Kaplan 2: Sources of data

Question 1

Sources of information

(Other than last year’s budget, incremental approach, which is not regarded as effective, any inefficiency could be perpetuated)

Answer 1

1. Other Internal sources:
   Info could be obtained talking to junior managers eg. state of repair of NCSs; training requirements.
2. Statistical techniques:
   eg linear regression
3. External sources.
   eg. Supplier pricelists; market rates of pay

Question 2

Budget committee make up

Answer 2

Group of managers & employees with responsibility for the budgetary process.

Typical:
Chief executive.
Management accountant (acting as *Budget Officer)
Functional Heads

*Budget officer (usually a MA is responsible for seeing timetables adhered to & providing assistance to functional managers in creation and analysis)

Question 3

Budget committee role and functions:

Answer 3

Role is to agree planning assumptions for budget preparations

Functions are to:

1. Agree policy with regard to budgets.
2. Co-ordinate budgets.
3. Suggest amendments (eg if inadequate profit)
4. Approve budget (after amendments if any)
5. Examine variations and recommend corrective action if not already taken.

Question 4

Budget manual

Answer 4

Sets out

1. Responsibilities.
2. Procedures to be observed
3. Timetable

Nowadays most of manual will be spreadsheets for managers to complete… easy to consolidate into master budget.

Question 5

Internal sources of info

Answer 5

1. Accounting system
   Sales analysis, cost info, aged receivables.
2. Payroll system
   Detailed labour costs
   Analysis on training, sick, holiday & idle time.
   Labour turnover by dept or mgr
3. Strategic planning system:
   May provide info relating to orgs objectives & targets.
   Details of capital investment programme
   Details of product launch programme.
   Some info may be sensitive & access to SMT.
   CRM system, info on customers obj. to incr. cust. loyalty

Question 6

External sources of Information

Answer 6

Businesses finding increasingly difficult to succeed if ignore the external environment which will influence their activities.

The process known as environmental scanning or monitoring is becoming a more important part of the MA’s role.

These terms describe the process whereby data is collected from outside, as well as from inside the org and used in the decision-making process. (I think this mean ‘as opposed to inside’ rather than ‘as well as’?)

1. Government sources
2. Business contacts
3. Trade associations & trade journals
4. The financial & business press & other media.

Question 7

Examples of info from 1. Government sources

Answer 7

Employment gazette
British business
National Income/Expenditure Blue book

Question 8

Examples of info from 2. Business contacts

Answer 8

Customer info on requirements

Supplier info on discounts/availability/alternatives

Question 9

Examples of info from 3. Trade associations & trade journals

Answer 9

Useful industry news and other info

Question 10

Examples of info from 4. The financial & business press & other media

Answer 10

FT, Guardian provide statistics and financial reviews as well as economic news and commentary.