experience 40 years in business 25 of which as President of
several companies both public and private, now retired.

Google search terms:
    "budgeting" + business
    "small business budgeting"
    "retired executives"

seedy

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