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TYPES OF BUDGETS Presentation Transcript:
1.TYPES OF BUDGETS
2.Appropriation Budgets
The legislatively approved budget that grants expenditure authority to departments and other governmental units in accordance with applicable laws.
3.Capital Budgets
Focuses on the acquisition and construction of long term assets.
Although the accounting cycle is traditionally one year, the budgeting process may extend for a considerably longer period.
The needs of organization constituents must be forecast and planned for years in advance.
4.Flexible Budgets
Which relate costs to outputs and are thereby intended to help control costs, especially those of business-type activities.
5.May be appropriate for governmental funds “expenditures and level of activity are pre-established by legislative authorization”
6.How are expenditure and revenues classified
Because the way the budget is presented can significantly impact the allocation of resources
GASB advised that “multiple classification of governmental expenditure data is important from both internal and external management control and accountability standpoints”.
7.How are expenditure and revenues classified
Suggested expenditure classifications include:
By Fund: such as general fund, special revenue fund, debt service funds.
By Organizational Unit: such as police department, fire department, city council.
By Function or Program: a group of activities carried out with the same objective, such as public safety, sanitation, recreation.
8.Suggested expenditure Classifications include:
By Activity: line of work contributing to a function or program such as highway patrol, crime investigation.
By Character: the fiscal period they are presumed to benefit such as (Current, Capital, Debt Service)
By Object classification: the type of items purchased or the services offered such as salaries, fringe benefits, travel, and repairs.
9.Purpose Served by Each Classification
Fund—Identifies which fiscal and accounting entity was affected
Function or program—Assists in budgeting resources for carrying out major areas of service activities or goals
Organization unit —Assists in enhancing managerial control over departments and divisions, and responsibility accounting
10.Why is more than one type of budget necessary?
Capital budget is a plan setting forth when specific capital assets will be acquired and how they will be financed.
Capital budgets are closely tied to operating budgets
Each year, a government must include current-year capital spending in its operating budget.
If the capital projects are financed with debt, the CAPEX will be offset with bond proceeds and will not affect the operating budget.
TYPES OF BUDGETS Presentation Transcript:
1.TYPES OF BUDGETS
2.Appropriation Budgets
The legislatively approved budget that grants expenditure authority to departments and other governmental units in accordance with applicable laws.
3.Capital Budgets
Focuses on the acquisition and construction of long term assets.
Although the accounting cycle is traditionally one year, the budgeting process may extend for a considerably longer period.
The needs of organization constituents must be forecast and planned for years in advance.
4.Flexible Budgets
Which relate costs to outputs and are thereby intended to help control costs, especially those of business-type activities.
5.May be appropriate for governmental funds “expenditures and level of activity are pre-established by legislative authorization”
6.How are expenditure and revenues classified
Because the way the budget is presented can significantly impact the allocation of resources
GASB advised that “multiple classification of governmental expenditure data is important from both internal and external management control and accountability standpoints”.
7.How are expenditure and revenues classified
Suggested expenditure classifications include:
By Fund: such as general fund, special revenue fund, debt service funds.
By Organizational Unit: such as police department, fire department, city council.
By Function or Program: a group of activities carried out with the same objective, such as public safety, sanitation, recreation.
8.Suggested expenditure Classifications include:
By Activity: line of work contributing to a function or program such as highway patrol, crime investigation.
By Character: the fiscal period they are presumed to benefit such as (Current, Capital, Debt Service)
By Object classification: the type of items purchased or the services offered such as salaries, fringe benefits, travel, and repairs.
9.Purpose Served by Each Classification
Fund—Identifies which fiscal and accounting entity was affected
Function or program—Assists in budgeting resources for carrying out major areas of service activities or goals
Organization unit —Assists in enhancing managerial control over departments and divisions, and responsibility accounting
10.Why is more than one type of budget necessary?
Capital budget is a plan setting forth when specific capital assets will be acquired and how they will be financed.
Capital budgets are closely tied to operating budgets
Each year, a government must include current-year capital spending in its operating budget.
If the capital projects are financed with debt, the CAPEX will be offset with bond proceeds and will not affect the operating budget.
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