MHR DAV INSTITUTE OF

NURSING,
JALANDHAR

Subject: NURSING MANAGEMENT

Topic: ASSIGNMENT ON BUDGET
PREPARATION OF HOSPITAL,
COLLEGE OF NURSING & SCHOOL OF
NURSING

Submitted To: Submitted by:

Mrs. JOPHY ELEZABETH GEORGE NEHA
PARIHAR
Associate Professor Roll No. – 01
CHILD health Nursing [Link]. Nursing 2 year
nd
 Submitted on: 09 OCTOBER 2024

INTRODUCTION

Word “budget” derived from old English word “budgettee” means a sack or pouch or leather bag
to carry official papers in. it is generally a list of all planned expenses and revenues.

A forecast of the resources required to deliver the services offered by organization. A budget is a
financial plan that includes estimated expenses as well as income for a period of time.

A nursing budget is a systematic plan that is informed best estimate by nurse administrators of
nursing revenues and expenses. It projects how revenues will meet expenses and projects a return
on equity or profit.

Budget is a numerical statement expressing the plans, policies and goals of an organization for a

definite period in future. Budget is a numerical statement expressing the plans, policies and goals
of an organization for a definite period in future.
MEANING OF BUDGET

One of the primary objectives of management accounting is to provide information to

management for planning and control.

A widely used device for managerial control is the budget. Because the amount and quality of
Nursing Services depended on budgetary plans, nurses should provide the resources necessary
for the safe and effective nursing care

DEFINITION

 Budget is a concrete precise picture of the total operation of an enterprise in monetary

terms.
H M Donovan
 A budget is an estimate of future needs arranged to an orderly basis covering some or all
the activities of an enterprise for a definite period of time.
T.N. Chhabra
 Budgeting is the formulation of plans for a given period in numerical terms.
Harold Koontz
  A budget is a plan that uses numerical data to predict the activities of an organization
over a period of time.
Bessie.
PURPOSE OF BUDGET

 To provide a quantitative expression of the plans of the hospital or the institution.

 To evaluate financial performance in accordance with the plans.

 Budget clearly recognizes controllable and uncontrollable cost areas.

 Budget offers a useful format for communication fiscal objectives.

 To enhance fiscal planning and decision making.

 Budget allows feedback of utilization of budget.

 Budget helps to identify problem areas and facilitates effective solution.

 Budget provides means for measuring and recording financial success within the objectives
of the organization.

FEATURES OF BUDGET

 It should be flexible.

 It should be synthesis of past, present, future.

 It should be product of joint venture for co-operation of executive’s department heads or

different level of management.

 It should be in the form of statistical laid down in specific numerical terms.

 It should have support of top management throughout the period of its planning and
implementation
IMPORTANCE OF BUDGET

 Budget is needs for planning for future course of action and to have a control over all
activities in the organization.

 Budget facilitates coordinating operation of various departments and section for realizing
organizational objectives.
 Budget serves as a guide for action in the organization.

 Budget helps one to weight the value and to make decision when necessary or whether one is
of a greater value in the programme that the order.

PRINCIPLES OF BUDGET

 Budget should provide sound financial management by focusing on requirement of the

organization.
 Budget should focus on objectives and policies of the organization. It must flow from
objectives and give realistic expression to the way of realistic such objective.
 Budget should ensure the most effective use of scarce financial and non-financial
resources.
 Budget requires that programme activities planned in advance.

 Budgetary process requires consistent delegation for which fixed duties and
responsibilities are required to be allocated to managers at different level for framing and
executing budget.
 Budget should include co-ordinating efforts of various departments establishing a frame
of reference for managerial decision and providing certain criteria for evaluating
managerial performance.
 Selling budget target requires an adequate checks and balance against the adoption of too
high or too low estimate, almost care is a must for fixing targets.
 Budget period must be appropriate to the nature of business or service and to type of
budget.
 Budget is prepared under the direction on the supervision of the administration or
financial officer.
  Budget are to be prepared and interpreted consistently throughout the organization in the
communication in the planning process.

TYPES OF BUDGET

1. Incremental budget or zero-based budget: This is a budget prepared using a previous

period’s budget or actual performance as a basis with incremental amounts added for the
new budget period.
2. Open ended budget: this is a budget which are subjected to any change at any time.
there is no set upper limit of cost, it can change according to needs and circumstances.

3. Fixed ceiling budget: Fixed budgets are budgets that are drafted on the basis of specific
criteria, and do not allow any room for any changes or variations in activity at any point
during the period of time covered by those budgets.

