fma final ppt

8/7/2019 FMA Final Ppt

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FINANCIAL MANAGEMENT

ACCOUNTING

TOPIC :

PERFORMANCE BUDGETING

BY:-

Arpita jaiswal (37)Arun mishra (38)


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Performance budgeting: involves evaluation of theperformance of the organization in the context of both the

specific as well as over all objectives.

It is a financial plan providing a statement of mission,

goals, objectives and regular assessment of performance

as a part of the budgeting process, which creates linkage

between the necessary inputs for the implementation of

the strategic development plan and anticipated outcome

Presupposes crystal clarity of organizational

objectives in general and short term

Aims at continuous growth in long run


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COMPRISES OF THREE ELEMENTS :

The result (final outcome)

The strategy (different ways to achieve the outcome)

Activity (what is actually done to achieve the final

outcome)


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CHARACTERSISTICS OF PERFORMANCE

BUDGETING:

Identification of mission, goals, and objectives

Linkage of strategic planning information with

the budget

Development and integration of performance

measures into the budget

Disaggregation of expenditures into very

broad areas


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CONTROL RATIOS :

1) Capacity Ratio = Actual Hours Worked * 100

Budgeted Hours

2) Activity = Standard Hours For Actual production * 100

Budgeted Hours

3) Efficiency Ratio = Standard Hours For Actual

production

*100

Actual Hours Worked


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ADVANTAGES OF PERFORMANCE BUDGETING:

It presents clearly the purposes and objectives for which

funds are required.

It gives better appreciation of budgeting by legislature.

It improves budget formulation process .

It enhances accountability of the executives.


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PERFORMACE

BUDGETING

TRADITIONAL

BUDGETING1. In it, the flow of

decision is upward.

1. In it, the flow of

decision is downward.

2. It follows the

functionprogramme----

activity classification.

2. In it, the classification

of expenses is by objects.

3. It makes a prospective

approach with its focus on

future markets.

3. The approach it

retrospective in such

budgeting.


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It requires preparation of performance reports.

prepared by departmental head.

compare budget and actual data and show

existing variance

Deviations are identified.

Necessary actions to correct the deviations from the

budget are taken.


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CONCLUSION :

In the past two decades, there has been a

fundamental restructuring of the budget

management systems in various countries. The

new budget management model, indicated here

(perhaps a little loosely) as performance

budgeting, but with different titles in different

countries, aimed at forging a more direct link

between allocating resources through the budgetand performance in reaching stated objectives

fma final ppt

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