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Effective Planning strategy for assuring total quality management (TQM)
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04/28/2023 1
PLANNING EFFICIENTLY FOR TQM
DIPENDRA GAUTAM
204/28/2023
OUTLINECapital planning and budgetingRequirement of capital projectCapital planning procedureOperation and capital budgetFixed and flexible budgetRevision of budgetBudget control method (audit)
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CAPITAL PLANNING
List and describe capital project
Effects of plan on key
financial variables
Project funding procedure
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BUDGETING
EVALUATION COMPARISON SELECTIONCAPITAL
BUDGETING
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INTERACTION BETWEEN PLANNING AND BUDGETING
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REQUIREMENT OF CAPITAL PROJECTPreparatory works: - Needs and demand analysis with
output specification - Options analysisViability evaluation - Financial analysis - Economic analysisRisk assessment and sensitivity analysis
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Contd….Professional analysis -Technology discussion -EIA -Legal and regulatory due diligenceImplementation readiness -Institutional capacity -Procurement planFinal summary matrix
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CAPITAL PLANNING PROCEDURE2. Identification of capital needs
3. Prioritization of capital requests
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Contd….
4. Capital improvement programming
5. Assessment and forecast of financial condition ability to finance capital needs
6. Selection of financial source(s) foe individual capital projects and expenditures
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Contd…
7. Maintaining or improving bond ratings
8. Authorization of capital projects or expenditures and appropriation of funds for them
9. Obtaining and management of financing for projects
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OPERATING AND CAPITAL BUDGET OPERATING BUDGET: Immediate future plan Affects how much we can wine and dine a client Developed by first estimating sales revenue Market trends and pricing decision facilitate this
forecast tempered with the capacity of the company to deliver the product or services
Covers: -Labor cost -Raw materials -Utilities
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Contd… -Overhead -Sales -Marketing -R & DZero based budgetDeveloped by month and may differ
significantly based on timing of outlaysMonitored monthlyShort term viability is checked
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Contd… CAPITAL BUDGET: Developed for two reasons: -Expansion -Replacement Developed with : - Continuous evaluation of market condition -Analysis of opportunities Use of NPV method for analysis Investment in the future Long termed
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FIXED AND FLEXIBLE BUDGETFIXED BUDGET: Static budget, projects static level of
known income and expenses over a set period of time
Acceptable for situations where the levels of income and expenses are not expected to fluctuate through the duration of the budgeting period
Prepared based only on one level of output Large variance is encountered.
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Contd….FLEXIBLE BUDGET (VARIABLE
BUDGET) A fixed budget, adjusted to account for
variable results Helps a business account for future
changes in any expense or income account
Designed to change in accordance with the level of activity attained
Designed to change appropriately with fluctuations
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STEPS FOR PREPARING FLEXIBLE BUDGET
Determination of budget variable cost per unit output
Determination of budget level of fixed cost
Determination of actual volume of output
FLEXIBLE BUDGET
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REVISION OF BUDGETMajor change in operating conditionExpected shift in sales happensSalary conditions vary rapidlyTo increase the company’s financial
standing
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STEPS FOR REVISION OF BUDGET
Analyze budget
Identify troubled areas
Make changes
Monitor and revise
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BUDGET CONTROL METHOD (AUDIT) Unbiased evaluation of a person,
organization, system, process, enterprise, project or product
Can be done: -Internally (by employees of the
organization) -Externally (outside firm)
audit
financial Quality
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WHY AN AUDIT?
audit
Irregularities
Inefficie
ncy
Adjustment
Reliability
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AUDITING PROCEDURE Completed by audit staff recording Initials and the date the test A summary of the test results whether or not substantive tests are
required (and test reference)
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and Welch remarks….‘ The budgeting process at most
companies has to be the most ineffective practice in management. It sucks the energy, time, fun and big dreams out of an organization. It hides opportunities and stunts growths.’
- Jack Welch
2304/28/2023
CITATIONS Capital Planning Guidelines Havens, H., Management Controls, Audit and
Evaluation Lawrence, D. M., Vogt, A. J., Capital Planning,
Budgeting and Debt Financing, Cahpel Hill School of Government, 2007, North Carolina
Office of Budget and Financial Planning, MIT Reports to the president; 2003-2004.
Smart Practices in capital Planning, The Federal CIO council, et al., 2007
Water Sense Summer 1999
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Many Thanks For Your Kind Attention