...Capital Budget Policy and Process Vernita Davis-Knight Susan Friguglietti Edna Primas Ronald Rehn University of Phoenix-Online February 27, 2008 Capital Budget Policy and Process Capital budgeting is the process by which capital investment decisions are made. Capital can be described as an organization’s operating assets (Diamond, Hanson &, Murphy, 1994). The capital budgeting process includes "planning, setting goals and priorities, arranging financing, and identifying criteria for making long-term investments" (Diamond et al., 1994, p. 463). Previously, capital budgets were known as plant and equipment budgets (Berman, Kukla &, Weeks, 1994). As the previous term implies, most capital expenditures are long-term investments for plant or equipment investments. Most, if not all, organizations have limited financial resources and must decide how to invest the financial resources for the best advantage of the organization. Capital investment decisions have a significant impact on the organization since large amounts of the organization’s resources are at risk for extended periods of time. This makes capital budgeting one of the most important decision making opportunities an organization can undertake (Diamond et al., 1994). There are two basic types of capital budgeting projects, independent projects and mutually exclusive projects. The independent project does not affect the cash flow of other projects. That is, regardless of whether the project is accepted...
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...Chapter 4 – Operating Budgets: A budget can be a process, a document, an accounting ledger, a plan, or a system. Local gov’t budgeting process unique – product of geographical, historical, economic, political and social factors peculiar to that jurisdiction. Budgeting is a unified series of steps to line and implement four functions: ❑ policy development – as policy instrument, CEO and legislative body need to articulate the goals, objectives and strategies that underline the budget – the flip side of proposing policy changes is accountability ❑ financial planning – includes gov’t financial condition; current/past-year trend financial act. by dept or prog; formal revenue est; look to the future to anticipate events/conditions; ensure debt service remains under control (while debt service receives first draw on municipal exp, financial plan set a rational debt service level for multi-year period ❑ service/operations planning – blueprint that governs the amount of service provided ❑ communications – way for decision makers to communicate changes in priorities, rationale for decisions and changes to vision in the future The final step in securing a framework w/in w/c the needs of policy setting, financial planning, service planning and communications can work is the development of quantitative performance measures. Environment/actors dictate the extent to which the linkage occurs and the form of linkage. Four phases of local budget cycle: ❑ planning/preparation...
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...TE AM FL Y THE JOSSEY-BASS Academic Administrator’s Guide to Budgets and Financial Management The Jossey-Bass Academic Administrator’s Guides are designed to help new and experienced campus professionals when a promotion or move brings on new responsibilities, new tasks, and new situations. Each book focuses on a single topic, exploring its application to the higher education setting. These real world guides provide advice about day-to-day responsibilities as well as an orientation to the organizational environment of campus administration. From department chairs to office staff supervisors, these concise resources will help college and university administrators understand and overcome obstacles to success. We hope you will find this volume useful in your work. To that end, we welcome your reaction to this volume and to the series in general, including suggestions for future topics. THE JOSSEY-BASS Academic Administrator’s Guide TO Budgets and Financial Management Margaret J. Barr Copyright © 2002 by John Wiley & Sons, Inc. All rights reserved. Published by Jossey-Bass A Wiley Imprint 989 Market Street, San Francisco, CA 94103-1741 www.josseybass.com No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission...
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...CECC Evaluation as We Care Foundation Board Member Susan Miller University Of Phoenix BSHS 451 Program Design and Proposal Writing Linda N. Latham, MFT October 26, 2010 CECC Evaluation as We Care Foundation Board Member We Care Foundation is in receipt of the grant request for the amount of $5,000. Whereas some of the guidelines for such a request have been followed, there are a few areas that need clarification before We Care can submit funds to the organization. The first item needed is a proof of tax-exempt status as a 501(c) (3) organization. According to the grant proposal policy set up by We Care Foundation for all funds proposals, requests cannot be accepted for capital expenditures, tuition, scholarships, fundraising drives, emergency relief, or endowments. In the budget breakdown section of the proposal, we request a more detailed breakdown in the areas of non-personal and educational equipment. As noted on our request guideline we do not fund any capital expenditures and, we need more clarification on these costs before we can accept the proposal. Credibility The credibility of CECC is also a question that needs to be answered with more clarification. CECC has been around for six years and that is quite an accomplishment. However, are there any other awards or recognitions that CECC may have received after the award from CDBG in 1994? The type of service provided by CECC correlates...
