Budgetary Impact of Smaller Organizations on Overall Government Agencies Budget - Essay Example

of project: BUDGETARY IMPACT OF SMALLER ORGANIZATIONS ON OVERALL GOVERNMENT AGENCIES BUDGET and number: name: Date submitted: INTRODUCTION AND BACKGROUND It is a quit fact and reality in any country’s economic framework, that the governmental policies on account of fiscal, monetary, exchange rates and others areas are keenly and deeply digested by the people of respective nations. All the masses up front shows their interests and reservations over such policies issues presented by the governmental bodies, especially the ones who have a strong finance, economic or a business background and academics. Moreover, many governments do have an established traditions and practice, in which they first present the draft of such policies to cabinet, public house, parliament or etc, in order to take some valuable comments, feedback and critics over the words of such presented policies. However, such gesture on the part governmental authorities merely acts as a fruitful and appropriate approach in some of the jurisdiction around the globe, were common peoples are not considered so common that they can’t have any say in the operations and functionalities of governmental policies as such. Thus, as a result, after welcoming their valuable and timely feedback on such policies drafts, state authorities then presents the final version of such policies to paper to respective houses, governmental official gatherings or parliaments. However, this way of practicing followed by the governmental bodies all over the world are much rare and thus, at times the interest of common peoples, general public, minorities and smaller organizations are significantly ignored in such policies papers of state authorities. Consequently, similar is the case with the budgetary decisions and policies that are too made by the various governmental agencies in different nook and corner of the world. Most of the governmental agencies usually present their budget on annual basis on front of the nation to which they are accountable to, which significantly covers various broad and comprehensive areas among which the overall amount of budget is appropriately and diligently allocated. BUDGET DEFINED A budget is merely an estimation of the all forms of revenue that can be earned and a summary of complete expenses that would be incurred, over a definite future period of time, usually one year. A budget could be made for any person, organization or group, including, family, group of people, government, business enterprise, college, university, , country, restaurant, multinational organization or just about any other sort of thing that could make and spend a money (Investopedia, 2009). Moreover, a budget is usually regarded by most of the people or firm as valuable and a priceless tool which significantly helps out in prioritizing your expenditures and manages your finance or money well. Because, no matter how more or how less you own, it is always an intelligent act to plan and monitor your budget effectively, timely and efficiently, as it will help you identify many wasteful expenditures which you can avoid, adapt quickly to your current financial situation needs and requirements and finally, it will help you out in achieving your financial goals in a timely basis (Personalfinance.duke.edu, 2014). BUDGET CRISIS AND GOVERNMENT AGENCIES Designing a budget for some small organization or a group of people or a family might be a process of few minutes of exercise and information gathering, but it is quite a cumbersome and a complex process and task when it comes to the development and designing the overall budget for any specific nation’s economy. As a result, policy makers and government bodies have to face many hardships and shortcomings to design and propose a suitable budget for its state, with the available resources constraints they have currently in their economic bank. As the primary aim of these government authorities is to allocate the equivalent and deserving share of budgetary resources to each and every department of state, and therefore, make the best possible outcomes they can made with their present financial resources. In addition, the federal or local budget crisis basically threatens to portray the same impact or affect on the communities and states in particular, which the global warming usually have on the environment, and as a result, the widespread negative results and its waves can touch everyone under its umbrella (Beckwith, 2014). Anyhow, most of the times, many of these authorities and agencies have to encounter with the phenomena, while designing a budget, commonly known as budget crises. Budget crises is basically is the condition or a situation, where the incomes or the available financial resources of a state falls relatively below the level, at which the current expenditure scale of a nation persist in terms of money or finance. Thus, as a result they have to sacrifice the need and requirements of one department of a state at the expense of the other or in other words, they allocate such deficient resource on the basis of priorities defined with respect to each of such departments. Effectively speaking, each state might contains up to several hundreds of department in their overall state budgetary structure, that might includes some big to medium to minor scale of departments. However, most of the departments that effectively and broadly become the subject for various countries of the globe in their overall budgets considerations have been specifically identified as follows; Defense Education Industry wise allocation (that may includes, textile, chemicals, oil and gas, pharmaceuticals, Information Technology, transportation, financial services, automobiles, manufacturing and many other sectors of trade and industry) Infrastructure Development Health and Care Agriculture, Forestry or other natural resources Allowances to Governmental Employees Promotion of sick and decline industry International trade and industry development Servicing of international debt or other related covenant Any other department or areas as per the specific needs of the state Therefore, the list presented above do contains some of the major departments of a state, to which the overall fund of state budget is to be allocated between them as per their requirement, importance, performance and demands. However, in recent times most of economies of the world are still in the jolts and shocks of the economic meltdown of 2008 and 2009 and still surviving the after affects of such an economic crisis. In particular most of the affected nations, are merely the under developed countries and developing countries of the world, which significantly lacks in financial resources, economic resources and also natural resources to some extent. And as a result, they had to face with lot