BUDGETING

INTRODUCTION
 Budgeting of school or college should be separate
.i.e. Principal in charge of the school of nursing
should be the drawing and disbursing officer and
empowered to a plan for operating the funds in all
different heads.
 The budget for the school/college is annually
planned by the nursing director, principal and
general manager and approved by the managing
director.
 HISTORY
 Budget word was first coined by
the British Kings in early days from
the word ‘BOUGETTE’.
 The important milestones were: –
1215 AD: constitutional exposure
1718 AD: consolidated fund act passed which
considered budget as financial statement of Govt
activities for facilitating accountability of public
fund.
1882 AD: Budget entered the parliament for first
time seeking advice.
 MEANING
 The word “budget” derived from the
old English word “budgettee”
means a ‘sack’or ‘pouch’which the
chancellor of the exchequer used to
take out his papers for laying before the
parliament, the government, financial scheme for
the ensuing year.
 Literally the word “budget” means a Leather bag
or sachet to carry official papers in.
 Now the term “budget” refers to the financial
papers, certainly not the sack.
 DEFINITION
 An estimate of income and
expenditure for a set period
of time.-Oxford Dictionary
 “Budget is a concrete precise picture of the total
operation of an enterprise in monetary terms”.-
HM Donovan.
 “Budget is an operational plan, for definite period
usually a year. Expressed in financial terms and
based on expected income and expenditure”.
 PURPOSES
OF
BUDGETING
 PURPOSES OF BUDGETING
 Budget supplies the mechanism for translating fiscal
objective into projected monthly spending pattern.
 It enhances fiscal planning and decision-making.
 It clearly recognizes controllable cost areas.
 It offers a useful format for communicating fiscal
objectives.
 It allows feedback of the utilization of budget.
 It helps to identify problem areas and facilitates
effective solution.
 PURPOSES OF BUDGETING
 It also helps co-ordinate the activities of the
organization by compelling managers to examine
relationships between their own operation and
those of other departments.
 To control resources
 To communicate plans to various responsibility
center managers.
 To motivate managers to strive to achieve budget
goals.
 To evaluate the performance of managers
PURPOSES OF BUDGETING
 To provide means for measuring and recording
financial success with the objectives of the
organizations.
 For accountability
 To provide visibility into the company's
performance
PREREQUISITES
TO
BUDGETING
PREREQUISITES TO BUDGETING
 The following conditions are necessary for the
development and implementation of a budgetary
programme:
Organizational Structure:-There is a need for a sound
organizational structure with clear lines of the authority
and responsibility.
. All the employees know their responsibilities and the
person to whom they are responsible; they have the
authority to do what they are responsible for and are held
accountable for their actions.
PREREQUISITES TO BUDGETING
. Organisation charts and job descriptions are available,
and goals and objectives are set for areas of
responsibilities. Budgets are then developed to confirm
to the pattern of authority and responsibility.
Nonmonetary statistical data:-
. Such as number of admissions, average length of stay,
percentage of occupancy, and number of patient days-
are used for planning and control of the budget process.
Someone must be responsible for collecting and
reporting statistical data
PREREQUISITES TO BUDGETING
Charts of accounts:-
. They are designed to be consistent with the
organizational plan.
. Revenues and expenses are reported by responsibility
areas, thus providing historical data that are valuable for
the planning and providing budgetary control for
evaluation as performance can be compared to plans.
. Nurse managers focus their attention on the principle of
management by exception by nothing what is not going
as planned so they can take necessary action.
 PREREQUISITES TO BUDGETING
Managerial support:-
. It is essential for budgetary program. Although budgeting
is done at departmental level , it must be valued by top
administration.
. Managers must be willing to devote their time and energy
to the budgeting process. They are most likely to do that
when they are familiar with the principles of budgeting
and its usefulness for planning and controlling, through
budget education.
PREREQUISITES TO BUDGETING
Formal budgeting policies and
procedure:-
. It should be available in a budget
manual, in which objectives of budgetary
are clarified, and instructions for budget
development are discussed in detail.
. Samples of standardized forms are
available.
. A calendar of budgeting activities with
the schedule for each stage of the
program is presented.
. Procedure for review, revision, and
approval of budgets are discussed in
detail.
FEATURES
OF
BUDGET
 FEATURES OF BUDGET
 It should be flexible.
 It should be synthesis of past, present, and future.
