Assessment Task 2: Budgeting and cost analysis Task description This task requires you to examine a selected budget process and to consider the effectiveness of the budget process as a mechanism for...

Budgeting Process – A report on Annual Plan of West Coast Council
Table of Contents
Executive Summary    3
An introduction to budgets-    4
Objectives and Importance of budgets:    4
Key Steps involved in developing, implementing and managing budget in an organization-    5
1.    Planning on a Strategic Level    5
2.    Goals of the business:    5
3.    Projections of the estimated revenues:    5
4.    Projecting Variable Expenses:    6
5.    Estimating Fixed Costs:    6
6.    Budget Discussions:    6
7.    Board Approval:    7
8.    Budget Review and Performance Measurement:    7
9.    Dealing with Budget Variances:    7
Few Considerations for preparing budgets:    7
Sources of budget Information:    9
Limitations and Loopholes in the budgeting process-    10
Improvements and Recommendations:    11
Conclusion    12
References    13
Executive Summary
Budgeting involves a deal of efforts. Budgets are the central knot in an organization round which all of the tasks and procedures of the organization revolve. Budgets are the guiding force that binds the freedom that the staff may enjoy and let them know what performance is expected out of them. It is just like the immediate aim in the direction of which the whole organization seems to be running. Budget is a crucial part of the whole financial management system and thus due importance is given by the management to this whole exercise.
This report is about West Coast Council Annual Plan and Budget Estimates for the Financial year 2017/2018. The vision of the council as highlighted in the report discussed about improving and providing a quality lifestyle to people that supports sustainable development and management of natural resources in a great manner.
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An introduction to budgets-
Financial Management of an entity requires the tasks to be performed such as planning, financing, utilization, analyzing, and reporting. All these processes revolve around a central process which is budgeting. Budgeting as the name suggests is the process of preparing, implementing, analyzing, rectifying budgets in the organization so that all of the business process are aligned together a common direction of achieving overall objective of the organization.
Objectives and Importance of budgets:
· Setting up fiscal targets for the year or month or quarter: Depending on the time frame for which the budget is being prepared, it provides targets for various employees, teams and departments. The people in the entity work based on the targets they have been assigned to do and budgets are the base on which the targets for the performance are set.
· Acts as a measure for performance measurement: Once budgets are successfully implemented in the organization and the people start following them, they also start serving as the performance benchmarks for the teams and staff in the entity. The under performers can be held responsible and appropriate action can be taken against them and the over performers can be given incentives.
· Acts as a guiding force and provides direction: The organization would be clueless without a budget. Budgets provide a scope within which the expenses can be incurred and allocated during the fiscal year. If there are no budgets people would start incurring expense randomly and would be a situation of great trouble.
Key Steps involved in developing, implementing and managing budget in an organization-
1. Planning on a Strategic Level: The West Coast Council is required by Local Government Act 1993 to frame a strategic plan for a period of 10 years which should be in consultation with the community. No budgetary processes can begin in such entity until there is a clearly laid down long term object of the organization. Great budgeting procedures can help create and propel an entity, while messy planning and checking of budget plans can catch off-guard an entity and influence its long-term monetary wellbeing and reasonability.
2. Goals of the business: Consistent with the planning done at strategic level, West Coast Council is also required to prepare an annual plan. Once the overall object of the entity is known next is to lay down the short term goals of the business. These goals are to be achieved keeping in mind the budgets which will be formed.
3. Projections of the estimated revenues: Based on how the business has performed in past and the future prospects of the business the revenues of business for future are estimated. Budgets are prepared based on the future estimated revenues that the business is able to generate. Further based on the goals that the firm has set in the previous step new standards for the sales can be set. For e.g., West coast council had reported revenues of $8101656 in 2016/17. Having regarded to the applicable market scenarios the council expects the revenues to be $10611471 in 2017/18. In the appendices attached to the annual plan of the council, the council has laid down the various rates and charges which will be made applicable to the services receivers. Based on the services that the council has provided in the past, it could estimate the services that it will be able to provide in the upcoming year. This is the reason it is basic to recognize who the clients are, discover what they need and spending dollars to set up frameworks and procedures to address their issues and surpass their desires.
4. Projecting Variable Expenses: These are the expenses which are directly related to the sales of the entity. If the revenue increase, these expenses also increase and vice versa. Now, when the sales have been budgeted and an significant increase in...