Page 164 - Budgeting for Managers

Tracking Your Budget
Adjusting the Budget
If the budget and actual amounts do not match, then it will be
necessary to make an adjustment. The authority to do so may
rest with you, your boss, or the accounting department. 147
Here are several different scenarios that will describe how
you might adjust the budget.
1. If a single line item that’s not under your control, such as a
medical expense, has gone too high, you may simply explain
the situation, write a memo, and get approval from your boss.
The accounting department will adjust the allocated amount for
the line item.
2. If you have a line-item budget and you’re within your total
spending limit, but some items are too high and others are too
low, you should write a memo requesting an adjustment as
early as possible. You may have to explain reasons for the vari-
ances. Organizations that have line-item budgets generally keep
very close control and want explanations.
3. If you have a block budget but you believe you need to
spend more money than allocated, you’ll probably have to write
a proposal explaining why the extra money is needed and what
benefit the company will get from the additional expense. Be
sure to state what work you will not be able to do if the budget
is not approved.
4. If you’re spending significantly less than you planned, discuss
this with your boss and the accounting department as soon as
possible. Otherwise, executive management may just assume
you don’t need as much money or that you overbudgeted and
will cut your budget for next year.

Reviewing Financial Statements
Once all of this is done and the month is closed, we prepare finan-
cial statements for the end of the month. Based on these financial
statements, we choose what business actions are best to keep the
company going and improve its financial and business health.