Amuyan Eddie Jr. P.

Government Accounting
August 28, 2021

THE BUDGETING PROCESS

The budgeting process is the process of putting a budget in place. This process involves
planning, forecasting, implementing, monitoring, controlling, and finally evaluating the
performance of the budget.

WHAT IS THE CONCEPT OF BUDGETTING?

For me, budgeting is a proper allocation of resources for expenditures of an organization or

business. It’s a plan on spending the money. This spending plan is called a budget. Creati this
spending plan allows you to determine in advance whether you will have enough money to do
the things you need to do. Budgeting is simply balancing the expenses with your income or
resources.

PLANNING A BUDGET

On planning a budget, you need to consider the amount of resources you have, how can you
plan without any resources. Know the needs of an organization or business, properly allocate
the resources to meet the needs of your business. Budgeting has a big role on financial
decision of business. For example, a business wants to buy a new equipment for cooking, on
budgeting it can track down how much available resources do the business have. Can the
business afford a new one or a second-hand equipment? It always depends on the budget
that’s why we need to plan the budget.

FORECASTING

Used to determine how the business should allocate their budget for future project. It
estimates a business future outcome. Forecast are reports that provide a clearer indication of
where the business is actually heading and where it’s reaching its budgetary goals and
ambition.

Monitoring

Budget monitoring is an on-going process by which the management ensures the

development/improvement plan is achieved. There’s a regular monitoring of activity in a
particular project to ensure that the budget allocated is properly consumed. For example, in a
construction company the construction worker is observed regularly to check if they were
really working. Workers prolong the time of work to earn much more money if they know that
the basis of salary is daily.
CONTROLLING

It’s a financial jargon for managing income and expenditure. In practice it means regularly
comparing actual income or expenditure to identify whether or not corrective action is
required. Control in budget helps the manager ensures that spending limits are adequate. This
control is important because spending excesses is important.

EVALUATING THE PERFORMANCE OF BUDGET

On evaluating the performance, you need to compare the actual to the planned budget. Upon
evaluation you will be able to determine if the project where you allocated the budget
performed well or you need to make an adjustment for improvement.