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...retailer sales. Understanding and proactive management of a supply chain is a key skill set for today's business executive. This course focuses on supply chain and distribution channel decisions within a global environment. The Marketplace Business Fundamentals simulation will provide you with the opportunity to apply, in a setting that simulates a real-world environment, a variety of business decisions that must be made when managing a business as a component of a supply chain. Watch the following video for an introduction to this course: Note: View the video in full screen at 720p for best results. Competencies This course provides guidance to help you demonstrate the following 10 competencies: * Competency 326.1.5: Budgets The graduate utilizes budgets and a variety of pro-forma statements for planning and control purposes including analyzing cash flows to assure adequacy of funds for capitalizing on business opportunities. * Competency 327.3.1: Continuous Improvement and Quality Management The graduate applies quality management methods for continuous improvement and proposes various quality improvements in an organization. * Competency 329.4.1: Operational Design The graduate designs capacity, process, layout, and location strategies. * Competency 329.4.3: Operating Efficiency The graduate employs just-in-time, lean systems and constraint management concepts and scheduling methods to improve operating efficiency. * Competency 329.4.5: Requirements Planning ...
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...Funding Allocation and Accountability Rena Godfrey Capella University ED7822 Funding of Educational Institutions Quarter & Year: Winter 2013 Email: renag1934@gmail.com Instructor: Lee Moore, Ed.D. Funding Education and Accountability Financial reporting ensures that school district budgetary and financial information are available, comparable and audited, and that school districts are meeting their legislated and government policy based financial responsibilities. Background of Emergency Financial Manager An interview was not conducted with the school business manager of Detroit Public Schools. Therefore, I researched the school district plan to demonstrate accountability (Detroit Public Schools, 2011). Roy S. Roberts was appointed by Governor Rick Snyder of Michigan in May 2011. Mr. Roberts, former Managing Director at Reliant Equity Investors, has decades of managerial, financial and organizational experience, having served as the highest ranking African American executive in the United States automobile industry as Group Vice President for North American Vehicle Sales, Service and Marketing of General Motors Corporation (GMC). He served as Vice President and General Manager of the Pontiac-GMC Division, presiding over the merger of Pontiac-GMC, which was the first at GM to lead such a merger. Prior to his 23 year career with General Motors, Mr. Roberts spent 17 years with the Aerospace division of Lear Siegler Corporation. Mr. Roberts earned a degree in Business...
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...Unit Budget Analysis Mindy Cashman Thomas Edison State College Abstract A budget is the most basic financial document needed to manage and plan for income and expenses throughout the year. The process of planning the budget is an ongoing process that requires adjustments throughout the year as needed to meet the goals of the organization it supports. When preparing a budget for an acute care unit in a hospital, there are many different reasons that the budget needs to be adjusted in order to meet the needs of the staff, patients and organization. This case study looks at the budget of a cardiac care unit with a variable budget. Several different factors have led to variances in the budget for the current fiscal year. Solutions are suggested to address the positive variances, that will fulfill the needs of staff and patients in the most beneficial and economic way possible. Due to a change in patient acuity on the unit, there has been a change in the staffing needs to adequately care for the needs of the increase in the number of very sick patients. Staff is requesting a permanent change in the staffing pattern to address these needs. There has been $275,000 expended year to date from the personnel budget. $30,000 of that was expended in the month of March. For the previous 9 months, that leaves an average of over $30,000 per month expended to the personnel budget. To address this negative variance in the budget, I would approach administration to request that...
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...BUDGET FORMATS By presenting selected information in particular ways, budget documents focus attention on certain questions, relationships, and developments. Because budget formats “establish the rules by which the budgeting game is played (the decision rules)” and also “create the standards by which success is measured (rules of evidence),” formats are important to public budgeting. “When we speak of budgeting formats, we are talking about the way in which budgeting information is structured, the kind of information that is required to justify budget requests, and what kind of questions are asked during the budget review process” (Morgan, 2002, p. 71). There are four general types of approaches: line-item, performance, program, and zero-based, plus hybrids. Table 1 compares them and the following discussion describes them in detail. 2 3 Source: 4 Reprinted by permission. Morgan, Douglas, with the assistance of Kent Robinson and support of Drew Barden and Dennis Strachota, 2002. Handbook on Public Budgeting. Portland State University, Hatfield School of Government, State of Oregon edition, Table 7-6, pp. 162–163, http://eli.pdx.edu/erc/morgan/handbook6.doc. Alternative Methods of Budgeting Line-Item Budgeting A line-item budget lists, in vertical columns, each of the city’s revenue sources and each of the types—or classes—of items the city will purchase during the fiscal year. Following is an example of how line-item budgeting would be used in a small town public...
