Budget review

It is important in the course of the year to keep a continuous overview of income and expense relative to the original budget, and the actual bank account transactions.

Only this way one can verify that the organisation, or a project is on track, and that the ledger journals reconcile with the payments.

You should make or adapt this overview monthly, quarterly, or after a large project or expense is accomplished.

Please ask your partners to report expenses monthly.

If the amount and number of transactions is limited, a quarterly review might be sufficient.

When huge amounts are not yet invoiced, you could book provisions, in order to have an accurate status of the financial situation.

Components

• (approved) yearly budget (proactively, reactive)
• Budget status (incremental, YTD, till EOY)
• Bank transactions (actuals)
• Debit credit (actual income & expense: aggregation of bank transactions)
• Expense provision (planned expenses, delayed invoicing, potential income, bad dept)
• Bank status (planned income & expenses by month till EOY)

Method

1. For each expense (or income) a budget item (project) is assigned.
2. For each expense a cost centre is allocated (activity based costing)
3. Further aggregation: by expense claim, by owner, by project, by activity, by date/period
4. Then you can create a pivot table to aggregate your expenses (or income)
5. Then you can compare the actuals (YTD) with the budget to calculate the remaining months budget (divide the remaining budget by the initial and multiply by 12)
6. For historical comparison, you can keep monthly, or quarterly results

See also

• Financial reporting