You are hired as a consultant to review the operations of a small company with 3 locations. The owner has allocated a budget for each location. If the location requires additional funding, the owner usually requests that the manager submit a budget for request for additional funds in the form of an excel spreadsheet. The owner has a bad feeling that 1 of the locations, which has requested funding 3 times more frequently than the other 2, is inflating the budget that he sends over. As a consultant, what steps might you take to review this assumption and to help the owner understand what might be going on? Are there ways to utilize accounting software, such as Excel, to spot any issues in general, or even in the spreadsheet that the owner receives? Be sure to note your source and in-text citations in APA format. 2- Budgeting allows for a company to set parameters for operations during a specific time period. There are many uses for a budget within a company or department. Provide examples of how a budget might be used in business and how decision making is affected by the use of a budget. Be sure to note your source and in-text citations in APA format.

Budget preparation

For a majority of businesses, budget preparation is part of the financial scheme created during the planning phase for the industry and is typically incorporated in the business plan as part of the strategic steps essential in running a business. The business budget is significant as it allows a manager or the owner to evaluate whether or not the business idea is viable and also gives the chance to scrutinize the existing financial situation. In some cases, the budget of a particular organization is likely to outweigh the rest due to the following reasons;

Q1 Steps in Reviewing Budget Inflation

Firstly, in creating a budget, there is the need to identify the goals of the business that is likely to vary from one organization to the other. The company will have to evaluate the factors that need to be accomplished within the industry that may require more finances and inflated budget. The second step is through looking into what the institution has including the income statements, the balance sheet, existing debts, and the projection of the cash flow. The third step is to look into the costs and get to understand the value associated with the goals of the business where some goals might require a significant amount of money for them to be accomplished (Schick, 2015). Spotting issues within the budgeting procedure require the use of accounting software rather than the excel as it allows the manager to acquire most of the reports needed with just a few clicks thus no need to wait for a whole month. It is also useful in real-time reports and budgets making them easy to monitor and share together with sales tax returns that are completed in few minutes.

Q2 Budget in Decision Making

As observed by Okogu, (2011), budgets are important in enhancing the laid down strategies as it will indicate the things that the business are involved. The basis of any budget ought to be the total income; thus, if one misses his or her income targets and have to cut back on the expenditures, this is an indication that smarter moves need to be introduced on the specific focus for the finances.

References

Okogu, B. (2011). Budget process, implementation and challenges. Presentation to: Public Service Institute of Nigeria, Abuja.

Schick, A. (2015). The road to PPB: The stages of budget reform. In Public Budgeting (pp. 39-56). Routledge.