Video 1 - Information system and the budget

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From the course by Fundação Instituto de Administração

Budgeting essentials and development

19 оценки

Fundação Instituto de Administração

Budgeting essentials and development

19 оценки

The Budgeting Essentials and Development course focus on an integrative and practical view of concepts, methods, and techniques to develop a budget. After finishing this course, learners will be able to: - Develop the budget with a broad view of the corporate functions; - Integrate the strategic guidelines into the discussions of budgeting process; - Structure the budget planning and development in a logical sequence - Coordinate the project of budget planning with the different areas of the company - Actively promote assumptions discussions to improve the process of developing the budget - Apply financial concepts to support the budget planning process - Design a budget monitoring and control model to support the performance management - Evaluate the performance of the company by managing the results and the budget In this course, learners will have a deeper understanding of the budgeting process, its challenges, common issues, and approaches to mitigate the problems and improve the learning curve of budget planning. It is integrative by emphasizing the transition between the corporate strategy and the budget. It is practical by following a structured process of going through a framework that illustrates and demonstrates how to analyze, develop and control the budget.

From the lesson

MODULE 2 - Corporate budgeting

The corporate budgeting process begins with the strategic guidelines, goes through the discussions of what may be the influence of the guidelines on the assumptions, and culminate in supporting the budget planning process. In this module, the discussions are about the aspects related to this process. Learning objectives include understanding the link between corporate budgeting and the business unit budgeting process; aligning strategic guidelines with planning guidelines, and assessing the connections of the corporate budget to the business level budget.

Video 1 - Information system and the budget7:06

Meet the Instructors

Alberto Sansiviero Jr.
MBA
FIA Futures Studies Program
Samantha Mazzero
MSc, MBA, BS Math
FIA Profuturo – Futures Studies Program
Nelson Yoshida
Ph.D., MBA, B.Eng.
FIA Profuturo – Futures Studies Program
Roberto Dumas Damas
M.Sc., CFA
FIA Profuturo - Futures Studies Program
Fernando Fleury
Ph.D.
FIA Profuturo - Futures Studies Program

Hi there, good to see you again.

We saw in the last session that the budgeting process needs some structure.

Now, we go through a brief discussion of the management information system.

We're not going to talk about software or

similar aspects because in the rapid environment of I.T.

solutions, the obsolescence may be fast.

And besides, every technical solution has its specificities,

so, that a discussion of solution A or B would be unproductive.

Therefore, we'll focus on the structure issues of managerial information system.

And this approach applies to any solution you may find in the company.

The first issue is the accounting and regulation compliance.

A company has to provide

financial and operational reports to the market or to the owners.

So, you need to structure the reports according to the policies and

regulations defined by official institutions or by the direct owners of the company.

By consequence, one driver for

the managerial information system is the fiscal compliance.

Going a bit further,

the intuition we have tells us that

if we have an information system to provide reports for

the fiscal compliance then why not to use

the same system to provide managerial information to support decision making.

And that's exactly what most companies do.

They use the same system as a support to contribute to decision processes.

So, the second issue to consider is the managerial level information.

At this level of information in the system,

we focus on information not necessarily specified for fiscal purposes.

This layer of manager

information use parts of the information of the fiscal reports, for sure,

but they also may have particular information that is

necessary to support decisions related to programs and projects.

The third issue to consider is the one related to the budget control.

Programs and project may have

their milestones to signal the evolution of the implementation.

Managers established the budget control system based on

the information of the advancement of the programs and projects.

So, the same system can provide all these layers of information.

Well, this is a prescriptive view of what should be available.

Do you want to have a more close to the real life view?

I've had personal experience with

management information system and what I can tell you is this.

Independently of the size of the company,

the chances that you will find the stratified information system infrastructure are very

high and don't even be surprised if you find manually managed Excel spreadsheets,

even in large companies.

Companies have their particularities.

And when people face challenges to adapt the information system to their specific needs,

they create solutions to overcome systems limitations.

Are they to blame?

Maybe yes, maybe not.

There's no right or wrong answer.

But what is relevant here is the fact that no matter how good is this information system,

you will find yourself in the face of homemade solutions.

Be prepared to deal with such contexts.

Sometimes these solutions have been applied for years

and the proposition to change and will involve cultural aspects.

Now, let's delve into three requirements that you should

consider regarding management information system and the budget.

Requirement number one, reliability.

No matter what is the information system,

be it an integrated solution by

a top business support system provider or even a homemade artifact,

what matters the most is the information reliability.

And what I mean for reliability is the information represent what it should represent.

Without any trace or bias or inconsistency.

Requirement number two, scope or completeness.

In the sense that the information allows manager to assess the company with

a broad perspective which means whatever information you need to analyze,

the system should have it.

Requirement number three, timeliness.

Meaning whenever you need information,

you can have it from the information system at the right time you'll need it.

Again, I'm describing the ideal system

from the prescriptive view of the things as they should be.

But to be honest,

from the descriptive view of things how they happen in companies,

I have to recognize that companies may have limitations.

So what's the message for you,

my fellow budgeting professional?

Know the limitations of the information system your company has.

The more you know then the more you'll benefit regarding the budgeting process.

Remember again, budgeting is about supporting, planning,

implementing and controlling and all these processes demand information.

So you expect that the information system is ready to support them.

By consequence, you can rely on the system

to provide information to the budgeting process.

But in case the information system cannot

comply with the three major requirements we just

saw then be aware that you may

need to deal with some limitation in the budgeting process.

For example you may need to improve the information system.

Is there any possibility to do it?

If yes, then develop a specification and give it to the I.T.

guys. Check for the time of development of the improvements.

If they take too long,

proceed to the budget planning without the improvements.

In contrast, if they can do it fast,

support the development team.

Of course, this procedure assumes that the I.T.

area would have the budget to develop your project proposal.

In this session, we briefly discussed

the management information system and the budgeting process.

We have seen that budgeting process cannot revolutionize the company.

If the information system is not adequate to support the company's needs in planning,

implementing and controlling then the budget will not have support to a higher level.

Admittedly, you may have a project proposal that aims to

solve part of the limitations of the information system.

If this is the case,

pay attention to this project in the budgeting analysis.

The next time you'll need the information system,

it may already be improved.

In the next session, we'll start the budget development framework.

It's the start of a new module in this course.

And it's going to be an extended module.

Thank you for your attention so far.

Please follow through the steps of the course.

Stay tuned and see you soon.

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