BUDGETING

1. BY:BINAL PATEL
Budgeting for nursing educational
institution

2. AIMS AND OBJECTIVES
 AIM:
At the end of seminar group will be able to
implement their knowledge regarding budgeting in
practice.
Objectives:-
At the end of seminar group will be able to…
 Define budgeting.
 Enlist purposes of budgeting.
 Describe meaning of budgets, budgeting and
budgeting control.

3.  Describe classification of budget.
 Enlist principles of budgeting.
 Explain budgeting process.
 Explain budgeting for nursing institutions.
 Enlist advantages and disadvantages of
budgeting.

4. History
 Budget word was first coined by the British kings
in early days from the word ‘BOUGETTE’
 The important milestones were:-
-1215 AD :constitutional exposure
-1718AD : consolidated fund act passed which
considered budget as financial statement of govt.
activities for facilitating accountability of public fund.
-1882AD: budget entered the parliament for first
time seeking advice

5. Definition of budgeting
1. Budget is a financial plan of the government for a
definite period.
-
Taylor
2. Budget can be defined as a numerical statement
expressing the plans , policies and goals of an
organization for a definite period in future.
-
Anonymous
3. Budget is a concrete precise picture of the total
operation of an enterprise in monetary terms.
-
Donovan

6. PURPOSES OF BUDGETING
 To provide a quantitative expression of the
plans of the institution.
 To evaluate financial performance in
accordance with the plans .
 To control costs
 To supply a mechanism for translating fiscal
objectives into a projected monthly spending
pattern.
 To enhance fiscal planning an decision
making.

7.  To clearly recognize controllable and
uncontrollable cost areas.
 To identify problem areas and facilitates effective
solution.
 To provide a means for measuring and recording
financial success in accordance with the
objectives of the organizations

8. Difference between budgets,
budgeting and budgetary control
 Budgets are the individual objectives of a
department, etc.
 Budgeting may be said to the act of building
budgets.
 Budgetary control embraces all and in addition
includes the science of planning the budgets
themselves and the utilization of such budgets as
a tool for the business planning and control.

9. Classification of budget
 Incremental budget:-
this is based on estimated changes in the
present operation, allowing for a percentage increase for
inflation, all of which is added to the previous year’s
budget.
 Flexible budget:-
this comprises several financial plans, each for
a different level of programme activity. It is based on the
fact that operating conditions rarely abide by expectations.
 Revenue and expense budget:-
it may be prepared in a detailed form or abstract
statement, reflecting the items of profit and loss under
classified headings.

10.  Rollover budget:- this one forecasts programmes,
revenue and expenses for a period more than a year, to
accommodate programmes that are larger than the
annual budget cycle.
 Fixed-ceiling budget:- this is a financial plan in which the
uppermost spending limits are set by the top executive.
 Performance budget:- this is based on functions not
divisions, e.g nursing research.
 Cash budget:- this is prepared by way of projecting the
possible cash receipt and payments over the budget
period.
 Expense budget:- expense budget in respect of
educational institutions can be prepared department wise

11.  Responsibility budget:- it is a budget which identifies the
revenues an costs with an individual responsible for their
incurrence. Such a budget is an excellent control device since
it identifies with the individual only such revenues and costs
which are controlled by him.
 Master budget:- it is a summary budget incorporating all
functional budgets in a capsule form.

12. Principles of budgeting
 A budget should provide sound financial management by
focusing on the requirement of the organizations.
 A budget should focus on objectives and policies of the
organization. It must flow from objectives and give
realistic expression to the realizations of such objectives.
 A budget should ensure that programmes activities are
planned in advance.
 A budget should ensure the most effective use of the
available financial and nonfinancial resources.

13.  Budgeting should aim at ensuring coordination among
the various departments, establishing a frame of
reference for managerial decisions and providing criteria
for evaluating managerial performance.
 A budget should not adopt too high or too low estimates.
 A budget is prepared under the leadership of the
administrator .
 While working on the budget a review of the performance
of the previous year is necessary and an evaluation of its
adequacy both in quantity and quality.
 While developing a budget , provision should be made for
its flexibility.

