Organizational Budgeting: Outlining Financial Goals & Allocating Resources - Essay Sample

Introduction

Organizations use budget to outline their financial and operational goals that help in allocating resources, evaluating performance and formulating plans. A budget is essential to an organization because it provides an accurate picture of expenditure and revenues to enable management to make critical business ideas like cut expenses, hire more staff, purchase equipment, or increase marketing (Abeyratne, 2013). Organizations usually have a master budget that has three components, which include; the operating budget, capital expenditure budget, and financial budget.

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Analysis of Organization's Budget

An organization like the International Civil Aviation Organization has its budget planned in two categories, strategic objective and supporting strategies.in 2017, 2018 and 2019, the organizations estimated expenditure was Canadian dollar (CAD) 9, 560,000 for 2017, 9,700,000 for 2018 and 9,930,000 for 2019 while its total authorized appropriation was CAD 302,053,000 for the three years (Zietlow et al., 2018). Its total operational cost was CAD 299,268,000, with a capital of CAD 2,785,000 (Zietlow et al., 2018).

The organization had its total authorized appropriation financed with CAD 302,053,000. International Civil Aviation Organization has its budget divided into two strategic objectives and supporting strategies section (Zietlow et al., 2018). Strategic objectives are further subdivided into safety, air navigation capacity and efficiency, security and facilitation, economic development of air transport, and environmental protection with a total strategic objective of CAD 162,625, which constitutes 53.8% of the budget (Zietlow et al., 2018).

The supporting strategies are subdivided into; program support and management and administration and have a total supporting strategies estimate of CAD 139,428, which is the remaining 46.2% of the budget (Zietlow et al., 2018). The budget has a detailed direct and indirect cost of strategic objectives with a direct cost totaling to CAD 162,625 and the indirect cost of CAD 139,428 (Zietlow et al., 2018).

Components of a Budget

In justifying the component of the budget, the organization indicated its goals, which are to enable States to attain safe, secure, efficient, economically viable, and environmentally responsible air transport. It has stated its accomplishment to provide an overview of emerging aviation issues and risks facing the International Civil Aviation Organization. The organization has outlined a way of how to accomplish the problems laid down by budgeting on supporting strategies and strategic objectives and provide an estimated appropriation (Abeyratne, 2013). The budget is well structured because it has an estimate of what the whole program will cost and how it will fund the program.

The organization has another essential component of a budget, which is a specified period to which the budget applies (Abeyratne, 2013). In this case, it is three years, which is from 2017 to 2019. The budget is presented to its assembly for review and approval of the requirements and guidelines indicated by the International Public Sector Accounting Standards (Zietlow et al, 2018). Lastly, the budget has the budgeted financial statements: with an estimated detailed income breakdown and another estimated detailed expense breakdown.

Conclusion

In conclusion, I feel that this is a quality budget and that it does not need any improvement because it has all the components a budget should have, and any effort to improve it would complicate it. Once it is complicated, it might not serve its purpose of planning or informing the public of the organizations' activities. The budget is in line with the requirements and guidelines indicated by the International Public Sector Accounting Standards.

References

Abeyratne, R. (2013). Reinventing ICAO's Role in Economic Regulation-A Compelling Need. Issues Aviation L. & Pol'y, 13, 9. https://heinonline.org/HOL/LandingPage?handle=hein.journals/isavialp13&div=5&id=&page=

Zietlow, J., Hankin, J. A., Seidner, A., & O'Brien, T. (2018). Financial management for nonprofit organizations: Policies and practices. John Wiley & Sons. https://books.google.co.ke/books?hl