The four stages of budgeting go from its planning to its audit. Keep in mind three things:
- Budgeting is not static, but dynamic
- Budgeting is subject to change due to fluctuations in administration
- Budgeting must be analyzed, and revisited
This being said, the first phase of budgeting is preparation- this includes all kinds of requests, listing accounts payable/accounts receivable, considering all expenses, from electricity bill to the use of paper for photocopies. Salaries, extra fees, and incentives must be included. Anything that does not fall under the most essential factors within the budget must be listed under revision.
The second phase is to get the approval. The most important part of approval is to show in detail where the proceeds are going. Therefore, a thorough and detailed account is needed to ensure that, once audited, the budget matches exactly to what the budget proposal stated from the beginning. Keep in mind that, to get approval, the money must be geared toward meeting the immediate needs of the organization and its employees; a budget that does not support the mission and vision of the corporation will not be approved.
The third phase is to implement the budget. The most important part of this process is to follow it verbatim as it was proposed in the first stage. Remember that you will be audited in the end and any deviation from the original proposal will result in infractions and, perhaps even, the loss of a contract.
The fourth stage is the review and, if necessary, the auditing. This part is superbly important because it is the final verification that the budget was followed as planned. The reason why so many CEO's of big corporations have suffered terrible consequences as a result of bad investments is precisely because they deviated from the original plan to feed the need of things of no importance. It is extremely important to keep receipts, "the books", lists, signatures and the rationale behind the budget to pass an audit with flying colors.