Page 147 - Budgeting for Managers

Budgeting for Managers
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Paying for Subscriptions
One situation that often creates a discrepancy between
monthly spending and annual spending is subscriptions to
professional magazines or journals. For example, Celeste totaled the
subscription costs of the professional journals used in her department
to be $1,440 per year. On her budget, that was annualized at $120 per
month. However, all of the subscriptions came due for renewal in
February and March.As a result, she needed to spend all $1,440 in the
first quarter.
She saw this ahead of time.When she sat down with accounting,
she told them she would spend the entire year’s budget for that line
item in the first quarter. Because they knew of the expenditure ahead
of time, they adjusted the quarterly budget and there was no problem.
While you’re working with accounting, have them review
procedures for submitting purchase orders, getting payments
approved and mailed, taking care of petty cash, and any other
routine procedures.

Block and Line Item Allocation
Accounting is primarily concerned with control of the budget,
that is, ensuring that the right people approve expenses and
that spending does not exceed the budgeted amount. Working
with your boss and the accounting department, you should
define the level of authority you have in relation to your budget.
There are two general questions about the authority that you
should clarify:
• What parts of the budget do you have authority over?
•What limits or checks are there on that authority?
Typically, a manager will have authority over a budget in
one of three ways:
•Expenses only, with no authority to change the amount
allocated to each line item (a line-item budget). Using
the example in Table 8-1, the manager would have
authority over $41,000, but he would not be able to
move money among the three categories: Printing,
Utilities, and Telephone.