The budget process refers to a set of procedures, methods and strategies that are used by governments or organizations to plan, organize, and control their finances. It involves creating an estimate of income and expenditure for a specific period of time, usually a year, and setting priorities for the allocation of resources based on those estimates.
The budget process typically begins with the preparation of a budget proposal by the relevant authorities or departments within an organization. This proposal is then reviewed and evaluated by senior management or decision-makers who may make changes before presenting it to higher authorities such as a board, council or parliament for approval. Once approved, the budget becomes a legal document that outlines the financial goals and objectives of the organization for the period in question.
Throughout the year, actual income and expenditure are compared against the estimates made in the budget proposal to determine variances. If necessary, adjustments can be made to ensure that the final outcome is aligned with the original plan. The budget process also involves monitoring and controlling spending to prevent overspending or misuse of funds.
Overall, the budget process is an important tool for managing finances in organizations or governments, allowing them to make informed decisions about how resources are allocated and ensuring that they stay on track financially throughout the year.