Page 120 - Accounting Best Practices

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Summary
available for closely linking the resulting budget model to company operations,
so that most activities cannot be completed without some interaction with budget
information. What all of these changes amount to is a highly efficient budgeting
process that can be completed in less time than the previous budgeting system,
while providing much better information to the management team.
SUMMARY

This chapter focused primarily on those best practices that improve a budget
model’s ease of use as well as the quality of the information it produces. These
are the very issues most managers complain about, since many budget models
take an eternity to produce and are not that accurate when released. Since the
bulk of the changes in this area are easy and inexpensive to implement, there is
no reason why an active and enterprising accounting manager cannot swiftly
replace the old budgeting system with one that is easy to use and results in excel-
lent budgeting information.
There was a lesser focus on best practices that enhance one’s use of the bud-
get once it has been produced. Since the budget is an excellent control tool, the
best of these practices is one that ties the budget directly to the purchase order
system, so that purchase orders can be automatically compared to the remaining
available budget and rejected by the computer if there are no budgeted funds
remaining. Another best practice links employee performance to the budget,
while another creates a summarized budget model for further financial modeling
work by members of management. These are effective ways to maximize the
budget once it has been produced.