SPRING 2014
FMI
*
IGF JOURNAL
35
sector monitors revenues and spending
separately.
Accurately reporting year end
forecasts through-out the year can be
challenging. Each operational unit
makes a multitude of assumptions
3
in
preparing its monthly year-end forecast.
While each unit strives for a precise
forecast, spending delays are often
unavoidable resulting in unspent funds.
The budget department normally
accepts unit forecasts after ensuring
that key material assumptions had been
considered. Hypothetically, if each
department of a 10 unit enterprise was
to over forecast by $0.5 million, it would
be possible for final actual spending to
be $5.0 million less than forecast. While
working in the public sector, I established
an informal budget committee for the
purpose of improving forecast accuracy.
While individual monthly unit forecasts
were not adjusted, the overall forecast
aggregate was adjusted using trend
analysis and professional judgement.
This mechanism significantly improved
accuracy. Trend analysis is a tool that can
accurately predict year-end spending
by comparing the current year-to-date
spending to that of previous years.
Concluding comments and an
invitation to practitioners:
Apaper, such as this, clearly only begins to
scratch the vast body of tacit knowledge
held by current and former practitioners
in the field of financial management in
the private and public sector. We trust
that you have found this brief paper
to be of interest, and would cordially
invite you to continue this conversation
through your own contributions to the
literature. We would as well welcome
any comments and opportunities to
engage in a dialogue on this aspect of
professional knowledge.
About the Authors:
Peter Taylor, B.Eng. (Melbourne University,) Financial Management
Certificate (Province of BC,) retired in May of 2012 after working for
the government of British Columbia since 1986. While working for the
government, he held various financial positions primarily focusing on
budgeting. He applied the process and logic skills of a trained engineer
to budgeting. Peter enjoyed giving back to the province by delivering
budget modules in the Financial Management and Control Course.
Peter also worked in the retail car industry from 1975 to 1985.
Rhordon Wikkramatileke, Ph.D., MPA, BA, teaches at the University
of Victoria. His current research interests include how professional
practitioners in the public sector construct and deploy their bodies
of working knowledge in fields such as financial management and
performance auditing. Contact Rhordon at
.
TACIT KNOWLEDGE
