Budget Manual | Meaning & Definition | Contents | Advantages

What is a Budget Manual?

Budget Manual
Budget Manual

Budget manual is a small booklet that contains the details relating to budgeting organization and procedure. While implementing budgets, some forms are necessary. These specimen forms are given in the budget manual.

Briefly, the budget manual is prepared to give full information to every employees of an organization relating to budgets and avoids misunderstanding also.

Budget Manual – Definiton by CIMA England

CIMA England, defines a budget manual as,

“A document, schedule or booklet which sets out inter alia, the responsibilities of the persons engaged in the routine of and the forms and records required for budgetary control”.

What does a Budget Manual contain?

Generally, the budgets are prepared according to the objectives of the organization given in the budget manual. Responsibility and functions of each executive with regard to budgets are given in the budget that avoids duplication or overlapping of responsibilities.

Budget manuals are prepared in many sections. Each section is issued to each line manager that is appropriate to his work and responsibilities.

Contents of Budget Manual

The following are the some of the important contents of budget

1. Introduction and brief explanation of the objects, benefits and principles of budgetary control system.

2. Clear-cut definition of lines of authority and responsibility;

3. Organization charts with titles of line managers.

4. Duties and responsibilities of line managers, budget committee and budget officer.

5. The method of preparation of department budget and master budget.

6. Time schedules for budget preparation.

7. Time lag between two budget reports i.e. performance report.

8. Instructions for preparing, submission and approval of budgets.

9. The procedure to be followed for obtaining approval for budgets.

10. Number and names of budget centers are clearly stated.

11. Account codes to be used in budgets.

12. The purpose, specimen form and number of copies to be used for each report and statement.

13. Length of budget periods and control periods are clearly stated.

14. Brief explanation of follow-up procedures.

15. Explanation about main budgets and their accounting relationship with each other.

16. Explanation of key budgets.

Advantages of Budget Manual

The following are the advantages of budget manual.

1. Maximum profit can be earned by an organization.

2. Each employee understands what is his/her role, what is to be done and how it is to be done under budgetary control system.

3. The problems can be easily solved.

4. There is a better allocation and utilization of available resources.

5. New employees can understand the procedures themselves.

6. As everything is available in white and block form, there is no ambiguity.

7. It standardizes methods and procedures involved in budgetary control.

8. There is no difficulty in obtaining co-ordination among line managers.