Accounting 5.0 has basic budget functionality suitable for organisations that have only one overall budget (rather than multiple project budgets).
Note: to enable the budget functionality you have to enable it in the Set-Up Sheet. Under ‘Do you have a budget’, select ‘Yes’, then ‘Activate Budget Module’.
Once enabled, a budget section is added to the ‘Account List’ sheet, and a budget report becomes available in the ‘Reporting’ Sheet.
How does it work?
Simply enter a dollar value next to each income, expenditure, asset or liability account that you are budgeting for the year in the yellow budgeting fields in the Account List sheet.
For each line you have the option of setting the budget ‘throughout’ or ‘one-off’. This field decides how a budget variance is calculated.
If ‘throughout’ is selected, the budget variance report calculated the budget figure by dividing the dollar value you entered for that account by the number of days the report is run for.
For example, you have an expenditure account called electricity, and you have budgeted to spend $1,500 in electricity for the year.
You then run a budget variance report in the Reporting sheet for the period 1 June 2023 – 31 July 2023. The spreadsheet will calculate the budgeted figure for this period based on the days in the period. There are 61 days in the selected period, so the displayed budget figure will be $1,500/365*61= $250.68
If ‘one off’ is selected, the budget variance report is looking whether a transaction has occurred in that account for the selected reporting period. This is most useful if you expect a single grant or large expenditure some time during the year.
For example, you expect to receive a grant from Lotteries over $10,000 in October 2023. You have a ‘Lotteries’ account in the Account List, put $10,000 and one-off as the budget figure. A grant of $12,000 was received and entered into the Transactions sheet on 15 October 23.
If you run a budget variance report for any period that does not include the grant receipt date (15 October 23), the report will show the budgeted Lotteries grant in a special section outside the variance column (see below). In any report including that date, the variance report will show $10,000 as the budgeted figure, $12,000 as the received figure, and $2,000 as a variance.
The Budget Variance Report
The budget variance report has three sections:
1. Income and Expenditure
This section has three columns: actual, budget and variance.
Actual: the transactions in the report period you have entered for this account in the Transactions sheet.
Budget: the calculated budget figure for this period based om your values in the yellow ‘budget’ section of the Account List sheet
Variance: the difference between actual and budget.
2. One-off amounts
This section displays any amounts in the yellow budget section in the Account List sheet for which you have selected ‘one-off’, and for which no transaction has been found in the selected period. In the Lotteries example above, the budgeted amount of $10,000 would appear here in any period that does not include the date when the grant was actually received.
3. Summary
Variances can be confusing depending on whether they are displayed as a positive or a negative. The standard accounting convention is to class them as ‘favourable’ (if there is more cash in the bank as a result of the variance), or ‘unfavourable’ (in the reverse situation) rather than relying on + or – signs.
The report displays a summary of the income, expenditure, and total variance and whether the variances are favourable or unfavourable.