Foreword
Preface
Acknowledgments
Part One Introduction To The Budgeting Process
Chapter 1 Integrating The Balanced Scorecard For Improved Planning And Performance Management
Antosh G. Nirmul
Overview
Elements Of A Balanced Scorecard
Use Of Strategy Maps
Scorecard Cascading
Bringing It All Together
Integrating The Scorecard With Planning And Performance
Balanced Scorecard And Annual Planning
Continuous Strategic Management With The Scorecard
Summary
Chapter 2 Strategic Balanced Scorecard–Based Budgeting And Performance Management
Robert E. Paladino, CPA, MBA
Introduction: Why Most Companies Fail To Implement Their Strategies
Why a Few Companies Produce Exceptional Results
Measure Your Strategy with Balanced Scorecard
Balanced Scorecard–Based Budgets
Performance Management
SUMMARY
Chapter 3 Budgeting And The Strategic Planning Process
Albert A. Fried
Definition Of Strategic Planning
Planning Cycle
Strategic Planning Process: A Dynamic Cycle
Situation Analysis
Business Direction/Concept
Alternative Approaches
Operational Plan
Measurement
Feedback
Contingency Planning
Problems In Implementing Formal Strategic Planning Systems
Summary
Chapter 4 Budgeting and Forecasting: Process Tweak or Process Overhaul? †
Joseph M. Orlando
William E. Dailey
Introduction
Survey Methodology
Findings: Budgeting Process
Findings: Forecasting Process
Report Summary
Developing a Road Map for Change
Chapter 5The Budget: An Integral Element Of Internal Control
Jay H. Loevy, C.P.A., C.F.E.
Edward Mendlowitz, CPA
Introduction
The Control Environment
Planning Systems
Reporting Systems
Summary
Chapter 6 Relationship Between Strategic Planning And The Budgeting Process
Jeffrey L. Bass, M.A., M.P.A.
Introduction
How To Plan
The Audience For Whom The Plan Is Designed
Strategic Business Planning And Its Role In Budgeting
Planning Differences Between Small, Medium, And Large Organizations
Components Of Strategic Planning
Management And Organization
Market Analysis
Formulation Of Marketing Strategies
Operations Analysis
Summary
Chapter 7 The Essentials Of Business Valuation
Frank C. Evans, C.B.A., A.S.A., C.P.A./A.B.V.
Edward Mendlowitz, CPA/ABV/CFF/PFS
Introduction
Understanding The Valuation Assignment
Research And Information Gathering
Adjusting And Analyzing The Financial Statements
Three Approaches To Valuing A Business
Income Approach
Market Approach
Asset Approach
Making Adjustments To Value
Reaching The Valuation Conclusion
Chapter 8 Moving Beyond Budgeting: Integrating Continuous Planning and Adaptive Control
Steve Player
Robin Fraser
Jeremy Hope
Introduction
Annual Budgeting Trap
Why Some Organizations are Going Beyond Budgeting
Beyond Budgeting: Enabling a More Adaptive Performance Management Process
Climbing the Twin Peaks of Beyond Budgeting
Beyond Budgeting: Enabling Radical Decentralization
An Alternative Coherent Performance Management Process has Emerged
Chapter 9 Moving Beyond Budgeting: An Update
Steve Player
Introduction
Beyond Budgeting Round Table (BBRT)
Guardian Industries Corporation (Guardian)
Part Two Tools And Techniques
Chapter 10 Implementing Forecasting Best Practices
Terrence B. Hobdy, B.B.A., M.B.A.
Introduction
Budgeting Versus Forecasting
Implementing Forecasting Best Practices
Forecasting Best Practices: Process
Forecasting Best Practices: Organization
Forecasting Best Practices: Technology
Conclusion
Chapter 11 Calculations And Modeling In Budgeting Software
Paul Barber
Introduction
Why Companies Use Budgeting Software
Calculations In Accounting Systems And Spreadsheets
Budgeting Software
Olap Databases
Modeling And Budgeting
Processes
More Complex Budgeting Calculations
Conclusion
Chapter 12 Cost-Accounting Systems: Integration With Manufacturing Budgeting
Paul D. Warner, Ph.D., LL.M., C.P.A.
