Choice of budget methodology and requirements for strengthening budget management

I. Choice of Budget Methods

The budget is in the form of a set of projected financial statements and other schedules. According to the different methods of budget preparation and budgetary purposes, different budgetary methods are to be chosen. Here, we detail zero-based and rolling budgets. There are other flexible budgets, probabilistic budgets, etc., so we will not introduce them.

1. Concept of Zero-Based Budgeting

Zero-Based Budgeting (Zero-Based Budgeting, abbreviated as ZBB) refers to the method of preparing budgets based on zero. The traditional method of budgeting is generally based on the actual number of the previous period, and then the possible changes in the planning period of the relevant factors (such as the increase or decrease in production, price increases or decreases, cost levels, etc.) to be taken into account, and ultimately determine the amount of their increase or decrease in the planning period should be called incremental and decremental budget method. Zero-based budget is different from this, for the planning period for any one project income and expenditure, not from the original basis, that is, without regard to the level of the base period, but everything to zero as a starting point to recalculate the project size and level.

The preparation of a zero-based budget includes three main aspects:

(1) All employees in each department of the enterprise are required to discuss in detail what cost items need to be incurred during the planning period according to the strategic objectives of the enterprise for the planning period and the specific tasks of each department, and to prepare a set of proposals for each cost item, presenting the purpose of the cost expenditure and the amount to be spent.

(2) for each cost project "cost - benefit" analysis, the cost of its comparison with the income, used to evaluate the various cost programs; and then the various cost expenditure programs in the weighing of priorities based on, into a number of levels, prioritized. Then the cost of each program of expenditure on the basis of priorities, divided into a number of levels, ranked in order of priority.

(3) According to the hierarchy and order set in the previous step, and in conjunction with the sources of funds available during the planning period, the allocation of funds and the implementation of the budget. It should be noted that the adoption of zero-based budgeting method is to zero as a starting point to observe all production and business activities, it does not exist ready-made cost budget expenditure items. Therefore, the workload of preparing a zero-based budget is quite heavy. However, zero-based budget has no box, not bound by the current budget, can give full play to the enthusiasm and creativity of managers at all levels, but also to promote the grass-roots units to calculate carefully, within the limits of their capabilities, the rational use of funds, and improve the effectiveness of the use of funds.

2. The concept of rolling budget

Rolling budget (Roll Budgeting) is the budget in the implementation of the extension, so that the budget period is always maintained for one year, every quarter (or month), immediately at the end of the period to add a new quarter (or month) of the budget. This kind of budget is also called "continuous budget" or "perpetual budget".

Rolling budget preparation. Generally take a long plan of short arrangements for the implementation of the budget, for the end of the additional quarterly budget, you can be a little thicker, a little more general, only quarterly totals. This approach facilitates regular analysis and study of budgetary information, and in accordance with the current budget implementation, revised in a timely manner. Preparation of rolling budgets, so that managers at all levels will always keep the work of the next year time to consider and plan to ensure that the enterprise's management work can be carried out in a stable and orderly manner.

Rolling budget preparation:

Enterprise management research of geosurveying unit

Two, strengthen the requirements of geosurveying unit (enterprise) budget management

In the socialist market economic system, geosurveying unit and enterprise's budget management is the whole process, centered on the control of cash flow and expenses, covering sales, profit and loss, costs, expenses, Cash flow, long-term investment and other financial operating areas. In the form of a set of financial statements and other forms, can be divided into operating budget, investment budget and financial budget.

Every business activity, every business unit, to implement a comprehensive budget coverage. So that every expense, every cost incurred are budgeted in advance, approved standards, amortization has a basis.

(1) Requirement of the local survey units and enterprises in the full understanding and study of market demand, science and technology development trend, under the premise of their own basic conditions, to formulate their own development strategy; according to the development strategy, the implementation of the annual operating objectives and various plans and indicators, on the basis of which the preparation of a comprehensive budget. Lack of clear, specific goals, who can not be ambiguous goals for the development of planning, programs and budgets.

(2) take the initiative to adapt and adjust the current accounting system and the implementation of the project budget is not adaptable. The practice is: on the one hand, the traditional budgetary accounts have been transformed to make it consistent with the classification of the plan, so that a system can be used to complete the assessment and inspection of the plan and budget; on the other hand, the establishment of two sets of accounts: one set of accounts for accounting by project according to the requirements of managerial accounting, and one set of accounts for accounting according to the current accounting system, and then set up a kind of conversion between these two sets of accounts The relationship between the two sets of accounts is then established as a conversion.

(3) In the implementation of the budget, the establishment of a set of objectives and methods to analyze the effect of the cost system, the establishment of a regular budget analysis and tracking system. So that the preparation of the budget is only the beginning of budget management, once the budget occurs, it is necessary to track, analyze and study, in particular, to establish a budget analysis and evaluation model, so that each expense occurs, through the evaluation model, at a glance to draw the correct conclusions.

In short, the budget is mainly a means of control. Budgeting is actually the first step in the control process - the formulation of standards. Because the budget is a quantitative way to show the standard of management work, and thus itself has the assessability, and thus conducive to the standard to assess the effectiveness of the work, to find deviations (the second step of the control process), and take corrective measures to eliminate deviations (the third step of the control process). Undoubtedly, the preparation of budgets can improve the planning process of defining objectives and formulating criteria. However, the greatest value of a budget also lies in its contribution to improved coordination and control. When budgets are prepared for all functions of the organization, they provide a basis for coordinating the activities of the organization. At the same time, deviations from expected results will be more easily identified and rated. The budget also provides a basis for corrective action in the control process. So, the budget leads out to better planning and coordination. And provides the basis for control, which is the basic purpose of budgeting. It is only when plans are formulated, coordinated and improved in full accordance with the needs of the operational work of the various departments that it is possible to prepare a budget for a subsector sufficient to serve as a means of control. The various plans are reduced to precise figures so that supervisors can see clearly which funds will be used by whom and in which units, and what cost plans, income plans and plans for inputs and outputs expressed in kind are involved. With this clarity, it is possible for supervisors to delegate authority to their subordinates to implement plans within the limits of the budget. For the budget that has been prepared and promulgated for implementation, it is necessary to carry out tracking, analysis and research, to find out problems from the implementation process, and to take corrective measures in time to ensure the smooth implementation of the budget. And on the basis of tracking and analysis, improve the budget assessment system, rewards and penalties system and year-end accounting system, in order to effectively play the role of budget management and budget control.