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5–19 USE ON-LINE BUDGET UPDATING Budgeting Best Practices
One of the most difficult problems for a budget manager in a large company is
bringing together the budget information arriving from a multitude of outlying
company locations. For example, a location may send budget updates on paper or
a floppy disk, either of which requires the manual translation of this information
into the budget model by the budget manager’s staff. If there are many locations
reporting budget information, this can result in a flood of work for several days.
Also, the person reentering the budget information may make a typing error,
thereby altering a budgeted amount from what a subsidiary intended, or may mis-
construe the submitted data and list a budget number in the wrong account. In
either case, the budget must be reviewed by the subsidiary and a request made to
adjust the error, which takes still more time and effort.
An excellent best practice that entirely eliminates this problem is to give sub-
sidiaries direct access to the budget model via modems. They can then dial up the
budget model, enter it themselves, make any necessary changes, and review the
results. By doing so, all errors are made, and must be corrected, by the sub-
sidiaries, taking this chore away from the central accounting group.
There are two problems with this best practice. One is that all subsidiaries
must go through the effort of acquiring modems, as well as direct phone line
access to those modems, in order to acquire on-line access to the budget model.
However, in these days of universal Internet access, it is a rare company that does
not already have modem access. The second item is more critical: Anyone from
any subsidiary can now have access to the entire budget model, with the ability to
delete it, alter information for other parts of the company, or just observe the
numbers budgeted for other divisions or departments, which can be confidential.
To avoid this problem, it may be necessary to split the budget into different files,
one for each subsidiary, and then give password access only to the portion of the
budget assigned to each subsidiary. Another option is to keep the budget model in
one piece, but to restrict access by passwords to just those account codes that
apply to each subsidiary. The first option allows a company to use an electronic
spreadsheet to contain the model, but the latter approach requires that it be stored
in a database with better password protection than is typically available for an
electronic spreadsheet. A company can pick either option based on its overall
need for securing budget information.

Cost: Installation time:

5–20 USE VIDEO CONFERENCING FOR BUDGET UPDATING

Companies with many locations have the added budgeting cost of bringing together
managers from outlying locations, sometimes for a number of meetings. Given
the high price of travel and lodging, this can be a significant expense. Further, the