There must be a general acceptance among the participants in the budget and the support of senior management is important and essential for the success of budgets because it imposes on all departments the need to adhere to the plans imposed on them And thus ultimately lead to the success of the budget project. Participation in the process of preparing successful budgets is through the higher levels of the company, as well as the middle management together side by side, and the preparation process begins with formulating the general strategy of the company, such as (that the companies take, for example, 50% of the market, or that the company is one of the largest 5 companies in its field) which are prepared by the company's board of directors and are called (MISSION STATEMENT).

The company’s master budgeting process consists of  a range of steps
 

1- Formation of the Budgets Committee

The budgets committee is formed under the chairmanship of the budget manager of the company and with the participation of the company's department managers (sales, production, procurement, human resources, etc.). The main budget lines for all departments are drawn up, and the role of the committee is also in the end that it approves the main budget and approves the sub-budgets from all departments.

2- Receiving sub-budgets from the departments

The budget manager collects all the proposed sub-budgets, then manages the budget work plan and presents it to the senior management of the company in order to be discussed in light of the general strategy of the company, the available resources, and the expected return.

3- Approval of the budget

After discussing the proposals with the higher management, making all the final adjustments and agreeing on the final form of the budget, then the budget is approved and it is binding on all departments.

4- The implementation phase

After approval and accepted of the Board of Directors, the plan is sent to those responsible for implementation, and it must be ensured that workers at the upper and lower administrative levels understand the budget, responsibilities and goals that must be achieved.

5. Follow-up phase

The budget department of the company has the responsibility to follow up the implementation of the company's sub-budgets in every financial period, whether monthly, quarterly or semi-annually, and to identify deviations or obstacles and determine responsibility for deviations so that the correction can be made in a timely manner.

And when the budgets are imposed from the higher management of the company to the lower administrative levels without any consultation with them, this is reflected in the satisfaction of the employees in the middle departments and the budgets are less acceptable to them, but it also has an advantage which is that it imposes a state of commitment between all administrative levels and departments

It also saves time and when budgets are prepared from the lower levels of the company to the higher administrative levels, this entrance is acceptable to members of middle departments, but at the same time there may be a state of inconsistency between some departments because each department has a different perception.

And it may be far from the general strategy of the company in addition to higher material costs.

Time frame for budgets

•  Each stage of the corporate planning cycle has its own budget according to its own time period.
   

•  There are budgets for long-term interest to senior management, one of the year, for example, to 10 years in the sense that senior management has, for example, sales plan to acquire 50% of the market within 5 years - means the formation of a long-term plan.
   

•  There are budgets and medium-term plans that concern the middle management of the company from one to three or five years.
   

• There are operational budgets ranging from periods of time have a month or every quarter of an annual or semi-annual or annual.

External factors affecting the preparation of budgets

Economic conditions that exist in the country greatly affect the decisions related to the budget of the company, as well as the availability of material resources of the company at the appropriate times

For example, when the economy falls and inflation rises dramatically, this affects the company's sales volume, forcing companies to reduce production.

Also from the external factors are the status and nature of the industry, when the state imposes fees and procedures that may affect the company's activity and also the nature of competition in this industry and whether the state plays a role in this industry or not and also in the case of high costs of raw materials in the industry to which the company belongs. This will affect On the profitability of the company

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the domination or control of budget

The ability to control is one of the most important tools for using budgets in the performance evaluation process.

which means that there are some direct expenses that the administrations cannot control and are imposed by the head office and therefore the branch will not be responsible for it and there are expenses that the branch must not exceed because they are outside the budget limits in the sense that there are some expenses that the branch cannot be held accountable because it is outside the scope of control there are expenses to be controlled and not exceeded.

Review of amendments to the budget

In fact, the practical assumptions and criteria upon which the company budgets vary from time to time according to economic variables that occur based on this change must be for the company to modify the main budget sub-budgets related to adjustments uniform, for example, the State to impose fees on certain severity and therefore has to be adjusted procurement budget and the ability of Budget management to make adjustments to the budget is a key sign of the success of the budget, as well as its ability to adapt to any circumstances that occur.

During the year or financial periods, it is necessary to make comparisons between the actual results and the budgets of all departments and inform the higher management of the deviations and their causes, and know whether the cause is the result of an internal problem in the company or external conditions in the country or market, and after knowing the reasons, a set of steps are taken such as establishing performance standards in each section

Establish performance standards in each department

• Actual performance measurement
• Analyzing and comparing actual performance against standards
• Handling errors and holding those responsible accountable
• Reconsidering the criteria and if they are compatible with the current situation