Edward Mendlowitz, CPA
Introduction
Decision Factors In The Selection Process
Cost-Accounting System Options
Costs Associated With A Product
Labor Cost
Variable Costing And Budgeting
Full Costing And Budgeting
Cost-Accumulation Procedures
Valuation: Actual Versus Standard
Actual Costing
Actual Costing, Budgeting, And Cost Control
Standard Costing
Variance Reporting
Variances And Budgeting
Manufacturing Overhead
Manufacturing Overhead, Budgeting, And Cost Control
Chapter 13 Break-Even And Contribution Analysis As A Tool In Budgeting
Jay H. Loevy, C.P.A., C.F.E.
Edward Mendlowitz, CPA/PFS/ABV/CFF
Introduction
Break-Even Analysis
Price/Volume Chart
Contribution Analysis
Cost–Volume–Price And The Budgeting Process
Chapter 14 Profitability And The Cost Of Capital
Mike Kaufman
Introduction
A Market Gauge For Performance
Coping With The Cost Of Equity
Building Company-Wide Profit Goals
Building Divisional Profit Goals
Information Problems And Cost Of Capital
Summary
Chapter 15 Budgeting Shareholder Value
Serge L. Wind, Ph.D.
Introduction
Long-Term Valuation
Economic Value Added
Complementary Measures Of Valuation
Budgeting Shareholder Value
Summary
Chapter 16 Applying The Budget System
R. Layne Weggeland
Malcolm M. Knapp, M.B.A.
Edward Mendlowitz, CPA
Introduction
Initial Budget Department Review Of Divisional Budget Packages
Divisional Review Meetings
Budget Consolidation And Analysis
Preliminary Senior Management Review
Final Revision Of Operating Group Plans
Second Budget Staff Review Of Operating Group Plans
Revised Consolidated Budget Preparations
Final Senior Management Budget Review Sessions
Operating Groups’ Monthly Submissions
Effective Use Of Graphics
Summary
Chapter 17 Budgets And Performance Compensation
Graef S. Crystal
Introduction
Measures Of Executive Performance
Structuring Reward Opportunities
Pitfalls Of Linking Incentives To Budgets
An Optimal Approach
Adjusting Operating Unit Targets
Budgets And Long-Term Incentive Plans
Summary
Chapter 18 Predictive Costing, Predictive Accounting
Gary Cokins, C.P.I.M.
Internet Forces The Need For Better Cost Forecasting
Traditional Budgeting: An Unreliable Compass
Activity-Based Costing As A Foundation For Activity-Based Planning And Budgeting
Budgeting: User Discontent And Rebellion
Weary Annual Budget Parade
Abc/M As A Solution For Activity-Based Planning And Budgeting
Activity-Based Cost Estimating
Activity-Based Planning And Budgeting Solution
Early Views Of Activity-Based Planning And Budgeting Were Too Simplistic
Important Role Of Resource Capacity Causes New Thinking
Major Clue: Capacity Only Exists As A Resource
Measuring And Using Cost Data
Usefulness Of Historical Financial Data
Where Does Activity-Based Planning And Budgeting Fit In?
Activity-Based Planning And Budgeting Solution
Risk Conditions For Forecasting Expenses And Calculated Costs
Framework To Compare And Contrast Expense-Estimating Methods
Economics 101?
Chapter 19 Cost Behavior And The Relationship To The Budgeting Process
Eugene H. Kramer, C.P.A.
