Accounting Best Practices, Fifth Edition

5–24. Use On-Line Budget Updating

One of the most difficult problems for a budget manager in a large company is bringing together the budget information arriving from a multitude of outlying company locations. For example, a location may send budget updates on paper or a compact disc, either of which requires the manual translation of this information into the budget model by the budget manager’s staff. If there are many locations reporting budget information, this can result in a flood of work for several days. Also, the person reentering the budget information may make a typing error, thereby altering a budgeted amount from what a subsidiary intended, or may misconstrue the submitted data and list a budget number in the wrong account. In either case, the budget must be reviewed by the subsidiary and a request made to adjust the error, which takes still more time and effort.

An excellent best practice that entirely eliminates this problem is to give subsidiaries direct on-line access to the budget model. They can then enter it themselves, make any necessary changes, and review the results. By doing so, all errors are made, and must be corrected, by the subsidiaries, taking this chore away from the central accounting group.

There are two problems with this best practice. One is that all subsidiaries must acquire on-line access to the budget model. The second item is more critical: Anyone from any subsidiary can now have access to the entire budget model, with the ability to delete ...