Seminar OutlineDay 1
Advanced Budgeting Overview
The module describes an advanced budgeting system.
The description provides a roadmap for an organization’s
progression from a traditional budgeting to an advanced
budget. The progression to an advanced budget is set
into context of the issues that are driving
organizations to adopt advanced budgeting.
- Flexible budgeting
- Zero based budgeting
- Activity based budgeting
- Performance based budgeting
- Dynamic (rolling) planning and budgeting
Assessing your organization’s budgeting process
The participant will be able to benchmark their
organization’s budgeting practices against international
best practices.
Advanced Budgeting Process
This module will provide an introduction to the
concept of transforming a budget from a number crunching
exercise to a business alignment and transformation
process. It provides an overview of a process framework
that links the budget, strategic planning, performance
measures and target costs.
Create a process framework
This module presents a template for creating a
process framework that is the foundation of a
state-of-the-art management system. The template uses a
spreadsheet to define macro processes and activities for
every organizational unit. The spreadsheet traces cost
from the general ledger to the activities to create a
process standard.
- Define the organization’s macro processes;
- Using a standard process dictionary to define
activities for a selected organizational unit;
- Define the activity outputs;
- Trace GL cost to activities;
- Calculate a standard process unit cost.
Day 2
Workshop case study
Participants will create a process based worksheet
that will be used subsequently to create an advanced
budget.
Translate your organization’s strategic plan into
a format that can be deployed to the budget
This module describes a budgeting process to
translate your organization’s strategic data into a
consistent framework that can then be incorporated into
your budget process.
- Creating strategic outcome statements;
- Customizing outcome statements to market segments;
- Building product features from customer market
segment;
- Setting cost targets from a strategic plan.
Incorporate performance measures into the
budgeting process
This module presents an approach to link your
organization’s performance measurement system with
strategy and the budget. The approach explains how to
identify performance targets from the outcome statement.
- Linking performance measures to outcome
statements;
- Aligning the Balance Scorecard with a performance
based budget;
- Linking financial budgets to performance measures;
- Evaluating alternative cost and performance
budgets.
Integrate key cost and performance indicators into
a performance based budget
Set cost and performance targets and apply a
budget-directed continuous improvement program to
achieve targeted performance.
- Setting performance targets using a Target Costing
methodology;
- Creating a continuous improvement program from a
performance based budget.
Day 3
Workshop case study
Participants will develop an advanced budget using
the process based worksheet created the previous day.
Ensure continuous alignment of your long-term
strategic plan with your short-term budget cycle
With a strategic plan generally being five to ten
years, and a budget being a yearly exercise, it is
common to lose sight of the ‘big picture’ thus
compromising the strategic thrust of the budget. Examine
how to ensure continuous alignment of short and long
term objectives to ensure that the two plans remain
synchronized.
- Balancing short-term results while achieving
long-term strategic objectives;
- Rolling budgets;
- Dynamic budgeting contrasted with static budgeting
Create a dynamic budgeting framework that can
adapt to external factors to improve budget achievement
Changes to the external business environment affect
your budget projections. Budgets need to be dynamic and
adapt to changes in critical external forces with
minimal impact on projected budgeted performance.
- Adapting a performance based budget to critical
changes in the business environment;
- Identifying, quantifying and minimizing budget
sensitivity to key events
- Integrate ISO and SPC to strengthen internal
controls and stabilize process performance.
Internal and process controls
This module presents an approach to assessing your
organization’s internal and process controls. Internal
and process controls are a critical element in managing
an advanced budgeting system.
Successful implementation of budgeting through
effective change management
This module presents a proven approach to
successfully integrate an advanced budgeting framework
into your organization’s unique business structure. The
approach covers key change management considerations of
implementing a performance based budget.
- Introducing multi-dimensional thinking into an
organization;
- A phased budgeting implementation;
- Executing the budgeting framework seamlessly into
your organization’s budgeting process;
- Ensuring statutory compliance with process
controls;
- Earned value reporting;
- What will performance based budgeting look like?
Day 4
Role of forecasting and budgeting in an
organization
- Examining the importance of forecasts and
budgeting to your organization
- Understanding tactical vs. strategic forecasting
and budgeting
- Understanding the impact on management decisions
- Understanding the impact on financial plans
Common problems but different skill sets
- Profile of a forecaster
- Profile of a budgeter
- Assigning responsibilities and accountability
- Both are concerned with predicting the future
- Both are concerned with managing uncertainties
Overview of forecasting tools and techniques
Evaluating criteria needed processes for effective
forecasting (e.g. different processes have different
criteria for evaluating its forecasting needs; the
criteria will later be used to select the appropriate
forecasting tool)
Forecasting tools and techniques
- Extrapolation based forecasting tools
-
Time
series models
-
Regression models
- Rolling forecasting tools
- Target based forecasting tools
- Feature based forecasting tools
Forecasting key success factors and considerations
Day 5
Understanding the link between budgets and forecasts
How forecasts link to budgets
Forecast error measurement
- Importance (sensitivity) of error
- Measuring forecasting errors
- Examining common causes of forecasting
methodologies successes and failures
- Identifying the current gap in forecasting
accuracy
Demystifying statistical principles underlying
forecasting
Statistical building blocks
- Dependent variable Y—What you forecast
- Independent variable X—What you use to predict
- R squared—A measure of exploratory power
Time series concepts
- Simple averages (level and percentage change)
- Moving averages
- Smoothing models
- Trends
Regression analysis
- Measuring the relationship between variables
- X-Y scatter diagrams
- What-if scenario planning
The assumptions—Where theory meets practice
Current use and practice of time series and
regression analysis
Advantages and limitations of time series analysis
and regression analysis
Integrating forecasting into budgeting (a target
budget approach)
Shaping the future rather than guessing
A target budgeting process
Integrating forecasting with target budgeting
Forecasting software
Stand-alone budgeting systems
ERP and other integrated budgeting systems
XBRL and XML integrated budgeting system
Evaluating the ROI of the selected system
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