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Etymological history of the definition «budgeting» and his value


The article analyzes the etymological origin of the term «budget», the characteristic features of the budget, distinguishing it from the plan. Author estimates the definition of budgeting and specifies work carried out by 147 scientists whose views were divided into 18 approaches the definition of «budgeting» and arranged in four groups that led to the conclusion that the term «budgeting» is going evolutionarily. First of all, speaking of history of the term «budget», we should note it differs from the terms such as «plan» and «estimate», characteristic features of the definition «budget» makes its transformation in the concept of «budgeting». Clarified the meaning of the modern budget. The author comes to the conclusion that the practice of recent decades shows - interpretation of the concept of the budget only as a short-term plan is outdated. American economists, authors of the concept of balanced scorecard (BSC), Kaplan and Norton, divide budgeting into operating and strategic spheres. Budget as a management technology is becoming more common not only in foreign enterprises, but also in the national economic space. The author also stresses that today the word «budget» in practice means understanding the spending limit. Thus, the definition of spending limit is achieved mainly by controlling fixed costs. The main instruments of controlling costs is a «benchmarking», the calculation results and costing, cost control. As a conclusion, the author clarifies the meaning of the definition of «budget» as a plan with some adjustments, in which a high level of detail in quantitative and qualitative terms established formal binding targets for individual projects (business processes, responsibility centers, departments, departments. At the same time, author writes that budgeting is a system of coordinated financial management, which acts with accounting, transactional systems (ERP, etc.). The main objective of budgeting is to increase the efficiency and performance of the entity on the basis of the target orientation and coordination of all events that encompass the change of financial resources and sources of formation and use, identifying risks and reducing their level, increasing the turnover of working capital raising capitalization capital, greater economic value added, etc.



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Keywords:  budget, plan, estimate, budget, financial management, key performance indicators

CORPORATE FINANCE

Prots Nadiya
postgraduate SHEI «Kyiv National Economic University named after Vadym Hetman»

 

 

 

 

 

 

 

 

 

 

 

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