http://nces.ed.gov/pubs2004/h2r2/ch_3.asp Budgeting. Retrieved on February 17, 2009 at A major element of financial data activity rests in the act of budgeting. Budgeting is the process of allocating finite resources to the prioritized needs of an organization. In most cases, for a governmental entity, the budget represents the legal authority to spend money. Adoption of a budget implies that a set of decisions has been made that culminates matching resources with needs. As such, the budget is a product of the planning process. The budget also provides an important tool for the control and evaluation of sources and the uses of resources. Using the accounting system to enact the will of the governing body, administrators are able to execute and control activities that have been authorized by the budget and to evaluate financial performance on the basis of comparisons between budgeted and actual operations. Thus, the budget is implicitly linked to financial accountability and relates directly to the financial reporting objectives. The planning and control functions inherent to any organization, including schools, underscore the importance of sound budgeting practices for the following reasons: ·
The type, quantity, and quality of goods and services provided by governments often are not subject to the market forces of supply and demand. Thus, enacting and adhering to the budget establishes restrictions in the absence of a competitive market. ·
These goods and services provided by governments are generally considered critical to the public interest and welfare. ·
The scope and diversity of operations in an organization make comprehensive financial planning essential for good decisionmaking. ·
The financial planning process is critical to the expression of citizen preferences and is the avenue for reaching consensus among citizens, members of the governing board, and staff on the future direction of the governmental unit's operations. The link...
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