4. Flexible budget: A flexible budget is a budget that adjusts or flexes for changes in the
volume of activity. The flexible budget is more sophisticated and useful than a static
budget, which remains at one amount regardless of the volume of activity.

5. Roll over budget: A rollover budget is a budget in which the funds, if not spent in a
particular month, roll over into that budget for the following month, adding to the
allocation for that particular month.

6. Performance budget: A budget that reflects the input of resources and the output of
services for each unit of an organization. This type of budget is commonly used by the
government to show the link between the funds provided to the public and the outcome of
these services.

7. Programmed budget: is the budgeting system that, contrary to conventional budgeting,

describes and gives the detailed costs of every activity or programme that is to be carried
out in a budget. Objectives, outputs and expected results are described fully as are their
necessary resource costs, for example, raw materials, equipment and staff. The sum of all
activities or programme constitutes the Programme Budget.

8. Sales budget: an estimate of future sales, often broken down into both units and
currency. It is used to create company sales goals.
 a. A projection of how much a business will generate in profit for the year. This is not
true form of determination for profit margin.

9. Production budget: an estimate of the number of units that must be manufactured to

meet the sales goals. The production budget also estimates the various costs involved
with manufacturing those units, including labor and material. Created by product-oriented
companies.
CLASSIFICATION OF BUDGET

Classified on the basis of: -

Coverage of functions – Period of Budget –

Master & Functional long term and short -term
budget. budgets.

Natured and activity Flexibility adopted –

covered – Fixed and flexible budget
Capital & Revenue budget.

A) MASTER & FUNCTIONAL BUDGET

 A mastered budget is prepared for the entire organization incorporating the budget of
different functions. e g. When we refer to the annual budget of Govt. of India. It
incorporates the budget out lays of different ministries.

 A functional budget is prepared incorporating a major function and its sub functions since
an organization may have a number of functions, numerous functional budgets are
prepared. E.g., production budget, cash budget in an organization.

B) CAPITAL & REVENUE BUDGET

 An organization’s activities involve two process. Creating facilities for carrying out
activities and actual performance activities. Creating facilities for carrying out activities
include capital expenditure whole returns accrue over a number of years. For such
activities, capital budget is prepared which is essentially a list of what management
 believes to be worthwhile projects for acquisition of new assets together with the
estimated cost of each project.

 Revenue budget involves the formation of target for a year or so in respect of various
organizational activities such as production, marketing, finance, etc. Thus, a revenue
budget includes expenditure and earning for a specific period like one year.

C) LONG TERM AND SHORT-TERM BUDGET

 Many organizations integrate their yearly budgets with long term projection of business
activities and along with yearly budget; they prepare budgets for a longer period of 2-3
years. When one budget period is over budgets are prepared for the next year and
subsequent 2-3 years.

 The short-term budget is for a year and is divided into a number of periods for effective
implementation. e g. Cash budgets are prepared on yearly basis as well as on monthly or
quarterly basis to facilitate better cash management.
D) FIXED AND FLEXIBLE BUDGETS

 Generally, organizations prepare budgets which pertain to only certain projected fixed
volume of operations for a year or so such budget are known as fixed or static budgets.
When an organizations volume of business can be predicted with fair amount of
precision, the fixed budget is satisfactory.

 A budget which is designed to change in accordance with the activities of the

organization is known as flexible budget. It considers several levels of activity and
assures that labor, material or facilities used in production and hence cost vary with a
known relationship to the actual volume of activity.

TYPES OF BUDGETING

There are mainly two types of budgeting.

1. PERFORMANCE
BUDGETING
2. ZERO-BASE
BUDGETING
1) PERFORMANCE BUDGETING
  A performance budgeting is an input/output budget or costs and results budget. It shows
costs matching with operations. Performance budget emphasis on non-financial measures
of performance which can be related to financial measures in explaining changes and
deviation from planned performance. Performance measurement are useful for evaluating
past performance and for planning future activities. Performance budgeting, results into
the following.

 It correlates the financial and physical aspects of every programme or activity.

 It improves budget formulation, review and decision making at all levels of the
organization.

 It facilitates better appreciation and review of organizational activities by the top

management.

 It makes possible move effective performance audit.

 It measures progress towards long term objectives.

2) ZERO BASE BUDGETING

 This was applied for the first time in preparing the divisional budgets of Texas
instruments of the USA in 1971.
 Zero base budget is based on a system where each function, irrespective of the fact
whether it is old or new, must be justified in its entirely each time a new budget is
formulated. It requires each managed to justify his entire budget in detail from scratch
that zero base.

The process of zero base involves four basic steps.

 Identification of decision units,

 Analysis of each decision unit in the context of total decision package.

