Performance budget, Financial Management

Assignment Help:

Performance budget: it involves evaluation of the performance of the organization in the context of both overall and specific objectives of the organization. As per the National Institute of Bank Management, performance budgeting is the procedure of identifying, analyzing, simplifying and crystallizing particular performance objectives of a job to be achieved over a period in the frame work of the organizational objectives, the idea and the objectives of the job. Performance budgeting needs preparation of performance reports which compare the actual data and budget and demonstrate the variances existing between both. The responsibility for preparing these reports lies with the respective departmental head.  Every departmental head will be supplied with a copy of the section of the master budget suitable to his sphere.  This report may be prepared regularly, every week, month or any basis based on the size of business and the budget period.  The reason of submitting these reports is to convey promptly the information about the deviations in actual and budgeted activity to the decision makers so that necessary corrective actions can be taken to correct the deviations.

Several ADVANTAGES of Performance budgeting is as follows:

  • It aims at constant growth of the organization in the long run.
  • It facilitates the organization to be sensitive and adaptive, preventing it from developing rigidities, which may retard the process of growth.
  • It aids performance appraisal

Fundamentals for a successful adoption of Performance budgeting are:

  • It necessitates preparation of periodic performance reports.

       • The accounting system should be suitably detailed and co-ordinate to offer necessary data for reports designed for the particular use of the individual or cost centers having primary responsibility for specific costs.


Related Discussions:- Performance budget

What is corporate social responsibility, (a) The term "financial reporting"...

(a) The term "financial reporting" incorporates not only financial statements, but also includes other means of communicating financial and non-financial information. Financial rep

How to determine the valuation of an investment bank, My company paid an ex...

My company paid an extremely high price for the acquisition of another company; the price was recommended by the valuation of an investment bank. We now have financial crisis. Is t

Senior versus subordinate bonds, This is again a distinction which be...

This is again a distinction which becomes important in case of a default. The senior bondholders have to be paid before the subordinate bondholders. This means th

Social responsibility-business ethics-business entity, Social responsibilit...

Social responsibility The firm must decide whether to operate strictly in their shareholders' best interests or be responsible to their employers, their customers, and the soc

Analysis of collaterals, If normal operating revenues are inadequate ...

If normal operating revenues are inadequate to repay the debt, liquidation of collateral may be necessary. Corporate bonds can be either secured or unsecured by c

Describe about accountants report, Q. Describe about Accountants Report? ...

Q. Describe about Accountants Report? Accountants' Report - Formal document which communicates an independent accountant's: (1) expression of limited assurance on FINANCIA

What is the requirement of working capital, Q. What is the requirement of W...

Q. What is the requirement of Working Capital? Ans. Meaning of Working Capital: - Working capital management is a significant aspect of financial management. In business money

Explain the procedure for cost benefit analysis, Question 1: i) Pe...

Question 1: i) Performance budgeting is the best budgeting system. Discuss. ii) Why there is a need for implementing MTEF in the Mauritian Public Sector? Questi

Net present value, What is Net Present Value? Describe please.

What is Net Present Value? Describe please.

Explain capital investment project appraisal, Question: (a) The future ...

Question: (a) The future value (F) of a sum invested now can be calculated using the formula: F = P(1 + r) n Required: (i) Describe each of the other constituents in the

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd