Checklist to Streamline the Annual Budgeting Process (4 weeks not 4 months)

Many accountants find themselves having to maintain an annual budgeting process even though they would rather be doing quarterly rolling planning. This checklist is designed to help make the antiquated process quicker and at the same time plant the seed for quarterly rolling planning. This checklist assumes you have a robust planning tool.

Key tasks

Run a workshop to analyse the annual budgeting pitfalls and sell the concept of quarterly rolling budgets

1. Notify those who should attend (all the influential budget holders)..

2. CEO to send an e-mail stating permission is to be sought from CEO if not attending the workshop.

3. Organize outside facilitator and presenter to give the annual budgeting better practice stories.

4. Lock in the following decisions:

? The annual budget is not to be broken down into 12 monthly targets.

? The annual budget does not appropriate funding to budget holders for 12 months, this is to be done on a quarter-by-quarter basis.

? There is to be a ten-working day time scale for gathering and finalising the numbers and thus, there is a ban on travel or holidays during these two weeks.

? Each budget holder has one chance to discuss their annual budget with the Budget committee, and the decision from the meeting is final.

? There is no need to have a budget for every account code in the general ledger (G/L).

? Each budget holder is only to have up to 12-15 cost category headings (each cost category is a group of account codes that add up to around 10% of total costs).

? Sales are to be forecast by major customers and major products. The rest of the customers and the rest of the products should be put into meaningful groups and modelled based on the historical relationship to the major customers' buying patterns.

Perform pre-work

5. Automate as many cost categories as you can (e.g., where trend analysis is as good or better than a budget holder’s estimate).

6. Establish a calculator for travel and accommodation so budget holders can quickly work out their travel costs (using standard costs).

7. Download all payroll details into the payroll section of the model so budget holders can quickly and accurately calculate their salaries and wages.

8. Issue annual budgeting timetable on the annual planning intranet page.

9. Obtain up-to-date demand forecasts from key customers where possible.

10. Set key assumptions and materiality levels .

11. Prepare the annual planning workshop presentation where all budget holders attend (physically or remotely).

12. CEO to send invitation to attend annual budgeting presentation.

13. CEO to send e-mail stating permission is to be sought from CEO if not attending the annual planning workshop.

14. Deliver presentation to explain to all budget holders of how the annual plan is going to be done.

15. Organize additional support to help with one-to-one support (using local accounting firms for remote branches—their staff would have to attend the presentation)

16. Provide briefing to staff from the local accounting firms.

17. Establish a schedule of who is to provide whom with one-to-one support during the four days of data input.

18. Update revenue and expenditure trend graphs for major category headings.

19. Establish a Budget committee (CEO, two general managers, and CFO) and explain their responsibilities.

Support budget holders during budget preparation

20. Provide one-to-one support

21. Provide a daily progress report to the CEO of budget holders who are running late—the “shame and name” report.

22. Consider providing small acknowledgements for prompt budget returns (e.g., movie vouchers).

23. Ensure budget holders have provided insightful commentary.

24. Provide budget holders with comparison graphs so they can see how reasonable their forecast looks against past trends.

Complete quality assurance (QA) procedures

25. Ensure all budget returns are in.

26. Check all forecast key ratios for reasonableness.

27. Review all revenue and expenditure graphs to ensure the trends look reasonable.

28. Ensure this checklist is up-to-date.

29. Rework budgets where forecasts have known and agreed on errors—with budget holders’ permission

30. Check the correct treatment of costs (capital vs expense) on major projects (particularly consulting fees).

31. Look for missed major expenditure items.

Budget Committee’s approval process

32. Advise budget holders of times for them to turn up and present their annual budget to the Budget committee.

33. The budget committee confirmed their attendance at the three-day lock-up.

34. The budget committee interviewed all relevant budget holders (budget holders with less than 2.5% of total costs can be approved by the finance team.

35. Adjust annual budgets based on feedback from the Budget committee.

36. The budget committee confirm the consolidated annual plan.

Presentation of the annual budget to budget holders

37. Deliver final annual plan numbers presentation (budget holders' attendance is optional).

Review process: Lessons learned

38. Set up an intranet-based feedback survey on the annual budget process and process changes to the process by amending the model, agreed rules and the draft presentation for next year.

39. Plan the next quarterly rolling planning forecast run

40. Check for any timing differences when the last year-end numbers are finalized (budget holders have forecast prior to year-end, so they did not know the final numbers)

Extract from David Parmenter's Implementation Guide on Rapid Planning. https://davidparmenter.com/product/rapid-annual-planning-budgeting-in-two-weeks-or-less-implementation-guide-80-page-pdf-whitepaper-e-templates/