The paper "Avoiding Surplus Budget at the End of the Financial Year" is an outstanding example of a case study on finance and accounting. The primary aim of the memo is to inform you not to employ the use it or lose it strategy in spending end year budget surplus. The memo provides logical reasons for avoiding use it or lose its strategy and alternative approaches to avoiding surplus budget at the end of the financial year. Rationale For Against Use or Lose It Approach In modern economic setup, strain in prominent organizations’ budgets directly affects the living standards of the State’ s citizens.
An organization must define its fiscal plans based on economic status to avoid overspending. Overspending by prominent organizations has greater adverse impacts on citizens who normally remit taxes to the government. It is imperative for influential organizations’ budgetary managers to avoid the end of the financial year overspending mainly to prevent potential increase taxes. Use it or lose it strategy has adverse effects on the development of the organization. Spending excess money from end year budget consumes an organization's finances which may make it bankrupt or derail its development objectives.
It is essential that budget managers enroll surplus budget to the next fiscal year rather than spend it on non-profitable projects (Shim, Siegel, and Shim, 2012). Moreover, you as budget managers should avoid the approach of use it or lose it to discourage corruption scandals. Spending an organizations’ money on unplanned projects at the end of the budget year correlates to poor financial management and consequent corruption issues. It is imperative to avoid the use it or use the method mainly to maintain good public image and policy. Alternative solution By avoiding the use of it or lose its problems at the end of the financial year, you should remain effective leaders as budget managers.
The most essential alternative would first involve distributing leadership within each budget line in the organization. Allocating responsibility would be indispensable in defining budgetary aims and assigning specific personnel in managing specific contacts, costs, and estimates within a department. Each department within the organization would have the ability to update its budget and reflect necessary changes.
It is imperative that the budget process remains a responsibility for more than an individual within the organization ( Schick, 2014). It is imperative to centralize reporting from different departments. The submission of budget reports from various sections of the organization is crucial in tracking potential overturns or shortfalls. Earlier identification of problems within the budget plan would be essential in ensuring appropriate spending. Consequently, the organization would have the capability of avoiding wasteful spending (Pinczuk, and Dunham-Taylor, 2010). Budgeting tools including databases for budget excel, and other platforms are indispensable.
The use of excel helps in analyzing static data involved in the budget. In addition, excel would allow you as a budget manager to easily manipulate data, share financial information, and identify problems through statistical analysis. It is essential that budget managers associate with other budgetary collaborative platforms. Business collaboration platforms are imperative in sharing budget management issues, publishing reports, and creating dashboards without investment in separate budgetary tools (Ré ka, Ştefan, and Daniel, 2014). In successful organizations, budgetary estimates frequently improve in progression.
Improved fiscal projections over the years are crucial for the development of the organization though it requires budget managers to remain confident. In addition, confidence in budget management is imperative in the avoidance of anticipated problems. Therefore, it remains prudent for managers to embrace confidence during budgetary entry. Confidence would enable budget managers to understand that particular views would remain realized according to plan and consequently allow them to make informed allocation decisions.