THE PROCESS OF BUDGETING Firstly, filing all the Purchase Order (PO) or the invoice received for all

expenses made for the department accordingly. After filing the invoices as a proof of purchase the itemises are manually keyed in at the excel spread sheet as per their expenditure cost type. The categories of expenditure type that each expenses fall into will differ. The Summary of Management Expenses is an overall accumulation of expenses made by the department, which was manually typed. From here, we will be able to see how the department use the limited fund allocated and approved by the government for all their expenses. Hence, the variance, which means the difference of actual amount from the budgeted amount, is calculated. THE PURPOSE OF THIS BUDGET The Summary of Management Expenses comes as very useful, as this table is submitted to the Human Resource department to allocate further additional budget for next month. Subsequently, this table will also mainly be a reference to prepare department budget for the coming month. The department will try to minimize the variance and to forecast the expenses accurately. This department budget acts as a guidance to be prepared for the expenses that might incur and manage the allocated fund efficiently. VARIANCE, UNDER ALLOCATED AND OVER ALLOCATED Variance is the term used in the budget as to compare the difference between the budgeted, planned or standard amount compared to the actual amount incurred. Here in this department, the variance is according to percentage as to the expenses over the allocated fund. Variance (%) = Expenses Incurred Allocated Fund x 100

Under allocated is the situation where the fund allocated is less or underestimated for the particular item/ duration. Similarly, over allocated is when the allocated budget is more than the actual expenses that has incurred. ANALYSIS FROM THE EXAMPLE DEPARTMENT BUDGET From the total of allocated fund RM10.41 mil, current expense as at July 2012 are at RM4.05 mil. The committed expense for the same month is RM3.19 mil. Finally, the balance from fund allocated is to cover for the Work Programme 2012. The Work Programme 2012 would be IT projects for the country where some implemented projects and some still pending for implementation. Unfortunately, for July 2012, it shows, as the fund allocated for this department is not sufficient to allocate for all Work Programme 2012 projects, therefore only RM7.25 mil will cater the projects. Hence, RM4.44 mil is the insufficient amount for this department to visualize all its projects. Therefore, programmes and projects that is still pending will be either implemented later or dropped for that month, depending on the departments management. Overall, the RM4.44 mil is the under allocated amount as at end of July 2012. As for the current cost, RM15, 000 allocated for upkeep expenses did not fulfil Julys actual amount as the actually expenses was summed up to RM22, 970. Therefore, the under allocated amount for upkeep expense is around RM7, 970. Similarly, for assets, the department has not allocated fund thus the expenses incurred for July 2012 considered under allocated around RM283, 418.44. However, for repair and maintenance, about RM6.05, mil allocated only RM3.24 mil used and subsequently over allocated amount. The reason why such allocation of huge amount for repair and maintenance is because it is the highest amount compared to all types of expenditure. Overall, the repair and maintenance spends 44.24% from the total allocated fund usually. There were no rental expenses incurred for July 2012, consequently the allocated RM837, 000 considered over allocated. The conclusion from this table is current cost is spending approximately 38.97% of the total amount of fund allocated by government.