control system over financial flows
Pietro Arentino, Senior Consultant Group of Companies Bestkonsalt "Material is provided by Magazine "Consultant" (№ 21, 2005)
Many Russian companies do not know firsthand what budgeting. But when it comes to monitoring of budget execution and its analysis, the majority of firms faced with many questions: how to monitor who is supposed to do, how to evaluate the resulting deviation. The concept of budgetary control is based on two concepts: the plan and the fact. The purpose of monitoring and performance analysis of planned budgetary targets - management disorders that affect the financial results. In the process of monitoring the budget controller, first, collects, processes and analyzes information about actual results of financial and economic activity. Second, identify deviations from planned values \u200b\u200band analyzes their causes. Third, management decisions to adjust plans and budgets within the permissible cases. To perform these functions, it is important to establish an effective system control.
Proven Methods
The company can be implemented many different methods of controlling the budget. Many of them are highly specialized and complex enough (eg, the method of "earned value" for the performance evaluation of the project budget). We focus on two common how to: - control of budgets by exception - the operational control of payments (treasury control). The budget represents the company's financial plan action to achieve profitability. Therefore, the basis of a control system must control costs. For its implementation uses the calculation of deviations, in which: - identify deviations from the data management accounting (if provided by the homogeneity of planned and actual data) - estimate the deviation in terms of impact on the planned outcome - determine the nature of deviations (eg, regular or random) and their causes, which may be both internal and related to unforeseen changes in external conditions - preparing recommendations and possible management decisions based on Analysis otkloneniy.Eti functions usually perform financial and economic life: economic planning department, a department budget planning (Depending on the company's organizational structure). In order to identify deviations, specialists of financial and economic services itemized compare actual and plan data. And in order to assess the effect of deviations in the planned result, they use a calculation of the proportion of individual articles. On the example (see table) shows the calculation of deviations of actual values \u200b\u200bfrom routine: on revenues (sale of goods) using the formula "Fact" - "plan", according to line items - the formula "plan" - a "fact." We see that the company has received over 50 000 rubles, less profit than had been planned. To determine influence on this deviation income and expenditure items, you need to calculate the proportion of the formula: (deflection under "/" rejection of profit ") x 100% Column "Deviation" we received information that suggests that the resulting actual profit by 25 per cent lower than planned. This, in turn, by 60 percent due to the fact (the column "Share"), which increased fixed costs. And, accordingly, by 40 percent - that fell realizatsiya.Na based settlements specialist financial and economic department prepares an analytical note of the recommendations to remedy the current situation in the next reporting period. For example, according to calculations, the company must increase sales by 20, 000 and reduce expenditure on "Security" on 10 000, while under "Salaries" - 30 000. At the same time the company has a reserve of 10 000 rubles for the additional costs of arende.Kontrol deviations in nature is "controlled in fact accomplished the operation." He is not able to prevent the single fact of financial-economic activity which results an adverse change. But it is effective over long periods of budget, if conducted on a regular basis. That is, controlling the deviations that occur a monthly budget, you can manage to take management decisions and align performance for the year. For example, a company in the first nine months of receiving data of overpayment of funds by object "Supplies" and "Advertising." Accordingly, it is necessary to make adjustments to the budget of 4 quarters: to reduce expenses under the relevant articles, setting strict limits or control of the treasury budget execution. In the end, it will remove the excess arose.
Score deviations and analysis
Before we analyze the deviations budget items, or indicators, you must determine exactly what is primarily important. For example, the company is no need to analyze reject such a measure as the exchange rate - is the external environment, which is not controllable now. In contrast, indicators of "production cost" or "cost of sales" can be controlled. It is sufficient to determine the cost structure. Next you need to determine the limit of permissible deviations. Typically, it is set as a percentage of the planned value. The value of these deviations can reach 10 percent, but the average range at the level of three to five percent. Definition of limit - it is a subjective evaluation. Typically, companies are guided by specific weight of the article. If the weight of the article "Salaries" is 30 percent of total costs, the planning will be more accurate and allowable limit deviations will be 0,5-1 per cent. In planning, for example, office expenses, constituting 0,05-0,1 per cent of the total amount of costs, limit deviations can be set at 5.10 protsentov.Kontrol budget execution and analysis is usually carried out planned economic life. To analyze the performance Budget use these types of analysis, as ranking factor analysis, plan-fact "analysis and others. Ranking applies in the case when it is necessary a comparative analysis of functional responsibility centers, business units, branches, etc. on the budget. In this case, identifying the most profitable and / or the most unprofitable divisions or activities. For example, the ranking is effectively used when comparing the budgets of sales by filialam.Faktorny analysis is to identify factors that influenced the change of values \u200b\u200banalyzed budget items or indicators. With this type of analysis can, for example, to determine the impact of each of the branches in the total amount of goods and services. The essence of the factor analysis reduces to ensure that the cause of deviations of parameters and to develop recommendations to address them. We have considered an example of detecting deviations from the planned result. Was determined by the proportion of each article in a general change in the financial result. Thus, we conducted a factor analiz.Plan-fact analysis can conducted for all major and individual operating budgets. Its main objective - to identify the causes of deviations, namely - what are the indicators that budget lines, the scenario will affect the execution of the budget kompanii.Privedennye methods are simple and effective in assessing the deviation, so it applies the majority of Russian companies.
Treasury control
essential component of the system of control - control of the treasury execution budget. That is, control of income and expenditure of funds, which are planned in the budget cash sredstv.Operativny control Budget cash flow, usually carries a budget controller. He guided approved limits of funds, determines budget line to finance the excess expenses. Comptroller evaluates each incoming request to carry out calculations and checks to Do not exceed the limit it on the appropriate line item. Exceeding the limits of the budget period may be permitted only by special order authorized official. Usually it is financial or chief executive officer. But when it comes to the redistribution of costs among the various budget lines, these powers tend to perpetuate themselves in financial kontrolerami.Kaznacheysky control is very often used in holdings, where the management company to manage the finance subsidiaries. Affiliates themselves only initiate a payment, and financial management of the parent companies compares the amount of data that is embedded in the budget. And then make a decision about the payment.
Example 1
Branches of one gold companies located in different regions, do not dispose of the funds except for payment of staff salaries. All other expenses paid by the parent company, located in Moscow. The current system of treasury control regulates all operations on the movement of money funds. But it has the flexibility and provides an opportunity to reallocate if necessary cash flows between the various affiliates or budgetary expenditure. The system allows more efficient use of funds of the company. For example, when one of the branches is necessary to pay for unplanned repairs of equipment, the company does not have to raise additional loans. However, it should be noted that not always this technique is effective. A typical error in this type of control - rigidly fixed limits on all articles and not regulated system of budget adjustments. In such cases, the company lacks flexibility and is not able to respond quickly to changes. Businesses should this into account.
Example 2
Thus, the budget of a metallurgical plant is strictly regulated charges to write-off process materials of production. Purchase of these materials is calculated on the basis of the planned write-off value. Then the production technology has changed. In this regard, there is a need to increase the rate and buy a more expensive process materials. The volume of production must was kept at the same level. The amount specified in the application for purchase of materials, was significantly higher than the set. Therefore, the Comptroller, Guided by the routine data, it has reduced. After adjustment costs for the purchase was authorized only if the increase in production. As a result, This led to what the next reporting period decreased production volumes.
Source material: magazine consultant "