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...Capital Budgeting Techniques | | GLOSSARY Capital Budget: (1) The amount of money set aside for the purchase of fixed assets (e.g., equipment, buildings, etc.). Also, (2) a request for authorization to purchase new fixed assets. Mutually Exclusive Proposals: Consideration of two or more assets that perform the same function. If one is chosen for purchase, the others are automatically rejected. Profitability Index: A ratio of the present value of the benefits (PVB) to the present value of the costs (PVC). The index is used instead of Net Present Value (i.e., PVB - PVC) when evaluating mutually exclusive proposals that have different costs. As the picture above illustrates, the capital budgeting decision may be thought of as a cost-benefit analysis. We are asking a very simple question: "If I purchase this fixed asset, will the benefits to the company be greater than the cost of the asset?" In essence, we are placing the cash inflows and outflows on a scale (similar to the one above) to see which is greater. A complicating factor is that the inflows and outflows may not be comparable: cash outflows (costs) are typically concentrated at the time of the purchase, while cash inflows (benefits) may be spread over many years. The time value of money principle states that dollars today are not the same as dollars in the future (because we would all prefer possessing dollars today to receiving the same amount of dollars in the future). Therefore, before we can place...
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...is the Surgery Unit Director who is getting ready to prepare a capital expenditure funding program for the coming year. His unit is too small and is running at over 90% capacity, so Ted wants more room. On the other hand, a cardiology surgeon at the hospital wants to create a new cardiac surgery program that would require extensive funding for new state-of-the-art equipment. Therefore, the surgeon has been campaigning with the hospital board members (Baker & Baker, 2011). Furthermore, Ted will need valuable information and will need to have a great strategy to prepare the capital expenditure funding program. Baker & Baker (2011) explains, “Capital expenditures involve the acquisition of assets that are long lasting, such as equipment, buildings, and land. Therefore, capital expenditure budgets are usually intended to plan, monitor, and control long-term financial issues” (p. 177, para 1). While Ted is preparing a capital expenditure budget proposal, there are four requests he should ask for upon creating the proposal. First and foremost, Ted should compose a timeline to show when his unit will open along with justification of the need for the proposal based on firm estimates of future needs (Department of Premier and Cabinet, December 2010, p. 9). A timeline will be able to let the others see his plan more clearly. In addition, Ted should also ask for the hospital’s guidelines and criteria for preparing a capital expenditure funding program. Baker & Baker (2011) states, “Some...
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...Venture Capital Present to: Professor LIM, MENG ANN Present by: HU, XINYIN LI, LUXI LIU, YUANCHANG RATANASIRIGULCHAI, TEEMAR Compensation Methods: Budget-based vs Flat-Rate Management Fee | | Mayfield charged a budget-based management fee to appeal to potential LPs. Because industry practice was traditionally a 2/20 based fee, Mayfield had a competitive advantage against other VCs as the budget-based fee was attractive because: * Transparency. Budget-based fees encourage transparency by requiring Mayfield to produce an expense list, providing LPs greater information compared to the traditional management fee based on committed capital. * Alignment of Interest. A flat-rate management fee causes misalignment of interest, especially as fund sizes increase; the increase in size is especially notable through the growing Mayfield fund sizes, peaking at $1b (Exhibit 2 to 4a) * Flat-rate fees encourage efforts placed in raising the funds, noted from the fact that a 2.5% fee could reduce the capital for investment by 1 investment project; alternatively, the budget-based fees emphasizes the performance of the fund. * Conceptually, budget-based fees are more justifiable as management fees were meant to solely support the operations of the VCC; as VCs promote alpha returns, alignment of interests is greater with lower management fee and the bulk of compensation geared towards the carried interest. * Best of Flat-rate and Costs. The budget-based fees...
