- A Budget is an estimate of the amount of money to be received and to be spent for a specified purpose in a given time.
- Budgets set a framework for reporting and analysis.
- Budgeting never stands completely alone, but rather flows out of the managerial process of setting objectives and strategies and of building plans. It is especially and intimately related to financial planning.
- While accounting, separate sub-codes to be created for every activity under the main grant code, so that the utilization of the budget can be monitored activity-wise.
While Planning the Financials
- The whole team needs to be involved in budgeting process.
- Objectives of the program along with activity plans must be completed before starting the budgeting process.
- Changes in strategies for the forthcoming year based on the past experience have to be unanimously decided by the team and the budget should be accordingly formulated.
- List out the resources required to achieve these activities and cost them.
- All line items in the budget must flow from planned activities.
- Budget should be as detailed as possible with justifications and break up of costs matched against each activity.
- When budgeting for subsequent years/phase, cost increases due to inflation, exchange rates etc would need to be kept in mind.
- All expenses have to be reviewed against the budget on a monthly basis.
- The project management shall verify the quarterly reports against the budget, analyze causes for variance and take appropriate action.