2. Content
• Introduction
• Objective
• Importance
• Characteristics
• Processes of budgeting
• Advantages and disadvantages
• Health budget
• Financial flows in the health financing system in
Nepal 2
3. Introduction :
• Budget is an operational plan , for a definite period usually a year ,
expressed in financial terms and based on expected income and
expenditure .
• Budget is a concrete precise picture of the total operation of an
enterprise in monetary terms . -H. M. Donoven
• A budget is a plan that outlines an organization’s financial goals .
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4. Contd ……
• A budget is an estimation of revenue and expenses over a specified
future period of time and is usually compiled and re-evaluated on a
periodic basis.
• Budgeting is the process of calculating how much money you must
earn or save during a particular period of time , and of planning how
you will spend it: -Dictionary meaning
• Budgeting is the process of creating a plan to spend your money.
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5. • Budgeting is the simply balancing your expenses with your income.
• Budgeting is related to the process of defining the allocation of
resource to produce the best output given the level of revenues.
• An important step to financial security
• About choices – choosing how to make and spend money
• Knowing what your income and expenses are every month
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6. Contd…..
• It is done at the beginning of fiscal year.
• In Nepalese context the fiscal year begins in Shrawan and ends in
Ashad and the process of budgeting is started in Shrawan.
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7. OBJECTIVES :
1) Provide structure : A budget is specially useful for giving a
company guidance regarding the direction in which it is supposed to
be going .thus , it forms the basis for planning what to do next.
2) Predict case flow : A budget is useful for predicting for case flows
but yields increasingly unreliable result further into the future .
3) Allocate resources : Some company use budgeting process as a tool
for deciding where to allocate funds to various activities .
4) Measure performance : A common objective in creating a budget is
to use it as the basis for judging employee performance , through the
use of variances from the budget .
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8. Contd…..
5) Budget provides the standard against which future result can be
compared.
6) With the establishment of budget , actions can be taken by
management if there are any material variance against budget.
7) Assist to plan and control earning and expenditure so that
maximum profitability can be achieved.
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9. Importance:
• Budgeting is needed for planning for future course of action and to have
control over all activities in the organization.
• It facilitates coordinating operation of various departments and section
for realizing organizational objectives.
• Budget serve as guide for action in the organization .
• Budget helps one to weight the values and to make decision when
necessary on whether one is of greater value in the program than the
other.
• It motivates manager to strive to achieve budget goals.
• It recognizes controllable cost areas.
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10. Characteristic:
• Should be flexible.
• Should be synthesis of past present and future.
• Should be product of joint venture and cooperation of
executive/department head at different level of management.
• Should be in the form of statistical laid down in the specific numerical
terms.
• Should have support of top management throughout the period of its
planning and implementation.
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11. Process of budgeting
• Step 1: Establishment of operational goals and objectives and polices.
• Step2: Goals must be translated into quantifiable management
objectives for organizational units. Departmental goal are made.
• Step3 : Formal plan for budget preparation are review including
assignment of responsibilities and timetable is prepared.
• Step4 : Departmental budget are revised and master budget is prepared
.
• Step 5 : Financial feasibility of master budget is tested and final
document is approved and distributed to all parties involved.
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12. Contd..
• Step 6 : Every head of the office are required to prepare
budget estimate in respect of salaries of establishment ,
contingent expenditure and other e.g. telephone, office
expense, rent of building etc.
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13. Fiscal planning :
• A fiscal plan is prepared to display how funds will to spent for a fiscal
year.
• Fiscal planning is kind of business planning that run according to a
fiscal financial year.
• A Continuous process which involves decisions or choices about
alternate ways of using available resources with the aim of achieving
particular goals.
• It is intended at creating a budget that will meet the needs of the
organization and its units.
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14. Accounting :
• “ The process of identifying measuring and communicating economic
information to permit informed judgment and decisions by users of the
information’’ .
• Accounting is an art of recording , classifying , summarizing and
interpreting financial events and transactions in a significant manner and in
terms of money.
• Accounting provides information on the
- Resource available - use of those resource and
-result achieved through their use
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15. AUDITING
• Auditing is the process of examining an organization’s financial record
to determine if they are accurate and in accordance with any
applicable rules ( including accepted accounting standards),
regulation, and laws.
• Auditing is done at the end of fiscal year.
• IT can be external or internal. Internal auditing is done by the internal
staff of the organization and external auditing is done by person/
organization external to the organization
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16. Advantages:
When properly developed administered budget:
• Reduces wastages and losses by identifying wasteful expenditures well
in advance and rectifying them.
• Effective means of communicating future organizational plans to all
people , in monetary and financial terms.
• Pre-decided and approved budget serves as an effective benchmark for
monitoring ongoing operations.
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17. Contd……
• Budgets through participation , encourage and develop team
spirit and collective responsibility towards excellence.
• Basis for assessing performance of senior managers in any
organization.
• Fixes accountability , assignment of responsibility and
authority.
• Financial matters can be handled in orderly fashion .
Activities are balanced.
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18. Disadvantage :
• Promotes waste ; Managers tend to spend all budgeted resources at the
last minute.
• Conflict can occur due to differing perception about budget .
• Estimates can prove inaccurate.
• It is time consuming and expensive .
• There is the chance of over budgeting ,the budget become meaning
less.
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19. Health budget:
• A health budget is the portion of the national budget allocated to the
health sector , including all ministries and agencies involved in health
related activities.
• A health budget is more than a simple accounting instrument to present
revenues and expenses – rather , it is a crucial orienting text, declaring
the country’s key financial objectives and its real commitment to
implement its health policies and strategies.
• For fiscal year 2076/77 the Government Of Nepal has provided NPR
56, 118.80 billion (4.26%) to FMOHP ( Federal Ministry Of Health and
Population, out of which
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20. CONTD..
NPR 4.2 billion (74%) was allocated to Provincial Government
NPR 18.15billion ( 32.2%) allocated to Local Government
NPR 34.08 billion (60.4%) remains at the FMOHP
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21. Types:
A) Regular budget or operating budget:
• For salary
• For all types of allowance
• For telephone ,electricity, water, internet, etc chargers.
• For general repair and maintenance
• For stationary etc
B) Developmental program budget
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22. Contd…..
• For AIDS control program
• For leprosy control program
• For TB control program
• For Family planning program
• For child health and health education program
• For diarrheal disease control program
• For different type of construction etc.
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25. Ministry Of Finance
Ministry Of Health and
Population
Department of Health Service
Regional
Health Office
DPHO/DH
O/District
Primary health care
centre
Health Post 25
26. Reference
• Financial flow chart-District Health Assessment To Guide the Design
of National Health Insurance scheme.
• Budgeting for health –WHO report
• College Accounting Coach
• Nepal Federal Budget FY 2019-20 highlights and key Announcement
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