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...cover the sources of capital and working capital and cash flow management. Sources of capital (XEROX copy) Working capital and cash flow management Working capital- is a portion of the firm’s capital continuously converted into cash fund, from its inventories, to account receivables to cash. It may include: firm’s safe cash, checks for encashment; bank accounts balances; marketable securities; notes and accounts receivables; supplies; inventories; prepaid expenses; and deferred items. Firm’s needs working capital for the following reasons: 1. Inventory replenishment 2. As provision for operating expenses for the day-to –day transactions. 3. Back up for credit sales 4. As a provision for a safety margin for unexpected expenses, possible delays in cash inflow or decline in revenue. Cash management –activities that aim to covers all firms cash expenditure and investing the idle cash to earn even to the minimal interest. Liquidity management-it requires maintenance of sufficient amount of cash to cover the cash requirements of the company, from various sources including: cash sales; collection of account receivables; loans; sales of assets; ownership contribution; or advances from customers. Inventory management consists of: a. liquidity- is measured in terms of inventory turnover b. Profitability-= is measured in terms of sales and profits. Working capital is sometimes classified as gross or net working capital, for the former includes...
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...Budget Project CMGT 410 Project Planning & Implementation December 18, 2014 Carlos Perales, MSCIS Memo To: Corporate Office From: Luis Pinon CC: Anyone that you believe should be copied Date: [ 1/7/2015 ] Re: Subject Description of Project The project for the company offsite 2 day training session has given a preliminary go-ahead. The budget of the project will determine any important factors that will impact the training project. The company of AER has given the opportunity for all workers to get the training required. The budget of the 2-day training session project will recover any expenses that occur before the initiation, during processes, and until completion of the project. Resources The first step of the project is to develop a budget. The budget management process involves the project manager in developing all the cost, estimates, and the total amount of money resources necessary for the implementation of all the activities. All the tasks and events are defined and stated in the WBS and Schedule in the lower section of the memorandum. Budget Development Budget development should cover the capital, and the operating expenses to ensure the success of the project completion. The project manager needs to gather all the funding requirements and then send a formal request to the sponsor. The sponsor needs to look first in the feasibility study, business case, and project charter before making any final decision. For developing a budget project sheet,...
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...ISSN 1940-204X Embezzlement at Sanchou College Avinash Arya* University of Michigan-Flint Jui-Chin Chang Howard University IntroductIon “April 28, 2003. United Daily News. An employee at Sanchou College was caught stealing tuition refund money, the police authorities said. They did not release the name of the employee as the matter is under investigation. The suspect had been working in the Evening School Division of the school since 1998 and was responsible for tuition receipts and refunds. Apparently, the embezzlement was going on for several years. The incident came to light when the suspect requested a tuition refund on behalf of five students and an alert employee, who was helping him with the refund, noticed that he had seals of those five students, one of whom had died recently. She became suspicious and reported the matter to her supervisor who immediately called the police. The school has been under the supervision of the Ministry of Education for many years due to mismanagement and infighting among members of the school board.” Dan Wu, the president of Sanchou, read the news over and over again as he was having his morning coffee. He had been informed the previous evening that police had been called on campus. Later in the day, he called an emergency staff meeting to discuss the embezzlement. “Why did it happen? How much money did he take?” Dan asked his staff. He wondered whether the Weekend School and the Short-term Programs Division had similar problems, and...
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...stewardship. All personnel with a role in the management of XXX's fiscal operations are expected to uphold the policies in this manual. It is the intention of XXX that this accounting manual serve as our commitment to proper, accurate financial management and reporting. Revised 1/26/97 1 Division of Duties The following is a list of personnel who have responsibilities within the accounting department: President: 1. Reviews and approves all financial reports. 2. Reviews and approves annual budget. 3. Reviews the payroll summary for the correct payee, hours worked and check amount. 4. Reviews all vouchers and invoices for those checks which require his or her signature. 5. Reviews and approves all contracts for goods and services that will exceed $10,000 over the year. Vice President: 1. Approves all vouchers, invoices and checks. 2. Receives unopened bank statements. 3. With the Fiscal Manager, and input from the President and Program Directors, develops the annual budget. 4. Reviews and approves all financial reports. 5. Reviews and approves list of pending check disbursements. 6. Reviews all vouchers and invoices for...
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