 Evaluation and ranking of all decision units

 Allocation of resources to each unit based upon.

BENEFITS OF ZERO-BASE BUDGETING

  Effective allocation of resources.

 Improvement in productivity and cost effectiveness.

 Effective means to control costs.

 Eliminator of unnecessary activities.

 Better focus or organizational objectives.

 Saving time of top management.

STAGES OF BUDGET PREPARATION

1. Preparation of position papers
2. Preparation of budget

1) Preparation of position papers:

Preparation of position paper providing background on which strategic budget is prepared

such as position paper include environment, organizational resources and constraints, past
performance and direction for future activities.
a. Position paper on environment:

These includes economic regulatory, political, marketing and competitive technological

factors. The paper may cover the environments trends likely to affect the organizations
performance specifying the assumption involved. This position paper is likely to provide
reference base for the development of annual plan to ensure the required between strategic
plan and annual plan.
b. Position paper on organizational constraints and resources:

This paper would specify at board level the resources available for achieving the targets by
way of personnel, funds, technological, capital expenditure etc. Similarly, the paper also
suggests the likely constraints faced by the organization so that the resources are deployed by
keeping these constraints in mind.
c. Position paper on past performance:

This paper can show the performance based on the strategic business units or responsibility
centers. There us alignment between the market needs and products.
d. Position papers on future direction of activities:

This paper would suggest the various short-term and long-term targets to be fulfilled. The
targets may be identified again for the organization as a whole and for different strategic
 responsibility centers. The paper would also indicate the way the organization will take over
various activities to match itself with environmental requirements like meeting the
competitive threats
The paper may also include the various tracts to be adopted to meet the above objectives.
These may include fixation of levels for working capital, credit levels, utilization of available
material and other physical factors.

2) Preparation of Budget: the strategic budget as prepared through the interaction between
corporate level and SBU level in the light of position papers. the process will go like the one
given as follows:
 SBU
LEVEL

Indian method

 Month

 Made by
Process
:

Review the goals of agency of Hospital.

Review Objectives
existing
of programme.

Revise the existing programme.

Manpower, capital and operating expenses are computer or each programme, old
and new.

Alternative methods are identified for realizing designated objectives.

Comparison is made
determine
to which alternative is most cost effective.

Budget is develop
ed.

FUNCTION OF BUDGET IN NURSING

 Identifies the importance of and develops short a long-range fiscal plans that reflects unit
needs.
 Articulate and documents units needs effectively to higher administrative levels.

 Assess the internal and external environment of the organization in forecasting to identify
driving forces and barriers of fiscal planning.
 Demonstrate knowledge of budgeting and uses appropriate technique.

 Provide opportunities for subordinates to participate in relevant fiscal planning.

 Co-ordinates unit level fiscal planning to be congruent with organizational goals and
objective.
  Accurately assesses personal needs using predetermined standards or an established
patient classification system.
 Co-ordinates the monitoring aspects of budget control.

 Ensure that documentation of clients need for services in clear and complete for facilitate
organizational reimbursement.

Advantages

• Maximizing of profit: it helps the organization in increasing profit. The allocation of

resources should be such that it increases profit and decrease expenditure.
• Co-ordination: The major strength of budgeting is that it coordinates activities across
departments.
• Tools for measuring performance: it provides a tool to measure the performance of
top-level managers and their capabilities.
• Determining weakness: it helps to determine the sensitive areas and weakness in an
organization.
• Corrective action: Budgets provide a tool for corrective action through allocations.

• Reduces cost: it helps to reduce cost within an organization

• Budgets translate strategic plans into action. They specify the resources, revenues and
activities required to carry out the strategic plan for coming year.
• Budgets provide an excellent record of organizational activities.

• Budgets improve communication with employees

• Budgets improve resource allocation, because all requests are clarified and justified

• Provide a method of allocating and using resources within the organization

• Help to monitor and control operations

• Promote forward thinking

• Show employees an overall picture of the direction of the organization which can
motivate staff
• Help to co-ordinate different departments and align them towards shared objectives 
Provide a framework for delegation.
Disadvantages:

• Budgets can demotivate employees because of lack of participation. If the budgets are
arbitrarily imposed top down, employees will not understand the reason for budgeted
expenditures, and will not be committed to them.
• Budgets can cause perceptions of unfairness.

• Budgets can create competition for resources and politics.

• A rigid budget structure reduces initiative and innovation at lower levels, making it
impossible to obtain money for new ideas.
• Budgets can be seen as pressure devices imposed by management, thus resulting in:
a) bad labor relations

b) inaccurate record-keeping.

