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6 May, 2015 - 17:10

The preparation of budgets is the responsibility of the budget committee. The budget committee is usually composed of employees of all levels of management because the success of the budgeting process depends on the cooperation of all departments and all employees. The preparation of budgets follows a sequence in which departmental estimates based on sales forecasts are received and combined into a master budget which must be approved by upper management. Most businesses initially base their estimates on prior years. But government agencies and not-for-profit organizations commonly prepare estimates as if the organization has just been created (which is called zero-base budgeting).