Any economic entity works on the principle of budgeting, that is, the formation of a financial "wallet" for a certain period. Working with him is an important part of the economic strategy, since exactly what is defined in it will affect the further possibilities of fulfilling the set goals.
The concept of budget and its functions
To understand what constitutes such an economic phenomenon as the "budget", it should be defined. It should be noted that it can be characterized in different formulations, but the following meaning will always be present - this is a fixed plan of income and expenses drawn up for the future period with a final implementation date. That is, this is a financial document containing essential information about the financial resources that should be available to the entity and which must be directed to the scheduled items of expenditure. But budgeting is not directly based on exclusively quantitative accounting, but includes more capacious actions for the qualitative analysis and determination of items of both income and expenses.
Each business entity chooses the period of its planning and implementation, except for those cases when the period is clearly defined in the legislation. In this case, the budget of the state and local levels is assumed.
Economically independent economic entities can set the period of its implementation at their discretion, based on the characteristics of the type of activity, but most often take a period of one standard calendar year. At the same time, budgeting is not directly based solely on current indicators, but rather takes into account development forecasts and likely new areas of expenditure.
Compilation levels
For commercial companies that do not have a hierarchy, a draft budget is prepared at the level of senior management with the participation of specialized departments, such as: economic planning, accounting, manufacturing, etc. But there is a condition. If the company is small, then the preparation of the draft budget is carried out by executives.
Companies with an extensive branch structure or holdings also carry out budget planning at the highest level, taking into account the planned budgets included in the company, firms.
Considering the budget system of Russia, the following levels should be highlighted:
- The federal budget, which is aimed at solving the most fundamental tasks of the state and the population.
- The budget of the constituent entities of the Russian Federation associated with processes at the regional level.
- Local level - budgets of urban districts, municipal districts, etc.
The stages of the formation of the draft budget
The budgeting process is very capacious and complex. It requires a competent and rational approach to take into account all the necessary aspects of budgeting.
It should highlight the main phases of its preparation for a commercial company:
- Determining the period for which the draft budget is compiled, the distribution of points of control over the implementation of the budget based on the time or project factor.
- Determining the sales potential in the planning period, taking into account all the main factors: demand fluctuations, price dynamics and changing consumer welfare, the possibility of changing the level of supply of goods and services, the actions of competitors in the market.
- Expenditure planning taking into account changes in the company's production policy, marketing strategies, availability of resources for carrying out activities, etc. Management costs are determined.
- Comparison of two articles - revenue and expenditure for their relationship.
- Identification of risks, change in balance in the budget.
- Direct preparation of the draft budget, its approval.
- Budget control at each control point.
If you want to answer the question “what are the main phases of the country's budgeting”, then in this case the process is more complex and multidimensional. The preparation period begins long before the time when it will be approved. The preparatory work will include the development of economic development plans, forecasts on financial, economic and social processes, based on data from tax authorities, and also include the main guidelines for the country's development, indicated in the message of the first person of the state.
In the future, the adoption of the federal budget will require that this document passes the approval of the State Duma, which in several readings produces discussion and approval.
Budget structure
Budgeting is not directly based on only items of income and expense, but takes into account a large number of additional factors and risks.
If the budget structure of a commercial company has already been described in the stages of budget formation, then the composition of the state budget should be considered separately.
The state budget also has items of income and expenses. The former are divided into tax and non-tax.
All taxes related to the federal level, as well as duties, including customs, are classified as tax items of income. The second group of revenues relates to the receipt of revenues from the sale of state property, profits of state enterprises, foreign economic activity, the implementation of state reserves and stocks.
The composition of federal budget expenditures is very diverse. Here, first of all, there are directions for providing social support to the population, which includes various types, the content of the national defense, the judicial system, law enforcement systems, and government agencies. Conducting federal investment programs, servicing public debt, and assisting local budgets are also expense items.
Imbalance in the state budget
Despite the fact that the state budget is compiled on the basis of the balance of expenditures and revenues, in the course of its implementation there is a divergence of proportions and a situation of imbalance. In the case when the expense items begin to exceed the revenue side, a budget deficit arises, the opposite situation is characterized as a budget surplus. Budget deficits are more common. In the event of such a situation, it will be necessary to seek sources for its repayment. Most often, at the state level, gold and currency reserves are used for this.
The situation when there is a surplus is, at first glance, more successful, but on the other hand, this means that some directions were incorrectly calculated, as a result of which they may not receive funding in the current time.
The issue of actual discrepancy between the items of income and expenses is also characteristic of commercial enterprises. In such cases, most often top management makes operational adjustments to these articles, identifies areas in which it is permissible to reduce funding in the event of a budget deficit, and if there is a surplus, what types of activities can be financed additionally.
Budget Legal Issues
The state budget is regulated by the Budget Code of the Russian Federation. Budgeting is not directly based on the Constitution of the Russian Federation, but the country's most important document determines the procedure for considering and approving the budget. The RF Constitution also fixes the budget system of the state, therefore, the relationship of the entire work procedure with the state budget and the RF Constitution is obvious.
It should be noted that the Budget Code of the Russian Federation, based on the principles of federalism and the independence of local self-government, constitutionally approved in the general provisions, contains information on the terms for which budgets of different levels are approved. At the same time, despite the fact that a period of three years is prescribed, the financial budget of Russia for a year is created in each three-year cycle. This allows you to look more broadly at upcoming periods and strategically manage revenue and expenditure.
Evaluation of the effectiveness of the budget strategy
As it was revealed, budgeting is not directly based on the balance of financial resources, but includes a complex of financial factors. The main task of budgeting, in addition to the quantitative balance of expenses and income, is the achievement of goals in each direction, provided with finances. Therefore, quite often they control the execution of the budget and the targeted use of funds, since when directing funds to third-party processes, the initial goals will not only not be achieved, but there will also be a fan-like decrease in efficiency in a number of related areas.
