Budget Commentary

• Salaries were over budget by R2000 per month due to the salary increase authorised in line with additional responsibilities allocated.
• Stationery was in line with the budget.
• Telephone expenditure was way over budget by R450 per month – the reasons for this need to be investigated and telephone expenditure needs to be curbed.
• Travel expenditure exceeded more than 100% of the budgeted figure. This urgently requires a check and control or possibly a revision of the budget.

When reviewing a budget, a manager should be vigilant to some of the following problem indicators:

• Sales are on target, but spending is not.
• Spending is on target, but sales are not.
• Large variances (more than 10%).
• Trends that show a decline, even if still within target.
• Sudden big changes.
• Single items of expenditure that exceed business unit spending limits.
• Large increases in accounts receivable (credit given to customer) and aging accounts receivable (debts not being collected).
• Headings that might conceal payments to third parties.