STRUCTURE

It will be your blueprint

It will (should) dictate how you proceed with

most every decision while making the project.

In budget structure you need to know the

documents inside and out - backwards and

forwards.

Multi-Level Budget
Structures

In the area of master data, hierarchies describe

how a public sector organization views the
following relationships:
Of its own internal organization
How the nature of expenditure is structured
How the pyramid of goals is defined

Multi-Level Budget
Structures
Inbudgeting,

the

hierarchy

defines

the

permissible account assignments.

In the case ofpostings, hierarchies control the

permissible account assignments also.

Forreporting, hierarchies enable users to look at

the data from many different viewpoints.

Forauthorizations, hierarchies explain how an

area of responsibility is formed.

STR
U

CTU

RE

consist of one to four

budget
levels
that
correspond to increasingly
more detailed levels of
budgeting in the structure.

Budget Level
It is a part of a budget structure.

An example of a typical appropriation

established under the GAA and setup in the
Central Subsidiary Expense structure, is
made up of three levels:

Level 1: BFY, Appropriation, Fund, Sub Fund

Level 2: BFY, Appropriation, Fund, Sub Fund,

Department
Level 3: BFY, Appropriation, Fund, Sub Fund,
Department, Object Class

The Importance
of

Communication of
corporate objectives
Budget is a formal process

of communicating top
management expectations
(vertically and laterally).
Employees become aware

of their roles in
achievement of overall
company objectives.

Enhances systematic and

logical planning.
Ensures that short-term plans are

consistent with long-term plans.

Managers are compelled to think

ahead and anticipate future

challenges.
Continuous improvement by

eliminating non- value adding

activities.

Coordination

Budget ensures goal congruence, promotes

teamwork, and eliminates overlapping of

activities.
Functional activities are harmonized through

the Master budget (r/m purchases and

production requirements, production and sales
volumes, cash inflows and outflows).

Clarification of Authority and

Responsibility.
Managers get to know their

limits as authority to commit

is established.
Departmental heads and

individuals take responsibility

for achieving their budget.

Control
Ensures that plans are complied

with and deviations are noted

and investigated (variance
analysis).
A company reaps the benefits of

central control and at the same

time, the benefits of delegation.
Serves as a basis for revision of

policies.

Performance evaluation.
Serves as a yardstick for

measuring and assessing actual

performance.
Decisions on promotion,

recognition, and punishment are

usually based of budget
achievement.
A manager can do self appraisal.

Motivation.

Active participation in setting the budget

motivates employees towards achieving the

budget.
Employees are motivated when their personal

interests are closely associated with budget.

Resource Allocation
Scarce resources are

optimally allocated to the

most profitable areas.
This would be in terms of

human resource, raw

materials, equipments,
money, time and all other
attributes.