• Departmental conflict arises due to:

a) Disputes over resource allocation

b) Departments blaming each other if targets are not attained.

• It is difficult to reconcile personal/individual and corporate goals.

LIMITATION OF BUDGETING

 Planning, budgeting or forecasting is not an exact science; it uses appropriately and judgment
which may not be 100% accurate. At best a budget is an estimate no one knows precisely
what will happen in the future.
 The success and utility of budgeting depends on the co-operation and participating of all
members of management. All person should direct their effort according to the plan. Many
time budgeting has paid only lip services to its executing.
 A budget is only a tool and neither eliminates nor takes over the place of management. A
budget cannot be substituted for management but should only be used by management for
accomplishing managerial functions.
 The establishment of a budgeting process takes time. Also sometime too much is expected
from a budget and in case expectation are not fulfilled the blame is put on the budget. An
efficient budgeting programme requires that responsible person should understand the
philosophy, objective and essential of budgeting.
 Student expenditure

 Medical expenses

 Travelling expenses (student conferences)

 Workshop, educational tour

 Examination

 Mess expenditure

 Library expenses

 Purchase of new books

 Subscription to journals

 Binding to volume of journals at the end of each year  Stationery items, postages etc.

 Laboratories/clinics

 Computer and internet

 Staff development

 Electricity and water

 Maintenance
  Advertisement

 Capital expenditure

 Maintenance of building

 Purchase of the office equipment

 Purchase of the teaching equipment

 Purchase of furniture  Inspections.

 SNA

 Transportation

 Affiliation fees and inspection fees (university, government, state level)

 COLLEGE OF NURSING BUDGET MODEL ([Link]. Nursing, Post Basic [Link]. Nursing, [Link].

Nursing)
S. PARTICULAR Previous Year (2018) Current Year (2019) Future Year (2020)

No. Income Expenditure Income Expenditure Income Expenditure

1. Opening Balance 3,50,000 14,20,515 25,29,680

2. Affiliation fees and inspection fees 2,50,000 2,80,000 2,80,000
3. Application Forms 1,35,000 2,00,000
4. Admission/Tuition fees from students 70,36,400 76,36,400 82,38,000

[Link]. Nursing 20,79,800

Post Basic [Link]. Nursing 4,56,600

[Link]. Nursing 45,00,000

5. Transport Fees 4,55,000 3,75,000 4,55,000 3,85,000 4,10,000 3,85,000
6. Exam Fees 3,41,050 3,00,000 3,41,050 3,00,000 3,52,000 3,10,000
7. Clinical Posting Fees 8,00,000 8,10,000 7,50,000
8. Funds 1,60,000 2,00,000 2,00,000
9. Transcript 1,50,000 1,80,000 2,00,000
10. Library fees 1,50,000 1,00,000 1,55,000 1,00,000 1,80,000 1,20,000
11. Computer and internet 50,000 75,000 80,000
12. Salaries 11,54,000 13,54,100 14,00,250
13. Provident Fund 8,31,885 9,58,885 9,60,000
14. Maintenance 2,50,000 2,00,000 3,00,000
15. Advertisement 3,20,000 2,88,000 2,88,000
16. Depreciation 2,00,000 2,00,000 2,05,000
17. Electricity and water 4,25,250 4,50,000 4,00,000
18. Tax 5,97,800 5,97,800 7,10,200
19. Stationaries 1,50,000 1,55,000 1,27,000
20. Furniture 2,50,000 2,50,000 2,55,000
21. Laboratory 2,00,000 2,00,000 2,00,000
22. Staff development 3,20,000 3,50,000 3,55,000
23. Sports Meet 1,00,000 1,40,000 1,30,000
24. Cultural Programme 80,000 90,000 91,000
25. Equipment 80,000 1,00,000 1,00,000
26. Prize Distribution 60,000 65,000 65,000
27. Books, Records, Log books & diaries 3,25,000 3,00,000 3,90,000 3,50,000 3,90,000 3,50,000
28. Uniform Fees- Students 3,05,000 2,84,000 3,50,000 3,10,000 3,10,000 2,35,000
29. Uniform allowance (for 4th class) 1,65,000 1,89,500 1,70,000
30. Miscellaneous 3,62,000 6,00,000 6,00,000
TOTAL 94,07,450 79,86,935 1,13,27,965 87,98,285 1,26,09,680 88,66,450
BALANCE SHEET
[Link]. BALANCE SHEET 2018 2019 2020
1. INCOME 94,07,450 1,13,27,965 1,26,09,680
 2. EXPENDITURE 79,86,935 87,98,285 88,01,450
14,20,515 25,29,680 37,43,230

