Page 124 - DLIS003_LIBRARY ADMINISTRATION AND MANAGEMENT

Unit 7: Budgeting

Introduction Notes

In the preceding unit you have learnt about the financial management of libraries in general and
sources of funds, financial estimation and planning for library expenditure. In this unit you will
learn what a budget is, why it is required in libraries and information centres, how it is operated
and what its advantages and disadvantages are. This unit deals with the important phase of
financial management, namely, budgeting, financial control and accounting. The library being
an expenditure-oriented institution, the central aspect of financial management is the budget
which is a statement of income and expenditure, providing guidance in spending the appropriated
funds through a period of time. It is also an instrument of control, communication, co-ordination,
evaluation and motivation. In this unit, we shall study the basic features of a library budget.
The preparation of the library budget is a major responsibility of the librarian and his staff.
In fact, the budget is a reflection of the current and future activities, programmes and plans of the
library. It has to be prepared with the cooperation of all senior members of the staff and within
the framework of rules, procedures and guiding principles. It is necessary to justify expenditure
on every item, particularly when more funds are to be earmarked for any running activity or
proposed new programme. Accounting as a means of recording library expenditure according
to established rules and procedures and maintenance of necessary financial records in conformity
with audit requirements are very important.

7.1 Library Budgeting and Financial Planning

Budgeting is a planning process in which the expenditure and revenue of the organization over
a specific time period are accounted for. The budget is a plan document and a financial statement
which provides details of the proposed revenues and their utilisation for expenditure for a
specific period, usually a year. It is a means of check and control on what money should have
been received and how money is to be spent. Budgeting need not be just confined to money.
It can be expressed both in financial and non-financial terms. But it is a practice (and it is the
strength of the budget) that it is expressed with a common denominator called the rupee
(in India). Hence, budgeting is the process of quantifying all the plans of an operation to determine
whether they will achieve the desired results and to adjust accordingly where they will not
achieve the desired results. The budget is a quantitative expression of a plan of action, a tool in
the hands of the library or information centre manager, a management action towards the
destination, and a tracking device ay highlight variations from the plan and show the need for
corrective actions to put the operation back on track (Newton, 1981, p1313). In other words, the
budget aids orderly and progressive planning, coordination and implementation, serves as an
instrument of financial a device for evaluating result.
Budget is a systematically prepared statement revenue and expenditure of an institution for a
period of time, usually a year. The objective of this process is to produce a financial plan. The
budget serves the dual purpose of limiting expenditure to income and assuring wisely planned
spending.
Financial planning and budgeting have certain obvious advantages. They make goals clearer,
assist in fixing responsibility, reveal weaknesses in the structure of the organization force
quantification of targets and achievements, lead to the waist productive use of resources, pinpoint
timely actions and indicate the need for corrections from deviations, if any. So much so budgeting
in general can also cause some problems: (i) It may lay much emphasis on easily observable
factors (e.g. circulation figures). (ii) the budget may tempt one to become routine without
improving operations. (iii) Library services are not quantifiable in terms of the rupee. (iv) The
budget requires continues adaptation to meet changed circumstances. (v) It does not work
automatically. (vi) The budget and, budgetary control are required to be used intelligently.

LOVELY PROFESSIONAL UNIVERSITY 119