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Prepare Draft Annual Budget
Finance Policy 007
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1. PURPOSE
Prepare the draft annual budget and submit it to the chief executive officer for approval.
2. APPLICABILITY
2.1. All departments / Budgeting committee.
3. DEFINITIONS
3.1. Annual Budget: The annual budget is generally based on the overall strategy, and is fully integrated with the determined business plans consisting of annual objectives in terms of projects, capital expenditures, operational expenditures, and financial expenditures to achieve the agreed on objectives.
3.2. Budget Templates: is generally based on the needs of the budget project and business plans consisting of annual objectives in terms of projects, capital expenditures, operational expenditures, and financial expenditures to ensure that all required information is included in the templates.
4. POLICY
  • 4.1. The draft budget preparation starts on the first day of April following Gregorian calendar, and the chief executive officer is responsible for announcing the start of the project.
  • 4.2. The concerned departments and sections fills the budget template within 15 working days from the date of receiving budget templates sent by the budgeting and financial planning department.
  • 4.3. The budget is prepared according to next year plans and the requirements of each individual department.
  • 4.4. All budget templates must be approved by the Manager Finance.
  • 4.5. All budget templates must be prepared and submitted to the Manager Finance for approval.
  • 4.6. The draft consolidated budget must be reviewed and approved by the budget committee and the chief executive officer respectively.
5. PROCEDURE
  • 5.1. The Manager Finance, as a member of the budget preparation committee, starts the process of preparing the annual budget, and informs the director of budgeting and financial planning to start the process.
  • 5.2. The financial planning prepares the budget templates using the budgetary system (if it is applied). The budget templates include, but is not limited to, the following information:
  • 5.2.1. Budget year(s).
  • 5.2.2. Departments and sections.
  • 5.2.3. Type of expenditures [capital, operational, revenues, financial].
  • 5.2.4. Revenue type and amount (if any).
  • 5.2.5. Position requirements (add, update, or cancel).
  • 5.2.6. Payroll requirements (with indication of any variances from the previously approved budget).
  • 5.2.7. Overtime requirements; training requirements (local and international) with listing the full details (number of courses, number of trainees, period of training, mandate total).
  • 5.2.8. Requirements for equipment and devices.
  • 5.2.9. Budget amounts and currency.
  • 5.2.10. Approximate prices.
  • 5.2.11. Priority / importance of items based on a specific scale.
  • 5.2.12. Totals.
  • 5.3. The financial planning reviews the budget templates to ensure that all required information is included in the templates, and that the templates are ready to be sent to the departments to be filled. According to the results of this review, if the templates need to be modified or changed to suit the budget preparation requirements, they are returned to the financial planning to update them.
  • 5.3.1. If there is no need for any updates or modifications, the Manager Finance sends the approved templates of budget preparation to the various departments to be filled by entering the budget items (accounts) in addition to funds, currencies, and appropriation across budget period and according to mandatory budget constraints.
  • 5.3.2. The director / manager of the concerned department receives the budget template, and the department’s team fills it with required budget information according to adopted operational plan for the whole organization, and according to the department’s requirements. After that, the department’s director / manager reviews and approves the filled template, and sends it to the budgeting and financial planning department for review.
  • 5.4. After receiving the filled budget templates, the manager of budgeting and financial planning reviews them. According to the review results:
  • 5.4.1. In case there are no comments, the manager sends the templates to the department director / manager then to the CEO for approval.
  • 5.4.2. In case there are comments, the manager prepares budget review reports containing all required comments and clarifications. After that, the budget templates and the budget review report are returned to the concerned departments for amendments and clarifications.
  • 5.5. The concerned department replies to the budgeting and financial planning inquires and provides the required clarifications, or modify the budget template according to the received comments.
  • 5.6. After ensuring that the budget templates are complete and accurate and do not require any additional clarifications, and after the budget analyst consolidates the budget and sends it to the manager finance for review, he reviews the templates and draft budget. If approved, budget templates are submitted to the budget committee for review and approval.
  • 5.7. The budget committee conduct meetings (in the presence of the directors of concerned departments) to discuss, review, and approve the draft annual budget, in order to ensure the budget reflects existing requirements and is aligned with the departments objectives.
  • 5.7.1. If the budget templates require more modification or clarification, the budget committee asks the concerned department to update it.
  • 5.7.2. After doing the required amendments, the concerned department resends the budget to the finance department for review and approval.
  • 5.8. The budget committee approves the draft budget and sends its final reviewed version to the chief executive officer for approval.
  • 5.9. The chief executive officer reviews the draft budget and approves it.
6. RESPONSIBILITIES
  • 6.1. It is the responsibility of the Manager Finance / Departments / Director / Managers to prepare, execute and review the annual budget.
  • 6.2. It is the responsibility of the budget committee to review and discuses all recommendations of the annual budget.
  • 6.3. It is the responsibility of CEO to approve the annual budget.
7. APPENDICES
  • 7.1. Process graphic: Prepare Annual Budget (Appendices A.)
  • 7.2. Process steps: Prepare Annual Budget (Appendices B.)
8. REFERENCES
8.1. N/A
9. DEVELOPMENT TEAM
  • 9.1. Accountant, Financial Control
  • 9.2. Accountant, Treasury
  • 9.3. Accounting, Financial Accounting