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Managing Budgets and Financial Plans

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At present, it is not unusual to have the budget function report to levels of management on top of the controller. Even though it is still accommodating for the budget director to report to the corporate controller, the approach toward reporting to a higher level is an acknowledgment of the necessity to have the budget function commonly based in all operating areas of the business. The budget committee of Swann Communication is composed of representatives from most operating areas. This composition promotes synchronization. If correctly administered, the budget committee can achieve the exceptionally useful role of encompassing and reconciling the numerous diverse interests that make up a modern business. An effective budgeting system assists control. The budgeting system must fit Swann Communication’s operational control needs. The budget is considered as management’s quantitative expression of plans for a forthcoming period. Budgets are prepared at different levels of the business. The Master budget is defined as the general financial plan for the period, which suggests the company’s goals and objectives (Kemp, and Dunbar, 2003). The master budget of Swann Communication composes operating and financial budgets. Operating budgets demonstrate the business’ planned sales and operating expenses. The Financial budgets mirror financing plans such as borrowing, leasing, and cash management. Budgeting, when done correctly, can serve as a planning and controlling system. Swann Communication’s goals and performance objectives are documented in financial terms. Once formulated, these plans are used all through the year. The monthly performance reports compare budgeted results with actual results. Management can inspect the performance reports and take required corrective actions to control operations. The role that successful budgeting plays in the management of Swann Communication is best understood when it is associated with the essentials of management.&nbsp.