The budget in any field of activity or business is an essential part of its functioning. Thanks to the funding, it is possible to calculate all income and expenses, plan any costs, and implement any plan for the modernization of production, its functioning, and improvement. Any company or organization must correctly calculate its budget planning to avoid mistakes that can lead to unfavorable consequences later. This paper states the basics of budgets, finances, and planning, considering how these apply to criminal justice agency budgeting.
The income and expense budget consists of all income and expenses over the period an organization uses to plan its operations. The budget is prepared well before the reporting period as a goal or plan that the business expects to achieve (Lindbeck, 2019). The budget includes the following standard items:
- Income is usually broken down into components. It is possible to forecast revenue on an annualized basis, but more detailed information is generally required, breaking down revenue into significant parts.
- Variable costs are incurred in connection with the manufacture of a product. The value of variable expenses varies depending on the volume of output. For example, the variable costs are the prices of goods sold, direct sales, and trading commissions.
- Fixed costs do not fluctuate much with changes in income and are mostly fixed, at least within the time frame of the operating budget. Rent, insurance premiums, telecommunications, and wages are fixed costs.
- Non-cash expenses such as depreciation and amortization.
In many developing countries, budgeting takes place on two main sides: capital expenditures from government revenues and capital expenditures from external sources (Webber, 2019). The Ministry of Justice is engaged in preparing and executing the budget. The Ministry’s Finance Department administers budget expenditures related to judicial activities and operational expenses. Thus, this budgeting system aims to enter and strictly comply with the requirements.
The creation of private business budgets is carried out as operational planning. The main tasks (strategies) of budgeting are:
- Ensuring current planning and coordination;
- Ensuring cooperation and communication of business units;
- Justification of the costs of the enterprise;
- Creation of a base for evaluation and control of enterprise plans;
- Compliance with the requirements of laws and contracts.
Indeed, the budgeting of public business is preceded by the development of maps of business processes, their tasks, and their constituent operations. The development of a budget structure for process-oriented budgeting is being implemented in parallel with the automation system of a modern business. The main strategies are:
- The process of generating information on the exact cost of goods;
- Allocation in the price of each operation of its variable and permanent part (Webber, 2019).
The sources of financing for both types of business can be divided into two components: External and internal sources. External sources include funds that are attracted from outside to finance activities. Bank loans, investments, issues of securities, and government support are external sources. Internal sources are funds owned by the company itself (Webber, 2019). These include own funds, income from the use of property, profit, depreciation, and reserve funds.
As for me, a private budgeting sector is a suitable option because strategies seem to be straightforward to implement. Moreover, I can apply business budgeting concepts to create an adequate criminal justice agency budget by following all the requirements and norms of strategies. Observing the budgeting procedure, it is possible to achieve success in planning and to calculate all the details of the budget of an effective criminal justice agency.
References
Lindbeck, A. (2019). Government budget – The budgetary process. In Encyclopædia Britannica. Web.
Webber, D. (2019). Good Budgeting, Better Justice: Modern Budget Practices for the Judicial Sector. Web.