Concept of Budget
 Budget is the statement or description of income
Budget in Health
Dr. Md. Nazmul Hassan Refat
MBBS, MPH (Health Service Management and Policy)
National Institute of Preventive and Social Medicine (NIPSOM)
Mohakhali, Dhaka-1212
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Purpose of Budget
 Budget helps to formulate planning of actual
operations by forcing managers considering probable
change in the conditions.
 It shows the steps to be taken now and encourages
managers to consider the problems before they arise.
 It also co-ordinates the activities of the organization
by compelling managers to examine relationships
between their own operation and those of other
departments.
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and expenditure to carry out all planned activities
for a given period.
 A budget is a financial plan and a list of all planned
expenses and revenues. It is a plan for saving,
borrowing and spending.
 A budget is an important concept in
microeconomics to illustrate the trade-offs
between two or more goods.
 In other terms, a budget is an organizational plan
stated in monetary terms.
Purpose of Budget
 Budget provide a forecast of revenues and
expenditures, that construct a model of how
business or activities might perform financially if
certain strategies, events and plans are carried out.
 It enables the actual financial operation of the
business to be measured against the forecast.
 It establishes the cost constraints for a project /
program or operation.
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 Objectives of Budget
 To control and allocate resources efficiently.
 To achieve maximum benefits by using minimum
resources.
 To communicate plans to various responsibility
center managers.
 To motivate managers to strive to achieve budget
goals.
 To evaluate the performance of managers.
 To provide visibility into the company's
performance.
Objectives of Budget
 To formulate economic policy.
 To ensure coordination among all economic
activities.
 To establish accountability & responsibility among
all workers of the state.
 To evaluate progress of all economic programs
and activities.
 To ensure welfare of all segments of citizen of the
country.

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Classification of Budget Types of Budget

 According to Source of Fund

 According to user  Revenue Budget
 Corporate budget  Development Budget
 Event management budget  According to Income Equilibrium
 Government budget  Balanced Budget
 Personal or Family budget  Surplus Budget
 Deficit Budget

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Types of Budget
Line item budget:
 The typical spreadsheet budget where each
estimated item gets a line and an amount.
 An example is “passive” budget, where
actual expenditures might be compared to
budgeted amounts weekly or monthly, but
always after the expense already occurs.
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Types of Budget
Percentage budget:
 A favorite among those who enjoy rules of
thumb, the percentage budget assigns
amounts for expenses based on a
percentage of income.
 One example of such a budget might call
for: 5% “housing,” 15% “transportation,” and
20% “savings.”
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Types of Budget
Envelope (zero-sum) budget:
 Zero-sum budgeting is an “active” process
that works by assigning income to various
virtual “containers.”
 Money is spent from these containers with a
theoretical $0 limit, which makes it difficult to
go over-budget in any particular category.
 Saving for irregular expenses and short-term
goals is also easier to grasp with this kind of
budget.
Types of Budget
Cash budget:
 A lot of people still like using cash for most
purchases for the direct connection, It
provides to spending / actual / money on
something.
 One of the problems with this system is
how easy it is to lose track of what amounts
should to be allotted to what needs.
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 Types of Budget Types of Budget

Capital budget:
Event budget:
 This is something that companies often use
 Each “event” has multiple expenses
to plan their long-term investments and
associated with it – both required and
expenses.
optional, large and small.
 This is a great example of long-term
 Mini-budget every time you plan for a
“capital” planning.
vacation, a new baby, buying a house, or
moving .

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Types of Budget Budget Formulation

Category budget:  Usually budget is formulated by
 You might find that a complicated or government.
problematic category needs additional detail.  The national budget is usually formulated
 One example is the “subscription” category, by the Ministry of Finance.
where we
 Budget for 5-10 sub-categories and are  In Bangladesh, the national budget is
able to spot changes or produced by the Ministry of Finance and
 Make decisions about trimming unneeded presented at National Assembly following
services. Article No 87.
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 Budget Preparation
 The budget should contain a narrative
explaining how you decided on the amount of
the reserve and a description of the expected
financial results of business activities.
 The assets should be valued with each and
every cost.
 All other expenses like labor factory
overhead and all freshmen expenses are also
included into business budgeting.
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Preparation of Revenue Budget
 The Ministry of Finance prepare a
budget calendar for budget formulation
 Draft budget is formulated and sent to
concerned government offices at district
and upazila level in the month of
October
 Feedbacks are collected and accordingly
modifications are done
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Steps in Budget Preparation
 Preparation of draft budget
 Approval of draft budget
 Budget: implementation,
maintenance and accounting
 Evaluation of budget formulation
and implementation or Auditing
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Preparation of Revenue Budget
 Draft budget is presented at National
Assembly and finalized after discussion
in details
 After then, the Ministry of Finance print
and publish the final national annual
budget
 Finally the budget is disseminated and
distributed to different ministries
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 Sections of Budget
 The national annual budget contains three
sections
 Description or statement of income and
expenditures of previous year
 Corrected or modified statement of income
and expenditures of current year
 Proposed statement of income
expenditures of coming year
 General expenditures and specific (charged)
expenditures are shown separately
Annual Development Budget
(ADB)
 Annual development budget is
regarded as development budget and it
includes:
 Development budget in public sector
 Private sector budget
and
 Foreign exchange budget
 Food budget
 Foreign business budget
 Budget in inflation
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Budget of Organization Budget of Organization

 Objectives
 The budget of a company / organization is
often compiled annually
 A finished budget, usually requires considerable
effort, a plan for the short-term future, typically
one budget year
 Traditionally the Finance department compiles
the company's budget, modern software allows
various departments (operations, human
resources, IT etc.) to list their expected
revenues and expenses in the final budget.
 To assist in planning to achieve goals and
objectives of the organization
 To state the long term and short term goals of the
organization numerically
 To ensure coordination among different wings and
activities of the organization
 To execute control over the expenditures and
minimization of expenditures of the activities
 To ensure rational allocation and utilization of
resources in order to reduce its wastage

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Types of Organizational Budget
 Types
 Recurrent budget: Budget
expenditures for purchasing daily activities
 Capital budget: Budget for expenditure for
purchasing capital goods
 Revised budget: Reallocation or re-budget
as per need and situation
 Supplementary budget: Budget for the
activities newly incorporated as
supplementary to ongoing activities
Steps of Organizational Budget
 Budget officer / finances officer formulate draft
annual budget
for  Administrative officer can also formulate budget if
there is no designated person for it
 Income and expenditure, sales, purchase and
services provided in previous year and future
demands are evaluated in budget formulation
 The draft budget is finalized in the board meeting of
executives of the organization
 Finally the budget is approved and disseminated
through annual conference/AG
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THANK YOU

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