PUBLIC COMPANY BUDGETING COURSE #2. Brought to you by the Public Company Community

Transcription

1 PUBLIC COMPANY BUDGETING COURSE #2 Brought to you by the Public Company Community

2 This Course Public Company Budgeting Course #2 Who will benefit Individuals currently performing budgeting Content Logistics of how to perform SEC reporting Practical tips and tricks

3 Course Materials If you like this course You still can t pay us. Sorry. No credit cards allowed! During this webinar, look for This means that there is an Excel or Word template related to the topic that we are discussing. These are templates that I have used in the past and have found to be very helpful. But you can: Recommend the site to your colleagues. Check out the other Articles pertaining to working at a public company and comment on them. Submit comments and course recommendations by following the contact us link. Link to Public Company Community from LinkedIn, Twitter, Facebook, Tumblr, and Instagram. Sign up for our list to hear about new articles and new courses. Become a published author and earn FREE CPE while doing it. Assemble a one hour course of your own about working at a public company. I will help you through the whole process, and I will even post it on the Public Company Community website for you for FREE. Oh and earn FREE CPE for doing this, too.

4 The Instructor Patrick Truesdell 13+ years experience in accounting 7+ years auditing or working for publicly traded companies Currently Director of SEC Reporting and Budgeting at a publicly traded company College accounting course instructor Business Consultant CPA, MBA, Certified Equity Professional (CEP), and Masters in Accounting

5 Topics to be Covered Budgeting Process timeline Using Excel your General Ledger vs Buying Budgeting Software Preliminary Review of budget to actuals Forecast Budget to Actual Reporting Departmental Consolidated

6 Budgeting Process In case you missed the last class Check out course documents For this class - Timeline Check out course documents

7 Budget Assumptions Overall plan for the year restrict the spend and maintain status quo, or grow responsibly, or grow aggressively New products or discontinuing products Changes in facilities or commercial outlets Other

8 Send templates out to department heads Be cognizant of payroll information Provide concise assumptions and directions Give them a deadline of no more than two weeks

9 Review Returned Budget Files Double counts Compare to prior year Not consistent with budget assumptions Department head meetings

10 Executive Sign-Off Review with the CFO and get sign-off Review with CEO and get sign-off

11 Board Approval Generally required for SOX Sales and gross margin by month by class Cash Burn and ending cash balance by month P&L by internal account category (Sales, COGS, Payroll, office costs, unallocated job costs, utilities) P&L by department P&L by major lines on SEC Filings (Sales, COGS, Selling, G&A, other non-operating) CAPEX by department with major additions tickmarked Current headcount by department with a column for additions/subtractions and columns for ending headcount for each forecasted year

12 Board Approval - Continued Level of detail to provide Get formal approval in the minutes or the written unanimous consent, if it s not directly associated with an actual meeting

13 Budget Software vs. Excel

14 Pros of using budgeting software Better budget reporting Fewer P&L formula errors More collaborative Makes monthly forecasting much more manageable

15 Pros of using Excel for all of the budgeting More flexibility in cash flow reporting and can more easily customize cash to accrual adjustments Easier to troubleshoot when balance sheet is out of balance or when results are not flowing properly into the roll-up Cost Budgeting Software is $15k setup plus $15k annual cost, Minimum No training time for Excel

16 Likely start of Course #3

17 Preliminary Review Before the Month is Closed Correct Department Correct General Ledger Account

18 Forecast Defined redo of the budget every month Reason Process Finance team runs forecast to actuals Finance team works with accounting and department heads to determine savings/overages vs timing differences and revises forecasts as necessary Will need additional finance resources and will place additional demands on accounting and department heads

19 Forecast alternative process Estimate the forecasted amounts a few days before the month ends Process requires essentially two closes An estimated close with journal entry estimates And an actual close CFO can analyze an approximate of the month end 5-10 earlier

20 Once the General Ledger is closed Department level budget to actual Consolidated budget to actual

21 Department Level Budget to Actual Run budget to actuals and identify all variances and reasons for the larger items Company culture dictated by CFO and CEO Budget as a projection tool Budget as a tool to influence when money gets spent or not

22 Consolidated Level Budget to Actual Largely based on the department level analysis performed earlier Determine explanations for the major fluctuations in the major expense categories

23 Review Question #1 Which of the following events occurs near the beginning of the budget development process A) The budgeting manager sets up the templates or establishes the permissions for each department. B) The Board approves the budget. C) The external auditors approve the budget. D) The CFO approves the budget.

24 Review Question #1 Which of the following events occurs near the beginning of the budget development process A) The budgeting manager sets up the templates or establishes the permissions for each department. B) The Board approves the budget. C) The external auditors approve the budget. D) The CFO approves the budget. A) This is generally the first thing that you would do when you are getting started with building the budgets. B) The Board generally approves the budget once it is finalized by management. C) The external auditors generally do not need to approve the budget. D) The CFO generally approves the budget later in the process.

25 Review Question #2 (Fill in the blank.) The forecasting process is generally. A) not done at a publicly traded company B) performed each month by the finance team C) not very time consuming for the finance team D) not good for predicting future costs

26 Review Question #2 (Fill in the blank.) The forecasting process is generally. A) not done at a publicly traded company B) performed each month by the finance team C) not very time consuming for the finance team D) not good for predicting future costs (Fill in the blank.) The forecasting process is generally. A) Most publicly traded companies do establish a budget, at least, each year. B) The forecasting process is generally lead by the finance team at the organization. C) The forecasting process is generally very time consuming for all involved. D) The forecast is a great way to have an updated projection of future costs.

27 Review Question #3 (Fill in the blank.) Generally the approves the financial budget each year. A) Staff Accountant B) outside counsel C) Internal Audit Manager D) Board of Directors

28 Review Question #3 (Fill in the blank.) Generally the approves the financial budget each year. A) Staff Accountant B) outside counsel C) Internal Audit Manager D) Board of Directors A) The Staff Accountant will generally not have the authority level to approve the budget. B) Outside counsel is typically not involved in the budgeting process. C) The Internal Audit Manager generally is not very involved in the budgeting process and does not provide an approval of the financial budget. D) The Board of Directors generally provides a formal authorization of the budget.

29 Topics Covered Budgeting Process timeline Using Excel your General Ledger vs Buying Budgeting Software Preliminary Review of budget to actuals Forecast Budget to Actual Reporting Departmental Consolidated

30 Help the Community Become a published author and earn FREE CPE while doing it. Published Author Assemble and deliver a one hour course of your own about working at a public company. I will help you through the whole process, and I will even post it on the Public Company Community website for you for FREE. Oh and you ll earn FREE CPE for doing this, too. CPE Provider to CPAs

31 Site content If you like this course You still can t pay us. Sorry. No credit cards allowed! Everything is absolutely free! In fact, there is not a single place on this site that you can even enter a credit card. No bait and switch with teaser introductory offers. But you can: Recommend the site to your colleagues. Check out the other Articles pertaining to working at a public company and comment on them. Submit comments and course recommendations by following the contact us link. Link to Public Company Community from LinkedIn, Twitter, Facebook, Tumblr, and Instagram. Sign up for our list to hear about new articles and new courses. Become a published author and earn FREE CPE while doing it. Assemble a one hour course and earn FREE CPE for doing this, too.