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Adding Value Through Budgeting

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Adding Value Through Budgeting

Budgeting is an important part of an organization's overall planning. Through budgeting, each part of an organization's structure can be identified for decision making and control. A reasonable budget can allow an organization to allocate resources and provide a plan and direction for the organization. A budget can also help measure performance and ensure that managers are held accountable for their decisions.

Consider accounting professional experience and knowledge from this week's Resources and/or Optional Resources as you answer the following Discussion questions:

After reading the article "Budgeting Perspectives From the Real World," assess how and why budgeting adds value to an organization. Based upon your professional experience, how useful is the forecasting, strategic plan, and budgeting process to your organization? What are the reasons that make these processes useful to your organization?

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Adding Value through Budgeting

How and Why Budgeting Brings More Value to an Organization:

Budgeting provides value to an organization in one way or the other. Budgeting is known to provide strategic initiatives which a top management specifies. In addition, it provides an estimate of the resources which requires forecasting operations to be carried out. Budgeting also ensures that planned and actual results are consistent with each other in that the available feedback regarding the activities of operation is also provided. Moreover, budgeting is also known to provide encouragement across different segments of a business and at the same time across different functions of a business such as finance. It also encourages the employee of an organization to put in efforts. Finally, budgeting is known to provide a determination of the various benefits or bonuses (Shastri & Stout, 2008).

Usefulness Of Forecasting:

Forecasting refers to the act in which companies ensure ...

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