Budget 1. Each council is required by its constitution to prepare an annual budget for presentation to its annual meeting. 2. A budget is basically a financial statement based on predictions rather than on facts and is a tool that should be used to direct the activities of any organization in a planned, orderly manner. A budget translates the proposed programs of an organization into monetary terms. 3. Proper preparation and use of a budget may prevent unpleasant surprises when attempting to allocate financial resources over an entire year’s program. 4. Preparation of a simple budget requires answering the following questions: a) What revenue can be anticipated during the year? b) What programs will be undertaken during the year? c) What is the likely cost of these programs? d) Will anticipated revenue cover the cost of these programs? If not, should some programs be dropped or should an attempt be made to increase revenue? What happens if anticipated revenue is insufficient to cover the projected costs of programs? If the organization has any surplus from past years, it may choose to use that surplus to fund current programs. However, using accumulated surplus to fund yearly operations should only be considered in extraordinary circumstances. The budget should provide for a surplus or breakeven result for the period of the budget unless there is a good reason to do otherwise. Consistently budgeting a deficit and covering the shortfall with past years’ savings is not effective financial planning. It will result in spending beyond the organization’s ability to generate revenue and eventually deplete the surplus. Once these questions have been answered and the dollar figures determined, it is important to periodically compare the budget to actual and, if necessary, to supplement the budget with a forecast during the year to reflect events that were not anticipated at the time the original budget was prepared. The preparation of the budget is a joint responsibility of the executive. While the treasurer may assemble the document in final form, the executive members must provide input to determine what activities the council will undertake during the year. The executive must assume ownership of the budget and portray it as a proposal from the executive rather than as a document prepared by the treasurer.
Budget 1. Each council is required by its constitution to prepare an annual budget for presentation to its annual meeting. 2. A budget is basically a financial statement based on predictions rather than on facts and is a tool that should be used to direct the activities of any organization in a planned, orderly manner. A budget translates the proposed programs of an organization into monetary terms. 3. Proper preparation and use of a budget may prevent unpleasant surprises when attempting to allocate financial resources over an entire year’s program. 4. Preparation of a simple budget requires answering the following questions: a) What revenue can be anticipated during the year? b) What programs will be undertaken during the year? c) What is the likely cost of these programs? d) Will anticipated revenue cover the cost of these programs? If not, should some programs be dropped or should an attempt be made to increase revenue? What happens if anticipated revenue is insufficient to cover the projected costs of programs? If the organization has any surplus from past years, it may choose to use that surplus to fund current programs. However, using accumulated surplus to fund yearly operations should only be considered in extraordinary circumstances. The budget should provide for a surplus or breakeven result for the period of the budget unless there is a good reason to do otherwise. Consistently budgeting a deficit and covering the shortfall with past years’ savings is not effective financial planning. It will result in spending beyond the organization’s ability to generate revenue and eventually deplete the surplus. Once these questions have been answered and the dollar figures determined, it is important to periodically compare the budget to actual and, if necessary, to supplement the budget with a forecast during the year to reflect events that were not anticipated at the time the original budget was prepared. The preparation of the budget is a joint responsibility of the executive. While the treasurer may assemble the document in final form, the executive members must provide input to determine what activities the council will undertake during the year. The executive must assume ownership of the budget and portray it as a proposal from the executive rather than as a document prepared by the treasurer.
PD-SC-4%202016%20Handbook%20for%20Treasurers%20of%20Specialist%20Councils.docx