Budgeting: A Tool for Strategic Growth

DURATION: 2 DAYS

Delivery Options:

  • In-House
  • Open

Course Objective

Imagine a world where we do things (including spending) irrationally without a strong WHY and not having a need for it. People who act this way may end up in regrets.  Budgeting is a tool everyone must be familiar with as it helps to put us in check and push us to achieve our aims. It is the financial aspect of personal and business goal setting. Budgeting to meet organizational goals is similar to that of personal goals but an organizational budget requires the application of some techniques not found in personal budgets.

This budgeting masterclass will provide participants with the knowledge, tools and techniques required to design effectively a budgeting process from linking budgets to strategic objective of an organisation to preparing all types of budgets, monitoring, controlling and measuring actual results with budgets.

Expected Learning Outcomes:

At the end of this programme, participants will able to:

  • Explain the planning and control cycle of an organisation
  • Explain the link between budget and strategy of an organisation
  • Identify key economic variables that may affect the performance of a budget
  • Explain the different cost types and cost behavioral patterns to be considered in preparing a budget
  • Identify and explain the different types and styles of budgeting that exist
  • Choose a suitable approach to budgeting for any organisation
  • Use different tools to test the performance of a budget based on the assumptions used in preparing the budget
  • Content Overview

    Module 1: Introduction to the budgetary control system   

    • Planning and Control in the Performance Hierarchy
    • Planning and control cycle
    • Budget as an operational planning tool
    • Aligning budget with the strategy of the organisation
    • Planning pitfalls

     

    Module 2: Macro-economic analysis in budgeting  

    • Environmental and Industry Analysis
    • Key economic variables to consider in preparing budgets

     

    Module 3: Cost Analysis Techniques  

    • Cost Behaviour and Activities
    • Fixed and Variable Costs, Direct and Indirect Costs
    • Product Costs and Period Costs
    • Cost Allocation and Absorption of Overheads
    • Absorption or Full Costing
    • Marginal Costing
    • Cost-Volume-Profit (CVP) and ‘what-if’ analysis using Excel
    • Activity Based Costing (ABC) and Activity Based Management (ABM)

    Module 4: Budgeting Process, types and approaches

    • Purposes of Budgeting
    • Stages in the Budget Preparation Process
    • Parties involved in a budget preparation
    • Identifying the principal budget factor
    • Types of Budget
    • Approaches to Budgeting and appropriateness of each approach
    • Incremental budgeting
    • Zero based budgeting
    • Flexible budgeting
    • Kaizen budgeting and continuous improvement
    • Activity based budgeting
    • Beyond Budgeting

     

    Module 5: Using flexible budget to improve sustainability measures

     

    Module 6: Cost Control  

    • Budget as a control tool
    • The control process
    • Responsibility accounting
      • Budgetary control to measure organizational and management performance
    • Variance Analysis
      • Identifying the reasons for variances
      • Taking corrective actions

    Module 7: Capital Budgeting and Project Appraisal

    • Time Value of Money
    • Identifying and analysing cash flows
    • Discounted cash flow
    • Capital Project Appraisal techniques
      • Accounting Rate of Return (ARR); payback; Net Present Value (NPV); Internal Rate of Return (IRR); Modified Internal Rate of Return (MIRR);
    • Sensitivity and Risk Analysis

     

    CASES: A sample company’s budget template will be used in class as a practical illustration of how participants should prepare their departmental budgets.

     

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