Effective Budgeting, Planning & Control

Module 1:

Preparing Budgets

The Essentials of Budgeting

• Strategic Planning, Forecasting, Budgeting, and Costing – Defined

• The inter-relationship of Strategic Planning, Forecasting, Budgets and Costing

• The Benefits & Limitations of Budgets and the Essential Features & Conditions Required

• An Evaluation of Various Types of Budgets, e.g.

  • Fixed

  • Variable

  • Zero Based

  • Activity-Based

  • Capital Budget

• The Essential Features of Activity-Based Budgeting

  • Developing the ABB application model

  • Budgeting for Processes rather than Departments

  • Defining Key Cost Drivers

  • Defining Key Activities

  • Development of ABB Cost Standards

  • Developing the Activity-Based Budget

• Preparing The Master Budget using Excel

  • Sales Budgets

  • Production Budgets

  • Cash Budgets

  • Capital Budgets

  • The Master Budget

Forecasting Future Sales, Costs, Exchange Rates, Interest Rates, etc

• Determine the Purpose or Objective of Forecasting

• Methods of Forecasting using Qualitative and Quantitative/Statistical Analysis

• including the Exploratory Data Analysis Tools Available in Excel®

  • Their Use & Limitations

  • Recognizing the Basic Patterns Inherent in Historical Data

  • Time Series Analysis

  • Exponential Smoothing

  • Correlation and Regression Analysis

• Presenting initial forecasts to decision-makers

• Forecasting future Market/Sector developments using Qualitative Analysis – SWOT Analysis and LEPESTE & Co Analysis

• Implementing Forecasts into the Budget

• Considering Hedging Strategies where variables such as Exchange Rates and Interest Rates cannot be forecast accurately

  • Forwards, FRA’s, Futures, Options, and Swaps

Preparing and Implementing Budgets Based on Forecasts

• Preparing the Sales Budget

• Determining the price, credit policy, discount policy, and currency

• Preparing the Production Budget

• Preparing the Cash Budget

• Make finance and investment decisions

• Preparing Capital Budgets

• Use Excel®, to evaluate various Capital Projects using Present

• Value, Future Value, Net Present Value, Internal Rate of Return, Modified Internal Rate of Return and Discounted Payback models

• An Introduction to “What If” and Sensitivity Analysis to evaluate the implications of changes in major factors of production and make strategic decisions

• Implementing Budgets Successfully

• The Conditions Required

• The Management Skills Required

Module 2:

Budget Management & Control

Break-Even Analysis, Sensitivity Analysis, and What-If Analysis

• Break-Even Analysis, Cost Behaviour, and Sensitivity Analysis

  • Identifying Fixed, Variable and Semi-variable costs

  • Identification of the level of sales/profit in order to break even

  • Identification of critical costs

  • Determining resources requirements

  • What if Analysis using Excel and leading software

• Performing “What If” and Sensitivity Analysis to evaluate the implications of changes in major factors of production and consumption on the Cash Budget and Profit & Loss Account

• Identification of key performance indicators for effective and focused decision making

• Recommend various courses of action to manage the implications of “What If” and Sensitivity Analysis.

• Developing Budget Re-Projection and Best Case / Worst Case Scenario Models

  • Planning for contingencies

  • Developing various scenarios

  • Using the Scenario tool in Excel® to explore the variable sets of assumptions while tracking the impact on the base model.

  • Building the financial simulation model using probabilistic (Monte Carlo) simulation

  • Building the financial simulation model using deterministic simulation

Variance Analysis, Reporting, Control, and Decision Making

• Accounting Systems, Accountability and Responsibility Systems

• Essential Elements of a Costing System

• Establishing and Implementing a Costing System

• Undertaking Variance Analysis and Presenting a Variance Report to decision-makers

• Evaluation of the results

• Making Strategic Decisions based on the Variance Report/Business Planning