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Published by: Shafia Ahmad on Oct 13, 2010
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10/13/2010

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Budgeting

is the process of planning and controlling the utilization of assets in

business activities. It is a formal, comprehensive process which covers every detail of sales, operations, and finance, thereby providing management with performance guidelines. A budget is a comprehensive, formal plan that estimates the probable expenditures and income for an organization over a specific period. Budgeting describes the overall process of preparing and using a budget. Since budgets are such valuable tools for planning and control of finances, budgeting affects nearly every type of organization from governments

and large corporations to small businesses as well as families and individuals. A small business generally engages in budgeting to determine the most efficient and effective strategies for making money and expanding its asset base. Budgeting can help a company use its limited financial and human resources in a manner which best exploits existing business opportunities.Intelligent budgeting incorporates good business judgment in the review and analysis of past trends and data pertinent to the business. This information assists a company in decisions relating to the type of business organization needed, the amount of money to be invested, the type and number of employees to hire, and the marketing strategies required. In budgeting, a company usually devises both long-term and short-term plans to help implement its strategies and to conduct ongoing evaluations of its performance. Although budgeting can be time-consuming and costly for small businesses, it can also provide a variety of benefits, including an increased awareness of costs, a coordination of efforts toward company goals, improved communication, and a framework for performance evaluation. BUDGET PROCESS GOALS ,OBJECTIVES AND TARGETS

1. Align the budget with company strategy 2. Increase the accuracy of forecasting, planning and budgeting 3. Improve company agility with effective budgeting, planning and review 4. Provide better insight to company-wide performance 5. Improve the quality of the budget process

Inter-departmental sales are often made using "transfer prices".e. b) Expense centres -Units where inputs are measured in monetary terms but outputs are not.INVOLVING THE RESPONSIBILITY CENTERS These enable managers to monitor organisational functions. c) Profit centres. ROI. There are four types of responsibility centres: a) Revenue centres -Organisational units in which outputs are measured in monetary terms but are not directly compared to input costs.Where performance is measured by the difference between revenues (outputs) and expenditure (inputs). A responsibility centre can be defined as any functional unit headed by a manager who is responsible for the activities of that unit. ACTIVITY FOR ACTUAL AND PLANNED ALLOCATION ACTIVITY TYPE CATEGORY FOR ACTUAL ALLOCATIONS . i. d) Investment centres -Where outputs are compared with the assets employed in producing them.

TOP-DOWN VS BOTTOM UP APPROACH .

FINANCE SRIKANTH BALACHANDER DIRECTOR-LEGAL AND REGULATORY DIRECTOR. A CEO and CFO Certificate forming part of the Corporate Governance Report confirms the existence of effective internal control systems and procedures in the Company. Company s Internal Assurance Group also conducts periodic assurance review in order to judge the adequacy of internal control systems. The Audit Committee reviews the effectiveness of the internal control system in the Company and also invites the senior management / functional directors to provide an update on their functions from time to time. ensures the regulatory and statutory compliance. The Company deploys a robust system of internal controls that facilitates the accurate and timely compilation of financial statements and management reports.IT JYOTI PAWAR AMRITA GANGOTRA DIRECTORINTERNAL ASSURANCE SHAMILI RAMALINGAM . Chairman and Managing Director SUNIL BHARTI MITTAL CEO(INDIA AND SOUTH ASIA) SANJAY KAPOOR JMD & CEO( INTERNATIONAL BUSINESS CYCLE GROUP) MANOJ KOHLI EXECUTIVE DIRECTOR NETWORK SERVICES EXECUTIVE DIRECTOR. It simultaneously reports to the Audit Committee of the Board.SUPPLY CHAIN S. ASOKAN PRESIDENT ENTERPRISE SERVICES DREW KETTON BUSINESS DIRECTOR-DTH SERVICES AJAI PURI PRESIDENTMOBILE SERVICES ATUL BINDAL PRESIDENT TELEMEDIA SERVICES K SRINIVAS JOAHCHIM HORN EXECUTIVE DIRECTOR-HUMAN RESOURCE KRISH SHANKAR EXECUTIVE DIRECTIR. PricewaterhouseCoopers Private Limited is the internal auditors of the Company. M/s.BHARTI AIRTEL FOLLOWS TOP-DOWN APPROACH The Company s philosophy towards control systems is mindful of leveraging resources towards optimisation while ensuring the protection of its assets. and safeguards investors interest by ensuring highest level of governance and periodical communication with investors. who conducts the audit and submits quarterly reports to the Audit Committee.Chairman and Managing Director of the Company.

It s argued to improve staff motivation Cost centers are grouped together into  decision.g. Profit center management is equivalent to running an independent business because a profit center business unit or department is treated as a distinct entity enabling revenues and expenses to be determined and its profitability to be measured.IDENTIFICATION OF PROFIT CENTERS AND COST CENTERS OF BHARTI AIRTEL A profit center manager is held accountable for both revenues. and therefore. . What this means in terms of managerial responsibilities is that the manager has to drive the sales revenue generating activities which leads to cash inflows and at the same time control the cost (cash outflows) causing activities. profits.  control. Accounting for those expenses 2. The various profit centers which have been identified are: y y y Marketing Manufacturing Measuring Profitability  Contribution margin  Direct profit  Controllable profit  Income before taxes  Net income A Cost Centre is a product. and  responsibility units. This makes the profit center management more challenging than cost centre management. physical place (e. the following are planned:  Which activities are performed from the cost center  Which costs are debited to a product when it uses the activities of the cost center This assists the management in: 1. and costs (expenses). Improving the control and decision making 3. sales department) or person within a business that can be held responsible for certain expenses incurred in the running of that business For each cost center.

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