 It should be product of joint venture + cooperation of
executives/ department heads at different levels of
management.
 It should be in the form of statistical standard laid down
in specific numerical terms.
 It should have support of top management throughout the
period of its planning and supplementation.
 It is a plan of program and has comprehensive plan of
action
 It should estimate revenues & expenditures as accurately
as possible
IMPORTANCE
OF
BUDGET
 IMPORTANCE OF BUDGET
 Budget is needed for planning for future course of action
and to have control over all activities in the organization.
 It facilitates coordinating operation of various
departments and sections for realizing organizational
objectives.
 Budget serves as guide for action in the organization.
 Budget helps one to weigh the values and to make
decision when necessary on whether one is of greater
value in the program than the other.
PRINCIPLES
OF
BUDGET
 PRINCIPLES OF BUDGET
 Budget should provide sound financial management by
focusing on requirement of the organization.
 It should focus on objectives and policies of the
organization. It must from objectives and give realistic
expression to the way of realizing such objectives.
 It should ensure the most effective use of scarce
financial and non financial resources.
 It requires that a program activities planned in advance.
 Budgetary process requires consistent delegation for
which fixed duties and responsibilities are required to be
allocated to managers at different level for framing and
executing budget.
 PRINCIPLES OF BUDGET
 It should include coordinating efforts of various
departments establishing a frame of reference for
managerial decisions, and providing a criterion for
evaluating managerial performance.
 Setting budget target, requires an adequate checks and
balance against the adoption of too high or too low
estimate.
 Budget period must be appropriate to the nature of
business or service and to the type of budget.
 Budget is prepared under the direction and supervision
of administrator or financial officer.
 PRINCIPLES OF BUDGET
 Budget are to be prepared and interpreted
consistently throughout the organization in
the communication of planning process.
 It necessitates a review of the performance of
the previous year and an evaluation of its
adequacy both in quality and quantity.
 While developing a budget, the provision
should be made for its flexibility.
 TYPES
OF
BUDGETS
 TYPES OF BUDGETS
1.Operating Budget(Revenues and Expenses):-
. It provides an overview of an agency’s functions
by projecting the planned operations, usually for
the upcoming year.
. The operating table reveals an input and output
analysis of expected revenues and expenses.
. Among the factor that nurse managers might
include in their operating budgets are personnel
salaries, employee benefits, insurance, medical-
surgical supplies, rent, light, housekeeping,
laundry service, drug, fees etc
TYPES OF BUDGETS
1.Operating Budget cont...
 Both controllable and non-
controllable expenses are
projected.
 Controllable expenses are wage level and
quality of materials.
 Indirect expenses such as rent, lighting and
depreciation of equipment, are noncontrollable.
 The operating budget deals primarily with
salaries, supplies, and contractual services.
 TYPES OF BUDGETS
1.Operating Budget cont...
 For a college of nursing, salaries,
supplies(A.V.Aids), lighting, employee benefits,
insurance, inspection fees etc.
2.Capital Expenditure budgets:-
 It is prepared for assuring planned timely capital
investment in the business to ensure the
availability of the capital at the right time over
longer period.
 TYPES OF BUDGETS
2.Capital Expenditure budgets cont....:-
 Or it is used to determine whether an
organization's long-term investments such as
new machinery, replacement machinery, new
products, and research development projects
are worth pursuing.
 It include physical changes such as
replacement or expansion of the plant, major
equipment , and inventories.
 These items are usually major investments and
reduce flexibility in budgeting because it takes
a long time to recover.
 TYPES OF BUDGETS
2.Capital Expenditure budgets cont....
 For instance, a patient may be charged per
treatment or per day for use of equipment, but it
may take many months or even years to recover
the cost of equipment.
 Under this budget, the nurse manager must
establish priorities if request exceed availability of
funds.
 TYPES OF BUDGETS
2.Capital Expenditure budgets cont....
 When filling out request forms for capital items, it
is advisable to include names of manufacturers
and suppliers, trade-in-credits, and estimates of
purchase, delivery, installation and maintenance
cost.
 Written justification of each item should be given.
 For a college of nursing new machinery,
replacement machinery, new products, research
development projects etc.
 TYPES OF BUDGETS
3.Cash Budgets:-
 A prediction of future cash receipts and
expenditures for a particular time period. It usually
covers a period in the short-term future.