of difficulties when shaping up their budgets for an upcoming financial year, in the shape of budget crisis. Most importantly, at initial stage of budget designing, they have to first cater for their most prioritized aspects and areas of state, which can’t be sacrifice or ignored at the expense of some other department and therefore, allocate the respective funds of budget to them accordingly. After that, comes the number of less important department, the actual budgetary requirements, in terms of money, of which can be sacrificed or foregone to certain acceptable level and assign the real financial resources to them on an effective basis. Then, a number of least essential areas of state comes, which basically and logically gets the residual share of financial resources available in the budgetary fund, to meet their respective needs and requirements for the entire upcoming financial year (Stid & Stid, 2014). Significantly speaking, departments like defense, education and health and care usually gets the attention of government bodies or agencies on the priority basis and thus, they falls in the most important department of substantial states of the world, when it comes to the allocation of budgetary funds. Furthermore, the departments like development of infrastructure and expenditure on agriculture or other natural resources generally are considered less important by most of the countries and thus, they are rewarded with the budgetary financial resources on accordingly basis. Finally, the others department could be considered as least important by states on substantial terms. However, the needs and requirements of one country or state can significantly differs, as compared to the others when it comes to the particular special needs and prioritized requirements of any state with respect to any department of such state. EFFECTS OF SMALLER AGENCIES ON OVERALL BUDGET OF GOVERNMENT AGENCIES The role and impact of smaller agencies at times and in literal terms, significantly affects the overall development and design of various state or corporations’ budgetary process and procedures. It is quite strange to mention but it is a rare fact and realistic information. It can be smartly understood with the help of an example of a huge corporation, having many different companies, associates and subsidiaries under its entire group and such corporation also have allocated a specific cost centers to each of such companies, associates and subsidiaries, which it effectively uses to book or record transactions into its accounting system, to carry out various budgetary process and planning purposes. So now, let say the corporation is about to initiate it’s budgetary and planning process for the upcoming financial year for each of its designated and allocated cost centers scattered into different locations of the world. Logically, at first instance, the corporation will highlight and identify the most important and core and key cost centers over its entire group of companies and will allocate the budgetary quota to them on justified basis. It will keep on allocating such budgetary resources to all of its cost centers on a reasonable and required basis for the upcoming year, until it reaches the range of cost center with a very minimal level of productivity and performance level during the last year of operations, as specified from the corporation overall defined criteria to identify such small cost centers. For instance, the cost centers which do execute only 100 numbers of transactions over the last year would fall under such category of small cost centers, in particular. Consequently, the planning management of the entire group would find it rather difficult to allocate a dedicated range of financial resources to such wide number of cost centers from its overall budget, As these forms of cost centers would be scattered on certain distinct locations, and would be in significant numbers as well, with very immaterial level of annual output or productivity. Therefore, to allocate the budgetary resources to them on a specific and definite basis and then to keep a track record of such allocation of resources on a separate or segregated basis as well, would rather increase the ultimate cost of the corporation by far extent and it would also compromise the substantial level of efficiency, in terms of productivity of the entire corporation (Daniel J. Mitchell, 2005). Therefore, it would rather be smart, feasible and dynamic, if such corporation broadly combined and merged some of those cost centers into few significant large cost centers, only for the purpose of budgetary resource allocation to those cost centers. In this way and as a result of this action on part of the management of the corporation, it would certainly save some precious time, energy and productive resources of the entire corporations well. Similarly, when it comes to government agencies designing their annual budget, they would also be faced and encountered with certainly trivial scale of agencies falls under its comprehensive umbrella. And therefore, they would not be in a position to allocate separately the various required budgetary resources to those department and then to keep a regular check on the spending and utilization of those resources by those small departments. Because, if these government authorities, plans to effectuate such a methodology in the allocation of budgetary resources, then they would probably be met with a huge loss of productiveness, time and financial resources in order to effectively manage and control the records of allocated resources to such small departments. Thus, it would be much suitable, sound and logical if it follows the same plan of resource distribution or allocation to respective small government agencies, as followed by the management of corporation in the example quoted above. REFERENCES OR BIBLIOGRAPHIES Investopedia,. (2009). Budget Definition | Investopedia. Retrieved 3 July 2014, from http://www.investopedia.com/terms/b/budget.asp Personalfinance.duke.edu,. (2014). What is a budget and why is it important? | Personal Finance @ Duke. Retrieved 3 July 2014, from http://personalfinance.duke.edu/manage-your-finances/budget/overview Stid & Stid, D. (2014). Five Ways to Navigate the Fiscal Crisis (SSIR). Ssireview.org. Retrieved 3 July 2014, from http://www.ssireview.org/articles/entry/five_ways_to_navigate_the_fiscal_crisis Beckwith, M. (2014). America faces an intergovernmental fiscal and relationship crisis. Mma.org. Retrieved 3 July 2014, from http://www.mma.org/advocacy-mainmenu-100/exec-directors-reports/6898-america-faces-an-intergovernmental-fiscal-and-relationship-crisis Daniel J. Mitchell, P. (2005). The Impact of Government Spending on Economic Growth. The Heritage Foundation. Retrieved 3 July 2014, from http://www.heritage.org/research/reports/2005/03/the-impact-of-government-spending-on-economic-growth Read More