Introduction
Cost Behavior
Break-Even Analysis
Additional Cost Concepts
Differential Cost Concepts
Maximizing Resources
Estimating Costs
Summary
Part Three Preparation Of Specific Budgets
Chapter 20 Sales And Marketing Budget
R. Malcolm Schwartz
Introduction
Overview Of The Budget Process
Special Budgeting Problems
Pertinent Tools
Unique Aspects Of Some Industries
Summary
Chapter 21 Manufacturing Budget
C. Eugene Moore
Introduction
Concepts
Changing To A Cost-Management System
Problems In Preparing The Manufacturing Budget
Three Solutions
Technique
Determining Production Requirements
Step 1: Developing The Plannable Core
Step 2: Obtaining Sales History And Forecast
Step 3: Scheduling New And Revised Product Appearance
Step 4: Determining Required Inventory Levels
Step 5: Establishing Real Demonstrated Shop Capacity
Step 6: Publishing The Master Schedule
A Total Quality Program—The Other Alternative
Inventory And Replenishment
More On The Manufacturing Budget
Determining Raw-Material Requirements
Determining Other Indirect-Material Costs
Determining Direct-Labor Costs
Establishing The Manufacturing Overhead Functions And Services
Quality Control Economics Review Questions
Plant Engineering Buildings And Equipment Maintenance Review Questions
Floor And Work-In-Process Control Review Questions
Summary
CHAPTER 22 Research And Development Budget
Maurice I. Zeldman
The Relationship Of Research And Development And Engineering To The Total Budgeting Process
Problems In Establishing Research And Development And Engineering Objectives
Developing A Technological Budget
Preparing A Departmental Budget
Managing A Budget
Coordinating Project Budgets
CHAPTER 23 Administrative-Expense Budget
R. Malcolm Schwartz
Maria Theresa Mateo, M.B.A.
Introduction
Role And Scope Of The Administrative-Expense Budget
Methods Used For Preparing The Administrative-Expense Budget
Factors That Impact The Administrative-Expense Budget
Unique Issues Impacting The Administrative-Expense Budget
Tools And Techniques For Managing The Administrative-Expense Budget
Summary
Chapter 24 Budgeting The Purchasing Department And The Purchasing Process
Carl Benner
John N. Trush
Thomas F. Norris
Description And Definition Of The Process Approach
Role Of Process Measures
Process Measures
Creating The Procurement Process Budget
Chapter 25 Capital Investment Review: Toward A New Process
Bryan Crawford
Introduction
Context Of The Revised Capital-Investment Review Process
Benchmarking Capital-Investment Review Best Practices
Revised Capital-Investment Review Process: Overview
Implementation: What Bonneville Learned In The First Three Years
Summary
Chapter 26 Leasing
Robert Dale Apgood, Ph.D., M.B.A., C.P.A.
Introduction
Overview Of The Leasing Process
Possible Advantages Of Leasing
Possible Disadvantages Of Leasing
22.5 Types Of Lease Sources
Lease Reporting
Lease-Versus-Purchase Analysis
Financial Accounting Standards Board Rule 13 Case Illustration
Negotiation Of Leases
Selecting A Lessor
Lease-Analysis Techniques
Lease Form
Summary
Chapter 27 Balance-Sheet Budget
James E. Kristy
Introduction
Purpose Of The Balance-Sheet Budget
Definition
Responsibility For The Budget
Types Of Financial Budgets
Preparing Financial Budgets
Preparing The Balance-Sheet Budget
Adequate Cash
Financial Ratios
Analyzing Changes In The Balance Sheet
Chapter 28 Budgeting For International Operations
George Cassidy
Gert Schumann
Introduction
“Top-To-Bottom” Qualitative Review
Operating And Capital Budgets
Regional/Group Budget Reviews
Publication Of Integrated Planning Document
Strategic Direction Paper
Distribution Of Strategic Direction Paper/Receipt Of Draft Integrated Planning Document
Budget-Review Procedure
Integrated Planning Document
Monthly Reporting Procedures
Budgeting For Headquarters Operations
Alternative Organizations Of International Business
Chapter 29 Understanding Foreign Exchange Transactions
Françoise Soares-Kemp, C.F.P.
