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Unit Chcadmin4b

Budgets are necessary for managers to plan and track financial goals to ensure organizational success. The budgeting process should include participation from employees to gain insights into costs and resource needs. Managers must regularly monitor performance against budgets and take corrective actions if needed to address variations and ensure proper use of resources.

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86 views2 pages

Unit Chcadmin4b

Budgets are necessary for managers to plan and track financial goals to ensure organizational success. The budgeting process should include participation from employees to gain insights into costs and resource needs. Managers must regularly monitor performance against budgets and take corrective actions if needed to address variations and ensure proper use of resources.

Uploaded by

Casey Elizabeth
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Written/oral Questions:

1. Why are budgets necessary?


Managers are responsible for goal setting, supervising, planning, organising and leading the
workplace. Budgets assist this process by providing a structured outline based on the
financial management of the business, which also backs up employee productivity and
waste management. Budgets ensure that organisations are on track to meet their financial
goals, and in turn, predict the long term success of the organisation.

2. Why should budgeting processes be participatory?


Traditionally, budgets where formed in the one-way or top-down mode of communication
of information. A more modern approach to communica te valid information is the two-way
or transactional mode, which is when a manager encourages participation from an
employee in a dialogue. By ensuring that the budgeting process uses the transactional mode
of communication to gather and distribute information , the manager will gain an insight into
client needs, peak hours of demand and resource shortages that they may have been
otherwise unaware of. This will ensure that the manager takes into account all running
costs, and that the budget is adequately resourced at all times.

3. What are some of the different types of budget that might be used in a community
services organisation?
The types of budgets that may be put to use are Revenue budgets, Expense budgets, Profit
budgets (generally not used for not -for-profit organisations, as they are not concerned with
profit margins), Cash budgets, Capital Expenditure budgets.

4. Why is it necessary to monitor financial performance and reconcile performance


against operational budgets?
Budgets need to be assessed on a regular basis to ensure the projected expenditure is
directly correlated with actual expenditure. There are risks that need to be addressed if
organisational expenditure is significantly lower or higher than what was projected at the
beginning of the financial year. If ex penditure is lower, it can indicate that the business may
be cutting corners to save money. This can be a negative thing because it may indicate that
customers are not receiving the service for which they pay for, and will go elsewhere. If
expenditure is significantly higher, it may indicate that the organisation is over spending,
which could mean that either the budget is not appropriate, or waste needs to be reduced.
It may also indicate that invoices are not being paid.

5. Why are contingency plans necessary and how might they be developed?
Contingency plans are developed to address any change of plan within your business. They
should assist management to rectify this change. Contingency plans should be developed by
pre-empting any possible issues that you may encounter by asking what if questions about
the business, and putting in place measures to address these problems if they arise. This
may include, but not be limited to;
- Ensuring all insurance policies are up to date in case they need to be claimed
- Installing cameras to avoid staff and client pilfering
- Having back up suppliers in the chance of your current supplier being unable to meet
your expectations

6. What actions might be taken by managers/supervisors if there are variations


between budgets and the actual performance of the organisation?
If revenue or expenditure is lower or higher than expected after any acceptable leeway is
considered, the appropriate parties must be informed. This may result in corrective action.
The parties that it may be necessary to report to include:
- The management team and/or the CEO
- The board or committee of management
- Funding providers if relevant
Where it in necessary for corrective action to be taken, staff need to be informed to give
them the opportunity to modify their p ractices. Some of the corrective actions that may be
taken include disciplinary action, training and education, sourcing new resources, expanding
client base, assessing the feasibility of particular programs, and provide staff with KPI͛s.

7. What are some of the tools that might be used to monitor costs and revenue in a
community service organisation?
Management needs to ensure that staffs are aware of their importance when meeting costs
within the organisation. You may need to set up a meeting with staff to discuss the budget
and the measures they can take to ensure that expenditure is being met, and the
ramifications for the business if these benchmarks are not matched. Some measures that
can be put in place to ensure that resources and expenditure are being met is by putting
into place KPI͛s (Key Performance Indicators) by doing this you can ensure that both input
and output standards are being upheld and offer bonuses to staff who achieve their KPI͛s.
You can also track the movement of stock to ensure you know that it is being used
efficiently, this can be done through log books, through which you ask staff to sing in and
out supplies as they are used.

8. Why is it important to find the most competitive prices for products/services?


Essentially, lower input costs equal higher profitability. As long as the products that you are
sourcing meet your standards of requ irements, the lower you can find these products the
higher the profit margin, leaving more room in the budget to invest money, improve and
update equipment, or reward employees.

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