Budgets, Planning and Financial Analysis
Budget: A numerical expression of planned revenues and expenses for a specified period of time, such as a fiscal year. This important management tool is the primary instrument that can give reality to objectives, strategies, priorities and plans.
Budget Adjustment: A revision to a department or unit's budget that is issued by the authorized signer (i.e. department or unit head). Examples of budget adjustments include the reallocation of funds from one line item to another within the same departmental budget (intradepartmental) or between departmental budgets (interdepartmental).
Budget Allocation: The total amount of planned resources set aside by an organization for the operation of a department or unit. This allocation of resources is generally linked to both the goals and objectives of the department or unit and the overall strategic plan for the organization.
Budget Amendment: A revision to an organization's budget that is issued by management.
Budget Variance: The difference between budgeted expenses and actual expenses. A positive variance is the result of budgeted expenses exceeding actual expenses. Conversely, a negative variance is the result of actual expenses exceeding budgeted expenses.
Chart of Accounts: A listing of all accounts that are included in an organization's general ledger, each of which is accompanied by a reference number. At Morehouse College, budgeted revenues are identified by 4-digit account codes that begin with the number 5 and budgeted expenses are identified by 4-digit account codes that begin with either the number 6 (personnel) or the number 7 (general and administrative).
Direct Pay: The payment of an invoice subsequent to the delivery of goods and/or services without having encumbered budgeted dollars by way of a purchase order. At Morehouse College, this practice should be the exception and not the rule.
Encumbrance: A commitment within an organization to use funds for a specific purpose. For example, a purchase order is used to encumber or reserve budgeted funds for the purchase of goods or services on a future date, and is the preferred method of procurement at Morehouse College.
Executive Summary Form: The Banner form that displays departmental budget information, including the allocated budget, year-to-date activity (expenses), commitments (encumbrances) and the available balance in total and by line item. This information may be accessed for both the current and prior fiscal years.
Fiscal Year: The twelve-month period for which financial results are prepared and reported. It may be different, by the organization's choice, from the calendar year. In the case of Morehouse College, the fiscal year begins on July 1st and ends on June 30th.
Fixed Cost: A cost that does not vary with the level of activity of a department or unit. Examples of fixed costs include lease payments, property insurance and taxes. These costs form the baseline of an organization's budget and should always reflect anticipated changes (i.e. increases or decreases) for the upcoming year.
General and Administrative Expenses (G&A): Non-personnel operating expenses paid by an organization.
Indirect Cost: A cost that is not assignable to a specific activity within an organization. It is the allocated cost or overhead associated with those departments or units that do not directly contribute to a specific activity. Examples of indirect costs include the salaries of Human Resources personnel, heating costs for administrative buildings and the cost to operate the procurement department.
Personnel Expenses: Salaries, wages and fringe benefits paid by an organization.
Variable Cost: A cost that changes in direct proportion to the level of activity of a department or unit. Examples of variable costs include instructional supplies, travel and faculty salaries.