Question

Describe the flow of budget data in an organization. Who are the participants in the budgeting process, and how do they participate?

Answer 1

Budget information flows in two directions: up and down. The initial flow should be from the bottom of the tissue to the top. The person responsible for income or expenses should create budget data to measure final performance. Once budget data is communicated to upper management, higher-level management should review the budget for consistency with the overall goals of the organization and the plans of other departments within the organization. All issues should be resolved through discussion between the person who created the budget and their manager.

All levels of the organization should be involved in the budgeting process, not just management and accounting. Lower levels are generally familiar with detailed day-to-day operational data and therefore have primary responsibility for formulating budget details. The top management level should have a better overview of the company's strategy.

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