Handbook of Budgeting

By William R. Lalli · Wiley · 2012

A reference on budgeting edited by William R. Lalli, in its sixth edition (January 2012, 864 pages). Wiley describes it as covering budgeting for exempt organizations and nonprofits in light of the IRS's newly issued Form 990, manufacturing CFOs' budgeting needs, current technology solutions, and updated information on value-based budgets, for controllers, budget directors and CFOs, from the initial planning process through forecasting to specific industry budgets.

On the syllabus

Exam CP-311 — Ch. 2 Strategic Balanced Scorecard-based Budgeting & Performance Management (2a, 2b); Ch. 29 Budgeting: Key to Corporate Performance Management, excluding pp. 667-676 (2a-2c, 2e); Ch. 30 Zero-Based Budgeting (2a-2c, 2e).

Foreword

Preface

Part One Introduction to the Budgeting Process

1 Integrating The Balanced Scorecard for Improved Planning and Performance Management

Overview
Elements of a Balanced Scorecard
Use of Strategy Maps
Scorecard Cascading
Bringing It All Together
Integrating the Scorecard with Planning and Performance
Balanced Scorecard and Annual Planning
Continuous Strategic Management with the Scorecard
Summary

2 Strategic Balanced Scorecard–Based Budgeting and Performance Management

Introduction: Why Most Companies Fail to Implement Their Strategies
Why a few Companies Produce Exceptional Results
Measure your Strategy with Balanced Scorecard
Balanced Scorecard-Based Budgets
Performance Management
Summary

3 Budgeting and the Strategic Planning Process

Definition of Strategic Planning
Planning Cycle
Strategic Planning Process: A Dynamic Cycle
Situation Analysis
Business Direction/Concept
Alternative Approaches
Operational Plan
Measurement
Feedback
Contingency Planning
Problems in Implementing Formal Strategic Planning Systems
Summary

4 Budgeting and Forecasting: Process Tweak or Process Overhaul?

Introduction
Survey Methodology
Findings: Budgeting Process
Findings: Forecasting Process
Report Summary
Developing a Road Map for Change

5 The Budget: An Integral Element of Internal Control

Introduction
The Control Environment
Planning Systems
Reporting Systems
Summary

6 Relationship Between Strategic Planning and the Budgeting Process

Introduction
How to Plan
The Audience for Whom the Plan Is Designed
Strategic Business Planning and Its Role in Budgeting
Planning Differences among Small, Medium, and Large Organizations
Components of Strategic Planning
Management and Organization
Market Analysis
Formulation of Marketing Strategies
Operations Analysis
Summary

7 The Essentials of Business Valuation

Introduction
Understanding the Valuation Assignment
Research and Information Gathering
Adjusting and Analyzing the Financial Statements
Three Approaches to Valuing a Business
Income Approach
Market Approach
Asset Approach
Making Adjustments to Value
Reaching the Valuation Conclusion

8 Moving Beyond Budgeting: Integrating Continuous Planning and Adaptive Control

Introduction
Annual Budgeting Trap
Why Some Organizations Are Going Beyond Budgeting
Beyond Budgeting: Enabling a More Adaptive Performance Management Process
Climbing the Twin Peaks of Beyond Budgeting
Beyond Budgeting: Enabling Radical Decentralization

9 Moving Beyond Budgeting: An Update

Introduction
Beyond Budgeting Round Table (BBRT)
Guardian Industries Corporation

Part Two Tools and Techniques

10 Implementing Forecasting Best Practices

Introduction
Budgeting versus Forecasting
Implementing Forecasting Best Practices
Forecasting Best Practices: Process
Forecasting Best Practices: Organization
Forecasting Best Practices: Technology
Conclusion

11 Calculations and Modeling in Budgeting Software

Introduction
Why Companies Use Budgeting Software
Calculations in Accounting Systems and Spreadsheets
Budgeting Software
OLAP Databases
Modeling and Budgeting
Processes
More Complex Budgeting Calculations
Conclusion

12 Cost-Accounting Systems: Integration with Manufacturing Budgeting

Introduction
Decision Factors in the Selection Process
Cost-Accounting System Options
Costs Associated with a Product
Labor Cost
Variable Costing and Budgeting
Full Costing and Budgeting
Cost-Accumulation Procedures
Valuation: Actual versus Standard
Actual Costing
Actual Costing, Budgeting, and Cost Control
Standard Costing
Variance Reporting
Variances and Budgeting
Manufacturing Overhead
Manufacturing Overhead, Budgeting, and Cost Control

