The Budget Cycle Paper Example

I am writing to acquaint you of the budget process. As a city council, you will be needed to prepare a budget during your term in office. It is essential that everyone is aware of the budget cycle so that when the time comes, there will be proper coordination and contribution from each member as needed. Before the budget cycle is communicated, it is important to note that budgeting is a continuous process that involves policies, recommendations, and harmonization of needs. It is a process that requires prioritization of needs and projection of what is needed within a specified period before the next budget. As such, submissions must be made in advance on the needs of the various council divisions so that the overlapping needs and those unique to each division are identified and categorized as such. Through the processes that follow, proper budget estimates are determined.

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The budget cycle is the term used to refer to the life of a budget. As council members, the essential aspect of your duties will be to come up with budgets for the local government to deliver services to the people efficiently. The budget cycle, therefore, refers to the steps that you will follow to come up with a proper budget. There will be many distinct processes to adhere to while coming up with a budget. Six stages of the budget cycle form three segments, each of which advances the one preceding it. The first segment involves the initial preparation and submission of the budget. The second segment entails its approval. Next, the budget will need to be audited and evaluated before what is provided in it can finally be implemented.

The initial step during the budgeting process is the preparation of the budget. Once the budget is prepared, it is submitted. During these two critical stages, the council will consider the numbers and decide on what merits and what is to be given priority in the later stages (Crossman & Fischer, 2015). It is at this stage that the outline of the budget is drawn and the first rough draft achieved. The various departments that form the local government each submit their budget estimates for the coming year and the council are tasked with first going through those numbers and establishing if they lie within the range of what the can be financed. This process involves input from various members, and an agreement is determined on issues provided. The complete budget is then submitted to relevant persons who review it. It is then forwarded to the accountant who goes through it and advises accordingly. The communication between the council and the accountant will require a give-and-take approach and members must be prepared for this.

In the second step, the budget is approved and executed. This segment of the budget marks the end of the give-and-take transactions between the council members and the accountant and makes the budget official. At this point, the budget is said to have taken shape. Approval of the budget will be done by the council members as provided. The approval means that the numbers that appear on the budget are final and the local government is given the go-ahead to prioritize and finance projects based on the estimates that are captured. Execution of the budget marks the beginning of a new accounting period. The fiscal year for the council begins at this point. It is important to note during the execution of the budget, and strategies are put in place to monitor and control the ongoing financial activities.

The third and final segment of the budgeting process which forms the budget cycle involves auditing and evaluation of the budget. These two processes occur after expenditure, once the fiscal year is ended and serves as a review of how well the budget was executed against what was envisioned. An assessment of the compliance of the budget against the projection for accuracy and effectiveness occurs at this point. From the determinations made at this point, recommendations are made for the next budget cycle which follows a similar procedure.

Please note that the council is restricted to these processes while preparing its budgets. They will be essential for ensuring that due diligence is followed in the budgeting process and will guide the improvement of efficiency based on past experiences. The budget cycle provides properly defined segments which are expected to ensure professional engagements between the stakeholders (Van der Stede, 2015). During these two crucial stages, the council will consider the numbers and decide on what merits and what is to be given priority in the later stages. It is at this stage that the outline of the budget is drawn and the first rough draft is drawn. The various departments that form the local government will each submit their budget estimates for the coming year, and the council will be tasked with first going through those numbers and establishing if they lie within the range of what the council can comfortably finance.

Kindly let me know if any further clarifications are necessary.

References

Crossman, H., & Fischer, D. (2015). Transparency and Fiscal Responsibility: Traditional Critics vs. Participatory Budgeting. Participatory Budgeting (June 12, 2015).

Van der Stede, W. A. (2015). Budgeting and management control. Wiley Encyclopedia of Management, 1-7.