Budgeting Alternatives

Author: Rob Stephens

Budgeting consumes a massive amount of time and resources. It's a stressful and busy time.

Are there ways to improve the effectiveness of the investment we make in the budget process? Can we make better budgeting decisions that lead to higher performance?

There are options within and beyond traditional budgeting. Each company should consider these options and decide which could improve their budgeting process. Budgeting has many benefits that we can continue to capture and build upon.

This course starts by outlining the benefits and challenges of budgeting. Throughout this course, I'll provide tips and alternative budget systems that can mitigate these challenges and capture more benefits.

I'll explore a series of budgeting alternatives. We'll look at rolling forecasts, zero-based budgeting, activity-based budgeting, and many others. We'll also look at operating without a budget. Each alternative has pros and cons that I'll list.

Each lesson in this course gives an overview of the budget alternative to help you decide whether you want to pursue that alternative further. Even if you don't fully adopt these alternatives, you can find ideas to improve your budgeting process.

The course concludes by revisiting budgeting process challenges and how the tips and alternatives presented in the course can address or mitigate those challenges.

Publication Date: February 2024

Topics Covered

• The master budget and sub-budgets
• The budgeting process

Learning Objectives

• Identify budgeting benefits and challenges
• Recall the differences between traditional costing and activity-based costing
• Recognize the pros and cons of budgeting alternatives
• Identify budgetary slack
• Identify the term for prospective financial amounts "based on the responsible party's assumptions reflecting the conditions it expects to exist and the course of action it expects to take", according to the AICPA
• Identify the type of company that would benefit least from rolling forecasts
• Identify the budget that adjusts budgeted variable expenses based on volume or sales thresholds
• Identify the budgeting method where expenses are released based on the priority level related to revenue and cash flow
• Identify the budgeting method that prioritizes expense allocations based on which products or services produce the highest value

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Finance (3 hours)

Program Prerequisites
None

Advance Preparation
None