SCHOOL OF NURSING BUDGET MODEL (GNM, ANM)

S. PARTICULAR Previous Year (2018) Current Year (2019) Future Year (2020)

No. Income Expenditure Income Expenditure Income Expenditure

1. Opening Balance 1,00,000 1,62,015 2,51,030

2. Application Forms 58,000 60,000 75,000
3. Capitation Fees 7,60,000 8,82,000 19,75,000
4. Tuition fees from students 50,000 50,000 60,000
5. Tax 45,985 45,985 50,835
6. Library fees 15,000 25,0000 25,000
7. Uniform Fees- Students 25,000 10,000 35,000 15,000 35,300 20,000
8. Books, Records, Log books & diaries 65,000 32,000 65,000 38,000 68,000 40,000
9. Transport Fees 35,000 35,000 35,500
10. Exam Fees 26,500 16,500 28,000 17,000 32,000 17,000
11. Clinical Posting Fees 60,000 60,000 70,000
12. Sports Meet 21,000 20,000 20,000
13. Funds 15,000 10,000 10,000
14. Miscellaneous 1,00,000 1,20,000 2,25,000
15. Transcript 60,000 60,000 63,000
16. Salaries 5,00,000 6,00,000 8,00,000
17. Stationeries 12,000 15,000 15,000
18. Maintenance 50,000 50,000 50,000
19. Furniture 35,000 25,000 35,000
20. Laboratories 20,000 20,000 20,000
21. Equipment 5,000 5,000 5,000
22. Prize Distribution 15,000 15,000 15,000
23. Stipend 25,000 25,000 25,000
TOTAL 11,59,500 9,97,485 13,67,015 11,15,985 25,84,330 14,53,335
BALANCE SHEET
[Link]. BALANCE SHEET 2018 2019 2020
3. INCOME 11,59,500 13,67,015 25,84,330
4. EXPENDITURE 9,97,485 11,15,985 14,53,335
1,62,015 2,51,030 11,30,995
THE RESPONSIBILITIES OF NURSING ADMINISTRATOR IN BUDGET ARE

1. Participation in budget

2. consultation with sub-ordinates in determining the needs of the unit for coming year.

3. requesting sufficient finds to suggest a sound programme such as to provide for

developing programme provision, expansion of programme, to attend and hold qualified
staff to provide for expansion of physical facilities and supplies etc.
4. submit budget request with justification with proposal expenditure.

5. when the budget is allotted, the administrator should support the budget and should
interpret budget to the subordinates.
6. budget controlling: once the administrator receives the budget approval, a plan of action
is necessary for review and control during the fiscal year.

SUMMARY

So far, we have discussed about the definition of budget, purposes and features of budget,
types of budget, stages of budget preparation, budget model, college of nursing and school of
nursing budget model and responsibilities of nurse administrator in budget.

CONCLUSION

Budget is important plan for building the nursing school and colleges. it has to be revised
periodically to find deviatory and make corrections/ rectifications in the plan and prepare then
effectively.
RESEARCH ABSTRACT

Isaac L, Lawal M, Okoli T. A Systematic Review of Budgeting and Budgetary Control in

Government Owned Organizations. Research Journal of Finance and Accounting. 2015.
Budgeting and budgetary control entails the establishment of goals by the management of an
organization and designing a process which serves as a framework within which an organization
effectively articulates overall planned activities. The quantification of these planned activities in
financial terms is known as budgeting, while the establishment of an effective mechanism to
guarantee desired result is known as budgetary control. This study therefore seeks to undertake a
systematic review of budgeting and budgetary control in Government owned organizations and
given the importance of the foregoing, attention was focused on the Nigerian National petroleum
Cooperation (NNPC).
METHODOLOGY: To achieve the objective of the study, primary data were obtained through
the use of a well-structured questionnaire administered to the respondents, while the secondary
data were obtained from the annual financial statements, files, memos, tax laws and gazette of
the NNPC.
RESULTS: The findings revealed that a necessary and sufficient condition for achieving
effective budgeting and budgetary control is the involvement of all relevant stakeholders in the
preparation of the budget, given the established processes in government circles, while
emphasizing a deliberate and faithful implementation, by all responsible officers. This rests on
the existence of a mental picture of the present state of affairs, vis-à-vis the future expected state
of affairs, within the organization. It therefore recommended that since budgeting and budgetary
control contributes to management efficiency and high productivity of an organization, all
relevant stakeholders must be involved in the budget process, from preparation to
implementation, in other to guarantee overall goal attainment.
KEYWORDS: Budgeting, Budgetary Control, Effective, Efficient, Management, Performance.
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