Cite a minimum of five current References should not be older than unless you are providing a historical overview of the subject peer reviewed sources.
Operating Budget Introduction An operating budget can basically be defined as the upcoming year statement of profit and loss for the various units and divisions of an entity as well as the entity as a whole.
For purposes of identifying variances as well as constant monitoring, an operating budget can be divided into periods usually called quarters.
For various entities in the health care setting, operating budgets are prepared for the following year and consequently discussed for approval by the top management. Effective financial management practices in creating and monitoring an operating budget When it comes to the creation as well as monitoring of a budget, the use of effective financial management practices cannot be overemphasized.
To begin with, the budget construction form must identify all relevant data. An operating budget is best presented as a profit and loss statement projection.
With that in mind, estimates of expenses and revenues future must be prepared. To ease monitoring, Finkler et al.
According to Gapenskian effective operating budget must be created on an annual basis. However, for purposes of effective monitoring of an operating budget, it is important to note that an entity can come up with a number of quarterly or monthly budgets for utilization as the year progresses. An operating budget must also include all the important information including inventory and operating expenses, costs associated with manufacturing as well as sales forecasts.
The inclusion of all this information as well as the categorization of the various items according to Boyd et al. Based on the size of the company or entity, Campbell et al.
To further enhance the effectiveness and completeness of an operating budget, there is need to include not only a profit and loss statement but also an accompanying cash flow statement and balance sheet which acts as supportive documentation.
Grantspring argues that the aspect of team work I the operating budget making process cannot be overemphasized. Participation of every across the board in the formulation, creation as well as monitoring undertakings is a great step towards the enhancement of commitment.
It is also important to note that the formulation of an operating budget should be taken as an ongoing process. On approval of an operating budget, measures should be put in place to begin the process of coming up with the items that shall be utilized in the creation of the next budget.
This includes but is not in any way limited to formulating assumptions and comparisons, collecting relevant data as well as coming up with the relevant goals as well as objectives. Financial management practices least effective in creating and monitoring an operating budget Wilder et al.
He notes that efforts should always be made across the board to ensure that the various long and intermediate term goals are in line with the goals of the operating budget. Another financial management practice that does not augur well with the creation as well as monitoring of an operational budget is the failure to align the operating budget with various assumptions with regard to the size, scope as well as nature of operations to be carried out in future.
Further, the creation of an operating budget according to Gapenski should not be a management only affair.
Monitoring is made easier when the formulation of an operating budget becomes an all inclusive proves.
This essentially locks out other critical contributors to the operating budget i. Broad participation of everybody is encouraged as far as the formulation of an operating budget is concerned so as to enhance commitment towards the realization of the same across the organization.
Conclusion In conclusion, an operating budget apart from being a control means should also be highly responsible and flexible. It should be noted that other documents that can act as supporting documents for an operating budget as far as its creation is concerned include a capital purchase budget, a roster for salaries, a manufacturing budget etc.
Health care Financial Management. Financial management in a managed care environment. Delmar Publishers Finkler, S. Accounting Fundamentals for Health Care Management. Jones and Barlett Publishers, Inc.
The multiple sources of GAAP for healthcare organizations: The Government Accountants Journal, 48 3.Discuss which financial management practices are least effective in creating and monitoring an operating budget. Top Answer Financial management practices least effective in creating and monitoring an operating budget One of the most common.
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While adequate startup funding and an accounting system that. What Financial Management Practice Is Most Effective And Least In Creating And Monitoring An Operating Budget Health Care Budget HCS/ July 27, Professor Michelle Gomillion Health Care Budget Most entities and organization create budgets as a guide for controlling its spending, prediction of profit, and it expenditure as they progress toward a set goal.
A budget is a systematic method of allocating financial, physical, and human resources to achieve strategic goals.
Companies develop budgets in order to monitor progress toward their goals, help. It also highlights the most common least effective financial management practices in creating and monitoring an operation budget.
Most Effective Financial Management Practices in an Operating Budget Creating and monitoring an operating budget needs a careful consideration of so many factors; one of such factors is managing the finances.