13 Break-Even and Contribution Analysis as a Tool in Budgeting

Introduction
Break-Even Analysis
Price/Volume Chart
Contribution Analysis
Cost–Volume–Price and the Budgeting Process

14 Profitability and the Cost of Capital

Introduction
A Market Gauge for Performance
Coping with the Cost of Equity
Building Company-Wide Profit Goals
Building Divisional Profit Goals
Information Problems and Cost of Capital
Summary

15 Budgeting Shareholder Value

Introduction
Long-Term Valuation
Economic Value Added
Complementary Measures of Valuation
Budgeting Shareholder Value
Summary

16 Applying the Budget System

Introduction
Initial Budget Department Review of Divisional Budget Packages
Divisional Review Meetings
Budget Consolidation and Analysis
Preliminary Senior Management Review
Final Revision of Operating Group Plans
Second Budget Staff Review of Operating Group Plans
Revised Consolidated Budget Preparations
Final Senior Management Budget Review Sessions
Operating Groups’ Monthly Submissions
Effective Use of Graphics
Summary

17 Budgets and Performance Compensation

Introduction
Measures of Executive Performance
Structuring Reward Opportunities
Pitfalls of Linking Incentives to Budgets
An Optimal Approach
Adjusting Operating Unit Targets
Budgets and Long-Term Incentive Plans
Summary

18 Predictive Costing, Predictive Accounting

Internet Forces the Need for Better Cost Forecasting
Traditional Budgeting: An Unreliable Compass
Activity-Based Costing as a Foundation for Activity-Based Planning and Budgeting
Budgeting: User Discontent and Rebellion
Weary Annual Budget Parade
ABC/M as a Solution for Activity-Based Planning and Budgeting
Activity-Based Cost Estimating
Activity-Based Planning and Budgeting Solution
Early Views of Activity-Based Planning and Budgeting Were Too Simplistic
Important Role of Resource Capacity Causes New Thinking
Major Clue: Capacity Exists Only as a Resource
Measuring and Using Cost Data
Usefulness of Historical Financial Data
Where Does Activity-Based Planning and Budgeting Fit In?
Activity-Based Planning and Budgeting Solution
Risk Conditions for Forecasting Expenses and Calculated Costs
Framework to Compare and Contrast Expense-Estimating Methods
Economics 101?

19 Cost Behavior and the Relationship to the Budgeting Process

Introduction
Cost Behavior
Break-Even Analysis
Additional Cost Concepts
Differential Cost Concepts
Maximizing Resources
Estimating Costs
Summary

Part Three Preparation of Specific Budgets

20 Sales and Marketing Budget

Introduction
Overview of the Budget Process
Special Budgeting Problems
Pertinent Tools
Unique Aspects of Some Industries
Summary

21 Manufacturing Budget

Introduction
Concepts
Changing to a Cost-Management System
Problems in Preparing the Manufacturing Budget
Three Solutions
Technique
Determining Production Requirements
Step 1: Developing the Plannable Core
Step 2: Obtaining Sales History and Forecast
Step 3: Scheduling New and Revised Product Appearance
Step 4: Determining Required Inventory Levels
Step 5: Establishing Real Demonstrated Shop Capacity
Step 6: Publishing the Master Schedule
A Total Quality Program—The Other Alternative
Inventory and Replenishment
More on the Manufacturing Budget
Determining Raw-Material Requirements
Determining Other Indirect-Material Costs
Determining Direct-Labor Costs
Establishing the Manufacturing Overhead Functions and Services
Quality Control Economics Review Questions
Plant Engineering Buildings and Equipment Maintenance Review Questions
Floor and Work-in-Process Control Review Questions
Summary

22 Research and Development Budget

Relationship of Research and Development and Engineering to the Total Budgeting Process
Problems in Establishing Research and Development and Engineering Objectives
Developing a Technological Budget
Preparing a Departmental Budget
Managing a Budget
Coordinating Project Budgets