14. Budgeting process

15. BUDGETING FOR NURSING
INSTITUTIONS
 School/college of nursing should have a separate
budget, principal in charge of the school of
nursing should be drawing the budget .(as per
government rules regulations and as seemed
necessary for running an educational institutions.)
 Both the school/college and hospital should have
separate budget. The budget for the school or
college is annually planned by the nursing
director ,principal and general manager and
approved by the managing director.

16. Classification of budget
Budget is classified into 2 heads
1. Revenue: it includes assets, fixed deposits,
investments, loan , income.
2. Expenditure : it includes all expenses.

17. Revenue expenditure
 College fees( from
students)
 Fixed deposits
 Government salary(for
employees)
 Donation(trustees)
 Guest lecturers
 Staff salary
 University payment
 Workshop or
conferences
 Maintenance

18. Recurring annual mandatory
expenditure
 Affiliation fees – Rs.-3,00,000/- and every year
Rs. - 50,000/- per course
 Inspection fees Rs. 25000/-
 State council – Rs. 7000/- every year for
recognition
 INC recognition fees Rs. 50,000/per course
 INC inspection fees 7,500
 Reinspection fees 7000/-

19. Recurring monthly expenditure
 Salary
 Stationary items
 House keeping indent
 Rent
 Guest relation
 Maintenance: repair, electricity

20. Programme fees
Programme
name
1st
inspection
fees
Annual
affliation
fees
Re-
inspection
fees
ANM /GNM 50,000 10,000 15000
B.SC NSG 1,00,000 10,000 15000
M.SC NSG 1,00,000 10,000 15000
P B BSC 1,00,000 10,000 15000
M PHIL 1,00,000 10,000 15000
PHD 1,00,000 10,000 15000

21. Balance sheet
 Definition :-
a balance sheet is a financial
statement that summarizes a organization’s
assets, liabilities and shareholder’s equity at a
specific point in time. These three balance
sheet segments give investors an idea as to
what the organization owns and owes, as well
as the amount invested by shareholders.

22.  Assets:- assets are items that are owned and
have value. Assets would include cash,
investments, money that is owed to the
person .
 Liabilities:- a liability is a company’s financial
obligations that arise during the course of its
business operations. eg: loans , account
payable.
 Shareholder’s equity:- is the difference between
total asset and total liabilities.

23. Format of balance sheet
liabilities Amount assets Amount
Loan taken 40000 Bills
receivable
40000
Account
payable
30000 Inventories(st
ock)
50000
70000 90000
Equity = assets-liabilities
90000-70000
20000

24. Advantages of budgeting
 A budget helps plan for detailed programme
activities.
 Financial matters can be handled in an orderly
fashion.
 Budgets act as controlling devices to correct any
excessive expenditure of a given activity at any
point of time.
 Weakness in the organization can be revealed
where there is no facilities available.
 Budget helps the management learn from past
experience .the management can isolate errors
and analyze their causes and establish steps to

25. Limitations of budgeting
 It is time consuming process
 Over budgeting is a big danger which may render
a budget becomes meaningless and expensive.
 Skill and experience are essential for successful
budgetary control.
 Restrict the activities.

26. Research study
 Fabricating budgets: a study of the production of
management budgeting in the national health
service
The study shows that management budgeting is
fabricated, put together in a changing and fragile
manner. Emerging accounting systems are not
fixed technologies with well defined purposes which
reflects patterns of responsibility but changing
constructions . Through this study of accounting in
actions, the paper explores the processes by which
accounting and budgeting systems bring economic
logic into hospital management .
It is also relevant to debates about the role of
budgeting and accounting in health care

27. BIBLIOGRAPHY
1. Bhaskara Raj e, Bhaskar
nima,2013,textbook of nursing
education, 1st edition ,EMMESS
medical publishers, Bangalore.
2. P C Tripathi P N Reddy , principles of
Management ,2ND edition , Mc-Graw
publication, New Delhi
3. www.science direct.com