In essence, budget variances occur because spending did not take place as had been planned. Therefore, in basic terms, variance could be representative of under-spending or overspending. Both under-spending and overspending, as shall be highlighted in this text, could have diverse implications. In that regard, therefore, there is need to highlight the factors that caused under-forecasting or over-forecasting of actual figures. This is important so that future variances can be reduced by taking corrective action on the basis of information derived from the present variance analysis. This text looks into the various spending categories, as presented, and highlights the various concerns relating to overspending and overspending. Further, the text discusses the overall picture painted across all spending categories, with an aim of analyzing the department’s effectiveness as a whole in budget forecasting.
An analysis of the adopted budget vis-à-vis the actual expenditures of Arapahoe County presents several instances of under-spending, in which case some budgeted funds remain unspent. While this could be a red flag in some instances, it is largely understandable in others. The Arapahoe County’s adopted budget is, in essence, a plan. In that regard, therefore, it may not match the actual expenditures and may be subject to variances. However, the county ought to have in place and embrace best practices in relation to the budgeting process where there are robust oversight and monitoring processes.
It is important to note that in some instances, managers may have deliberately failed to report instances when there were reasonable expectations that that actual expenditures would come under budgeted expenditures. In this case, there may have been concerns that some unanticipated uses could crop up during the fiscal year. Failure to report or factor in the relevant figures could have been founded on the fact that anticipated savings could be used as a basis to slash present or future budgets. This particular concern manifests itself in supplies where we have a 26.8% positive variance for the fiscal year 2013 and a subsequent 41.4% positive variance for the year 2014. In essence, there is a significant gap in this case, which could have come about as a consequence of cost savings...
References
Shim, J.K., Siegel, J.G. & Shim, A.I. (2011). Budgeting Basics and Beyond. Hoboken, NJ: John Wiley and Sons.
Snyder, H. (2006). Small Change, Big Problems: Detecting and Preventing Financial Misconduct in Your Library. New York, NY: American Library Association
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