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Developing an Operating Budget—Theory and Practice

When creating a budget for an organization, it is important to consider several outputs, which depend on the perspectives of the individuals developing the budget. There are certain best practices to keep in mind when developing budgets.

Using the module readings, Argosy University online library resources, and the Internet, research the value of budgeting as well as methods used to motivate all departments or units of an organization to define budgets.

Based on your research, respond to the following:

  • What is the purpose of developing a budget?
  • Is the budget a planning document, a control document, or both?
  • What are some of the phases of developing a budget?
  • Are there different budgeting models?
  • What are factors that could cause variances in a budget?
  • How should management address variances in a budget?
  • How could management facilitate a participatory approach to budget development?
  • How might the budgeting process differ between for-profit (FP) and not-for-profit (NFP) hospitals?
  • Contributions are an integral part of an NFP meeting budget. How appropriate is it for an NFP hospital to budget expected contributions?
  • Many states have a charities bureau that monitors charitable activities including NFP hospitals. Review the site for your state and comment on this agency as it relates to the budget process. For an example, review the following link for the charities bureau for New York State.

Give reasons to support your statements.


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