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Budget Commentary

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  • 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.