Budget 101 – Basics on how to Create Budgets for Government

or Business or HouseholdBy: Paul Young, CPA, CGA

Agenda

• What is a budget

• How are budgets produced

• Samples of Government, Business and Household Budgets

What is a Budget?

• Budget is document that lays out the plan on how you will managed your revenue and expenses

• Budget is also detail document including assumptions as part of supporting both expenses and revenue targets for the year.

• Budgets typically are one year, but can have 2-3 year projections as part of the overall strategic plan

How are budgets created• Government

• Cabinet or council sets the priorities for the fiscal year• Preliminary estimates are produced for the new budget• Budget meetings are conducted with the public for input• Fiscal update is released as part of managing the targets for current and next budget

cycle• Budget is released

• Business• Budgets start with forecast for the last few months of a fiscal year• Sales are projected through run-rates/discussion with sales management• Cost are projected through run-rates and/or expense targets set by management

• Household• Based on Cash Flow and everyday expenses

Type of Budgeting

• Zero Based Budget• Starting from scratch which means building up revenue and expenses from

scratch

• Budgets based on run-rates with individuals adjusted the run-rates based on their targets

Government Budget - Sample

Government Budget - Sample

Government Budget - Sample

Business Budgeting

• Revenue Budget

• Capital Budget

• Compensation Budget

• Operation Expense Budget

Business Budget

Business Budget

Household Budget

Household Spending

Summary

• Budgets do not balance themselves

• Budgets include assumptions

• Budgets for government become law when approved by house of commons, provincial legislation, council

• Business Budgets are approved by either Senior Management or the Board of Directors