23 Administrative-Expense Budget

Introduction
Role and Scope of the Administrative-Expense Budget
Methods Used for Preparing the Administrative-Expense Budget
Factors that Impact the Administrative-Expense Budget
Unique Issues Impacting the Administrative-Expense Budget
Tools and Techniques for Managing the Administrative-Expense Budget
Summary

24 Budgeting the Purchasing Department and the Purchasing Process

Description and Definition of the Process Approach
Role of Process Measures
Process Measures
Creating the Procurement Process Budget

25 Capital Investment Review: Toward a New Process

Introduction
Context of the Revised Capital-Investment Review Process
Benchmarking Capital-Investment Review Best Practices
Revised Capital-Investment Review Process: Overview
Implementation: What Bonneville Learned in the First Three Years
Summary

26 Leasing

Introduction
Overview of the Leasing Process
Possible Advantages of Leasing
Possible Disadvantages of Leasing
Types of Lease Sources
Lease Reporting
Lease versus Purchase Analysis
Financial Accounting Standards Board Rule 13 Case Illustration
Negotiation of Leases
Selecting a Lessor
Lease-Analysis Techniques
Lease Form
Summary

27 Balance-Sheet Budget

Introduction
Purpose of the Balance-Sheet Budget
Definition
Responsibility for the Budget
Types of Financial Budgets
Preparing Financial Budgets
Preparing the Balance-Sheet Budget
Adequate Cash
Financial Ratios
Analyzing Changes in the Balance Sheet

28 Budgeting Property and Liability Insurance Requirements

Introduction
Role Risk Management Plays in the Budgeting Process
Types of Insurance Mechanisms
Role of Insurance/Risk Consultants
Use of Agents/Brokers
Self-Insurance Alternatives
Identifying the Need for Insurance
Key Insurance Coverages
Identifying Your Own Risks
How to Budget for Casualty Premiums
Summary

Part Four Budgeting Applications

29 Budgeting: Key to Corporate Performance Management

Future of Budgeting
Adding Value to the Organization
Corporate Performance Management
Developing a Budget Process Focused on Implementation of Strategy
Role of Technology
Overcoming Organizational Resistance
Planning and Controlling Implementation of a New System
Conclusion

30 Zero-Based Budgeting

Introduction
Problems with Traditional Techniques
Zero-Based Approach
Zero-Based Budgeting Procedures
Decision Package
Ranking Process
Completing the Profit and Loss
Preparing Detailed Budgets
Summary

31 Bracket Budgeting

Introduction
Application of Bracket Budgeting
Premises to Profits?
Developing a Tactical Budgeting Model
Bracket Budgeting in Annual Planning
Consolidating Income Statements
Summary of Benefits
Summary

32 Program Budgeting: Planning, Programming, Budgeting

Introduction
Description of Program Budgeting
History
Framework of Program Budgeting
Program Structuring
Types of Analysis
Installation Considerations
Summary

33 Activity-Based Budgeting

Introduction
Traditional Budgeting Does Not Support Excellence
Activity-Based Budgeting Definitions
Activity-Based Budgeting Process
Linking Strategy and Budgeting
Translate Strategy to Activities
Determine Workload
Create Planning Guidelines
Identify Interdepartmental Projects
Improvement Process
Finalizing the Budget
Performance Reporting
Summary

Part Five Industry Budgets

34 Budgeting For Corporate Taxes

Introduction
Taxation of C Corporations
Personal Holding Company Tax
Net Operating Loss Utilization
Charitable Contributions
Taxation Budget
Federal Corporate Tax
Purposes
Tax Return

35 Budgeting in the Global Internet Communication Technology Industry

Overview
Essentials from Earlier Chapters
Freemium Strategies
Volunteer Services
Enterprise Risk Management

About the Editor

About the Contributors

Index

Sources

Handbook of Budgeting, 6th Edition (Wiley, 2012): Table of Contents (PDF excerpt) — the document's own contents pages: parts, chapter titles and the section headings under each (their nesting is not shown in the extract, so each chapter's sections are listed flat); a few ligature gaps in the extract ("Defi nition") were closed
Handbook of Budgeting, 6th Edition (Wiley product page) — the publisher's description used for the lead, the editor, the ISBN (978-0-470-92045-9), January 2012 and the page count
CP 311 Syllabus, Nov 2026/Mar 2027 (SOA) — the citation (Lalli, W.R., 6th Edition, 2012), the three assigned chapters, the excluded pages and their learning outcomes