 They ensure that the agency has enough, but not
too much, cash on hand during the budgetary
period(This is necessary because income does not
always coincide with expenditure).
 TYPES OF BUDGETS
3.Cash Budgets cont....
 If manager have insufficient cash on hand, they
will not be able to purchase needed resources.
 At the other extreme, if too much cash is available,
interest or other earnings that money could
generate lost.
 Using cash budget, the nurse manager estimates
the amount of money to be collected from clients
and other sources and allocates the cash to the
expenditures.
 TYPES OF BUDGETS
3.Cash Budgets cont....
 If the budget is well planned, it will provide
cash as needed and produce interest on excess
funds.
 A college of nursing should have enough
money to conduct any national or international
workshop, do research work and for supplies.
 TYPES OF BUDGETS
4.Labor, or personal budgets:-
 Personal budgets estimates the cost of direct
labor necessary to meet the agency’s objectives.
 They determine the recruitment, hiring,
assignment, layoff, and discharge of personnel.
 The nurse manager decides on the type of
nursing care necessary to meet the nursing
needs of the estimated patient population.
 The current staffing patterns, number of unfilled
positions, and last year reports can provide a
base for examination and proposals.
 TYPES OF BUDGETS
4.Labor, or personal budgets cont....
 Patients occupancy and the general complexity
of cases affect staffing patterns.
 This budget is also affected by personal policies,
such as salary related to position and number of
days allowed for educational and personal leave.
 In college of nursing recruitment of teachers,
work assigned, their salaries, leave etc.
 TYPES OF BUDGETS
5.Flexible Budgets:-
 Some variable expense are unpredictable and can
be determined only after change has begin : thus
the need for flexible budgets, to show the effects
of changes in volume of business on expense
time.
 Periodic budget reviews help managers
compensate for changes by seeing the
relationship between rise and fall.
 For college of nursing general and administrative
expenses, salaries, academic fees etc.
 TYPES OF
BUDGETS
6.Strategic planning budget:-
 It is a long range budgets for long range planning
are often called the agency’s strategic plan.
 Program budgets are part of strategic plan
focuses on all the benefits and the cost associated
with a particular program.
 For college of nursing, improvement in admission
process, increase research and scholarship
productivity, transform nursing education etc.
STEPS IN BUDGETING
 Review the goals of the agency
or organization to identify activities
of highest priority(because these
are most likely to receive funding.
 Review the objectives of the existing programs
and written for proposed program to ensure that
achievement of these objectives will support
agency.
 Existing programs are revised and proposed
programs designed to ensure that achievement of
these objectives.
 STEPS IN BUDGETING
 Manpower, capital and operating expenses are
computed for each program, old and new.
 Alternative methods are identified for realizing
designated objectives and price of each
alternative is determined.
 Comparisons are made to determine which
alternative is most cost-effective.
 STEPS IN BUDGETING
 A budget request is developed which details a
fiscal plan for the preferred program indicates
alternative methods for meeting the same
objective, and explains why the recommended
program is preferred.
 ADVANTAGES
 Fixed and variable costs and their effect on the
total cost are analyzed.
 Budget plans for detail program activities.
 They state goals for all the units, offer a
standard performance, and stress the continuous
nature of planning and control process.
 It encourage managers to make a careful
analysis of operations and to make decision on
careful consideration.
 ADVANTAGES
 Hasty judgements are minimized.
 Weakness in the organization can be relieved
and corrective measures are taken.
 Staffing, equipment, and supply needs can be
projected and waste minimized.
 Financial matters can be handled in an orderly
fashion, and agency activities can be
coordinated and balance.
 DISADVANTAGES
 Its time consuming and expensive.
 There is danger of over budgeting; the budget
becomes cumbersome, meaningless, and
expensive.
 Forecasting is required but uncertain because
budgetary control is subject to human
judgement, interpretation, and evaluation.
 Skill and experience are required for successful
budgetary control.
 DISADVANTAGES
 The budget may become an end in itself instead
of means to an end.
 It converts all aspects of organizational
performance into monetary value for a single
comparable unit of measurement.
BUDGET FOR ACADEMIC
SESSION FOR A COLLEGE OF
NURSNIG
AM TUTION FEE UNIVERSITY UNIVERSITY
DURATION PER ENROLMENT EXAM FEE
SEMESTER FEE

1. B.Sc. (N) 4yrs 45,000 5,000 4,500

2. Post Basic 2yrs 18,000 5,000 4,500

B.S.c (N)

3. M.Sc (N) all 2yrs 45,000 5,000 8,000

specialities
THANK YOU