Topic 1 guide and pointers

The issue for most people with Topic 1 is that they do not have the primary data. So they write about the theory and all the different types of budgets whether they are relevant to the company or not and do a questionnaire allegedly asking people simple questions about how efficient the budgeting system is. The result is some sort of wishy-washy unstructured report that is not very convincing as there is no real evidence on which to form an opinion of whether the budgetary system is contributing towards achieving company objectives and improved decision making or not.

What they should be doing after a bit of appropriate theory, is setting out the stages in the budgeting process in their company and looking at the feedback loops. The markers are keen to see a model and I would suggest that a SWOT model can be applied to the process by looking at the strengths that budgeting offers and the opportunities various types of budget offer in terms of expansion plans, efficiency and the disadvantages (weaknesses and threats) e.g. a time consuming process that may be entered into half-heartedly and how without budgeting resource allocation may be compromised and the best use not made of capital and cash. Then there needs to be a comparison of the budgets with the actuals and looking at how variances are dealt with (budget revisions and decisions related to the adverse variances). When this has been done you are then in a position to assess how effectively the whole thing is in terms of improved decision making and helping the organisation achieve its objectives (usually profit maximisation and operating efficiently). There is also scope to make recommendations for improvement. If you can cope with that (and reference well) then you stand a good chance of passing 🙂

One more Important question ! do you think i will need access to budget itself ?
I can get access to variance reports and everything. Get % increase in budgets and all but the company won’t allow me to look at the budget itself ?

Dear @Trefena, I am looking to start my OBU and I have chosen T1, T11andT16. I am currently doing internship in one of UN Agency and the unit I am based in is governing the extra- badget ( funds from donors). as there are two type of budget in The UN system (Regural budget and extra budget). I was thinking to go for T1, Please would be wise to use only extra budget in my research? Do you think this is the right company to take as a case study?
Thank you for your time.

This is something you should be working on with your mentor. Topic 1 is notoriously difficult to pass so although you have opened a new post you are advised to use the search facility and read all of the posts on that thread as you need a lot of reliable advice to stand a chance of passing. (And in the interests of everyone this post will be amalgamated with the original thread and once again we ask students NOT to open a thread each time they have a question when there is already an existing relevant thread)

Any SWOT for this topic needs to focus on the strengths and weaknesses of the budgeting process not the strategic position of the company

Do you work in this organisation? The level of detail required for Topic 1 means that unless you work there or have access to primary data that you are unlikely to be able to provide the level of detail required to be successful with this topic.

With the Balanced scorecard you need to have such inside information to be able to apply it adequately. The focus with Topic 1 should always be on performance management and the decision making i.e. how the company’s budgeting process impacts on these and therefore one model well applied will normally be adequate.