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Cost Accounting Software Regarding The Budgeting Process

2044 words - 8 pages

Cost Accounting Software Regarding the Budgeting Process

Budget tracking and control is a key decision-support tool, so it comes as a surprise that the budgeting capabilities of most accounting suites is rudimentary at best. There are also few stand-alone budgeting packages that deliver budgeting functionality beyond budget templates designed for use in spreadsheet packages. While there are at least four different software approaches to managing budgets, some stand-alone budget packages can add value to the budgeting process by providing such features as workflow, the ability to account for many scenarios, and additional options for budget entry and reporting.

The Four Software Approaches to Budget Management

1.Built-in budget management.

Most accounting suites provide some budgeting capabilities as a function of the general ledger and some extend similar functionality to other modules, such as payables and receivables. The advantage of this approach is that the budgeting system can share existing structures in the accounting system and budgets can be easily compared to actuals because they are all stored in the same database and accessed through the same report and inquiry systems. The budgets can also be secured and audited to the same degree of depth as the actuals information.
Built-in budgeting functionality is often of a lower quality than other functions of the package and may require budgets to be created and managed like regular accounting transactions, which can be cumbersome and awkward for managing complex and high-volume budget data. And if an accounting suite offers sophisticated budgeting functionality within the appropriate accounting modules, this is usually a clear sign that it is designed for larger organizations rather than smaller businesses where managing budgets is far less important than managing cash flow.

2.Using spreadsheets to manage the budget.

Managing budgets in spreadsheets outside the accounting system requires either the budget numbers to be imported into the accounting system or the actuals to be exported from the accounting system in order to manage comparative reporting. In systems that support Microsoft Object Linking and Embedding (OLE), budget data may be managed from within the accounting system by using an "embedded" budget spreadsheet to pass data to and from the accounting system.While spreadsheets, which remain the budgeting tool of choice, are a good paradigm for the entry, viewing and analysis of budget data, they are poor at managing budget structures and producing matrix-based comparative reporting, both of which are best handled when the data is stored in a database rather than in spreadsheet files.

3.Budgeting can be a function of financial reporting.

Financial report writers...

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