Budget Execution: More Than Just Spending16 December 2014

Project Management

Budget execution is the process of implementing, monitoring, and reporting on the current year’s budget. Each fiscal year, for instance, Congress provides an appropriation after reviewing and adjusting the FAA’s budget submission. Once the President signs the Appropriation Bill, the Office of Management and Budget (OMB) apportions any facilities and equipment appropriation, and Air Traffic Organization (ATO) Finance provides the authority to obligate and expend funds. This begins the execution of the approved budget. Every organization manages to a budget, whether or not it’s the size of the FAA’s or on a much smaller scale. The principles and practices involved are much the same.

Budgets, however, are rarely implemented exactly as approved due to changes in economic conditions. Therefore, there may be some adjusting or reprogramming of funds because of changes in projects or contracts that could lead to overspending or under-spending. During the budget process, spend plans are developed based on requirements and implemented during budget execution. The spend plan is the sole source for approved planned program activities to be funded within a certain timeframe. It is an ongoing role for management in analyzing and assessing how funds are actually spent to implement the policies, programs, and projects outlined in the budget. Actual spending is compared to these plans throughout the year and is used for projections and future adjustments. The execution phase of any budget should include the following activities:

Allocation of funds – the processing of procurement request (PR) and project authorizations (PA) to fund projects and contracts based on the approved spend plans.

Obligating and expending of funds – the monitoring of funding using a company’s mandated financial systems to make sure funds are awarded on contracts and expended in a timely manner, and to make sure facilities and equipment (F&E) funding is being obligated within the appropriate timeframe for your organization or industry.

Financial documentation and tracking/monitoring – for good accounting practices, the use of cuff records (manual Excel spreadsheets) as a key financial tool to document all financial transactions against a programs budget. Track all program appropriations, commitments, obligations (contract award), and expenditures.

Reconciliation – the use of a company’s mandated financial reporting systems to generate reports that are compared to program cuff records in order to maintain accuracy as well as assist with resolving discrepancies.

Reporting – the use of a company’s mandated financial systems to generate reports used to provide management with the current program funding status, also know as “detailed obligation reports.”

In order to implement these activities, one has to have extensive knowledge of a company’s policies, procedures, and the concepts and principles of funding, including appropriation types, apportionment and allotment to an agency, with internal processes of funds commitment, obligation, and expenditures.

No matter the exact method you use to execute your budget, it is my belief that the key to successfully executing a budget is good bookkeeping and funds reconciliation.

Fiscally responsible budget planning and execution is critical to a company’s growth and success. For help with budget planning or execution in your organization, contact North Star Group today.

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