Budget Analysis Introduction Taking a cash flow plan for instance, there are many materials that can assist one in how to make an accurate budget. There is the need to improve this situation by taking a look at the values and attempting to understand what they really stand for. That is where one has to analyze these figures to understand what they represent in a proper manner. There are three parts in a cash flow plan, with incomes and expenses making the first two segments. The third section is the difference between incomes and expenses; this enables to make any improvements.
This difference goes under many names, from savings to discretionary funds. The main objective of budget analysis is to upsurge the third component of the budget, which is the difference between incomes and expenses. There are two ways of achieving this: by either increasing incomes or decreasing expenses. Budget analysis altogether is a vital part of most organizations and professionals; therefore, there is a need to develop and carry out budget plans that will assign both the company and the government resources appropriately. The Baltimore budget as a policy document A policy statement should outline the executives policy for establishing whether an aspirant organization or an already existing registered charity is carrying on an acceptable business or an unacceptable business (Budlender, Rhonda, and Allen 32).
There are as many policy statements as there are institutions to make them. These statements serve to elucidate intent, depict how a policy is run, and describe its details. They aid in protecting an institution from misunderstandings, which may lead to unlawful behavior or lawsuits. The Baltimore budget is a good representation of a policy document.
At the beginning of the summary, all the participants involved in the writing of the budget are named. This clearly states the power or executive responsible for the budget of the residents of the city. Conversely, the best depiction of the budget being a policy document is manifested on page 24 to page 25. The budget process and related policies topics clearly state the method to be applied in executing the budget. There is a clear description of how the strategy is going to be run after explaining the particulars of the plan.
This policy is exposed to all stakeholders, so they can ascertain that all the details within the budget are true. This also eliminates the cause of action that may be taken by any party claiming that they were not well informed of the plan (Budlender, Rhonda, and Allen 32). Baltimore budget as a financial plan The financial plan of an institution generally comprises three financial statements: the cash flow projection, the income statement, and the balance sheet. A concise analysis or description of these three statements is also included in the plan.
A financial plan section is the segment that establishes whether or not the organization’s idea is viable. It comprises a sequence of steps or objectives used by the institution, and the development and collective attainment which is conceived to accomplish a final financial target or set of conditions such as the elimination of debt. In the case of the Baltimore budget, we are going to organize the city’s finances and at times, comprise a sequence of stages or specific objectives for spending and redeeming future revenues.
The city evidently states all its revenues before the budget comes into effect as from page 26. It also clearly states the total expenditure for the budget. The revenue can sustain the projected budget, taking into considerations other determinants such as the budget environment on page 1 as well as the comparison, with past actual and projected budget plans (Budlender, Rhonda, and Allen 33). Baltimore budget as an operations guide Every institution, no matter how small, needs to have principles. Developing your own set of guidelines and procedures will assist an organization in running more efficiently, especially in the absence of supervision.
It is imperative to have a laid down system in place when you begin to take other steps, in this case budgeting, so that all the participants within an organization understand every detail of how the organization should run. For instance, when the total revenues of the city should be amassed, which technique should be utilized, where the capital for budgeting should come from, and how it should be used. In the case of the Baltimore budget in relation to the operations guide, the entire budget tends to describe how the funds are supposed to be assigned to distinct departments and sections of the city.
This in a way is an operation guide. However, the manifestation of an operation guide to a great extent is evident in the section tackling the operating budget as from page 55. They have incorporated diagrams to explain how operations in the execution of the budget are going to be undertaken. It further goes deep, with each item explaining its responsibilities, amount awarded and what is expected from that section. Baltimore budget as a communication device A communication device in these settings can be described as a medium through which an organization executive or administration passes information to other individuals, who are involved in the running of the organization.
This is vital for the channel to be as competent as possible so as to facilitate the running of the organization by avoiding adversities such as misunderstandings, which may lead to conflicts within an organization. The main objective of a communication device is to pass information; the summary of the adopted budget by the city of Baltimore really takes passing of information at a much greater level.
The summary is very informative to all residents and any other individual with respect to the budget. On the part of the administration, it is a very commendable job. It is easy to comprehend the contents of the budget owing to the use of simple language and utilization of other features such as diagrams for better illustration (Budlender, Rhonda, and Allen 35). Conclusion Budget analysis is a technique where one evaluates the budget to analyze if it is working.
It is advisable to check for problem areas and to assess whether the financial objectives are attainable during the budget analysis. This should be done often in a financial year when an organization is new, but may also be done annually after the organization is well established. This detects any cracks in the foundation of the organization, which may cause it to crumble, during the harsh initial stages. There are numerous factors to be evaluated in this process, which are very critical.
There is more to budget analysis than the factors addressed above, such as streamlining the procedure, detecting faults in a budget, and many others. Analysts should be conversant with all these fields so as to facilitate an effective budget analysis. Works Cited Budlender, Debbie, Rhonda Sharp, and Allen Kerri. How to Do a Gender-Sensitive Budget Analysis: Contemporary Research and Practice. Sydney: Australian Agency for International Development, 1997. Print.