Foreign Exchange Rates
Impact Of Foreign Exchange On Operating Exposure Management
Chapter 30 Budgeting Property And Liability Insurance Requirements
Ronald K. Tucker, B.B.A., C.P.C.U., A.R.M.
Vicki L. Tucker, M.S., A.R.M.
Introduction
Role Risk Management Plays In The Budgeting Process
Types Of Insurance Mechanisms
Role Of Insurance/Risk Consultants
Use Of Agents/Brokers
Self-Insurance Alternatives
Identifying The Need For Insurance
Key Insurance Coverages
Identifying Your Own Risks
How Can One Budget For Casualty Premiums?
Summary
Part Four Budgeting Applications
Chapter 31 Budgeting: Key To Corporate Performance Management
Michael Coveney
Future Of Budgeting
Adding Value To The Organization
Corporate Performance Management
Developing A Budget Process Focused On Implementation Of Strategy
Role Of Technology
Overcoming Organizational Resistance
Planning And Controlling Implementation Of A New System
Conclusion
Chapter 32 Zero-Based Budgeting
Peter A. Pyhrr
Introduction
Problems With Traditional Techniques
Zero-Based Approach
Zero-Based Budgeting Procedures
Decision Package
Ranking Process
Completing The Profit And Loss
Preparing Detailed Budgets
Summary
Chapter 33 Bracket Budgeting
Michael W. Curran
Introduction
Application Of Bracket Budgeting
Premises To Profits?
Developing A Tactical Budgeting Model
Bracket Budgeting In Annual Planning
Consolidating Income Statements
Summary Of Benefits
Summary
Chapter 34 Program Budgeting: Planning, Programming, Budgeting
William B. Iwaskow, M.B.A., J.D.
Introduction
Description Of Program Budgeting
History
Framework Of Program Budgeting
Program Structuring
Types Of Analysis
Installation Considerations
Summary
Chapter 35 Activity-Based Budgeting
James A. Brimson, M.B.A.
John J. Antos, M.B.A.
Edward Mendlowitz, CPA
Introduction
Traditional Budgeting Does Not Support Excellence
Activity-Based Budgeting Definitions
Activity-Based Budgeting Process
Linking Strategy And Budgeting
Translate Strategy To Activities
Determine Work Load
Activity-Based Budgeting Calendar
Create Planning Guidelines
Identify Interdepartmental Projects
Improvement Process
Finalizing The Budget
Performance Reporting
Summary
Part Five Industry Budgets
Chapter 36 Budgeting for Corporate Taxes
Scott M. Cheslowitz
Stewart Berger
Introduction
Taxation of C Corporations
Personal Holding Company Tax
Net Operating Loss Utilization
Charitable Contributions
Taxation – Budget
Federal Corporate Tax
Purposes
Tax Return
Chapter 37 Budgeting In Nonprofit Organizations
Richard S. Wasch
Introduction
Nonprofit Sector
Nonprofit Budgeting Characteristics
Nonprofit Budget Process
Tools For Use In Nonprofit Budgeting
Chapter 38 Budgeting In Higher Education
Frederick J. Turk, C.P.A., M.B.A.
Introduction
Resource Management—Budgeting In Context
Annual Budgeting
Summary
Chapter 39 Budgeting In The Health-Care Industry
Christopher S. Spence, M.B.A.
Overview
Cost Control
Cost Control In A Competitive Market
Basics Of Health-Care Budgeting
Hospital Budgeting
Physician Budgeting
Chapter 40 Budgeting In The Biotech Industry
R. Malcolm Schwartz
Glenn A. White
Robert F. McElroy
Overview
Key Budgeting Issues
Challenges At Stages Of The Company’s Life Cycle
Budget Focus By Function And Area
Other Considerations AND TOOLS
SUMMARY
Chapter 41 Budgeting In The Global Internet Communication Technology Industry
Michael Kraten, PhD, CPA
Overview
Essentials From Earlier Chapters
Freemium Strategies
Volunteer Services
Enterprise Risk Management
Sources And Suggested References
About the Editor
About the Contributors
Index
