Finance · Budgeting · Component
The budget
The allocation itself — money against lines, with the assumptions that produced each figure.
The deliverable
What it is
A budget without recorded assumptions cannot be corrected. When actuals diverge, nobody can identify which belief failed.
It is also the clearest statement of strategy the organisation produces, whether or not anyone intends to read it that way.
One level in
What it is made of
Each element is a constituent part of the component. Follow one to see the attributes it carries.
The assumptions
What each figure depends on being true.
3 attributes: Assumption · Assumed value · Confidence
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Record the assumptions with the numbers. Without them, a variance is a surprise rather than a diagnosis.
The other components in budgeting
The strategy check
Where the money moved compared with last period, and whether that matches what the organisation says its priorities are.
LearnThe variance record
Actual against budget, with the reason rather than only the number — because the number alone prompts explanation rather than learning.
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