To begin this topic, we will do it low the definition of system, considering that it is a set of elements logically organized and interdependent, but constituted in order to obtain a common objective called budget.
For the success of the system, it must act under certain premises:
.- Each element has a specific mission.
.- All its components are equally important.
.- When a variation occurs in one of its elements, this will affect the rest of the components of the system.
.- The systems can be divided into subsystems, but even then they will act under the same premises.
Therefore we can say that the budget is an information system consisting of several elements, such as: pre-elaboration, elaboration, execution, control and evaluation, which, combined with each other, achieve the objectives proposed in the plan.
Elements necessary to constitute a budgetary system
1.- Of external origin
• Competition: you should consider not only the national competence, but the international one, if necessary, taking into account your company name, vision and mission.
• Qualities that are studied under the market, such as: demand, reputation of the organization, quality of the product or service, among others.
• Economically, inflation, the exchange rate and its policies.
2.- According to internal factors, we have:
• Organization and functions manual: refers to the standards under which the preparation of the budget must be developed.
• Accounting system that supports the structure and development of the plan.
• Internal control system to ensure that the objectives are met.
• The time period established in the accounting period must be defined, which will determine the budget period.
• Manual of budgets, which allows knowledge to all the units that make up the company in terms of preparation, execution, evaluation and control.
• Committee and budget director that will govern the programming policies of the operations, under a group of people trained and authorized for that purpose.
• Motivation of the personnel towards the process, fundamental point to maintain a favorable work environment for the achievement of the outlined goals, which are reflected in the budget.
• Standards, if the company obtains its product through standardized processes, the budget must be reflected step by step, in such a way that its costs are estimated.
• Rules and laws that govern the organization, no process or activity that takes place in the company can be carried out isolated from its laws, that is, the budget must be framed, according to the policies and laws that constitute the organization.
• Reports, the budget must be regulated, in such a way that the results of its progress and development are constantly issued.
• Economic and financial conditions of the entity, a determining factor in the formation of budgets, since this will depend on the success in its development, therefore the endorsement and support of the company's board of directors is required.
Stages necessary for the formulation and preparation of the budget
The entrepreneur must resort to the budget considering it a planning and control tool, once there is
implemented the system, taking into account the following stages:
1.- Pre-processing
2.- Budget making
3.- Execution
4.- Control
5.- Evaluation
Pre-processing
The results obtained from previous values are analyzed, the guidelines of the main indicators used to qualify managerial management are examined, the environmental factors not controlled by the management are evaluated and the behavior of the company is studied.
Budget making
The budget is prepared based on the approved plans for each functional level by the line of command, acquiring monetary dimension in budgetary terms.
Execution
It means the implementation of all the planned in order to achieve the objectives set.
Control
The budget is the thermometer that measures the execution of each and every one of the business activities; The control stage is important to determine to what extent the company can go with the budget as a measurement pattern. Since it faces the forecasts with reality.
Evaluation
In this stage a critical report is prepared of the results obtained that will contain, not only the variations, but the behavior of each and every one of the functions and business activities.
