Answer to Question #73210 in Accounting for Ahsan

Question

How frequently should the budget review occur? Under what conditions is this different and when will the review occur in that case?

Answer 1

The first step of analyzing actual results with the budget is to enter effective figures for the previous year (the forecast at the time the budget was established). If the effective figures divide too far away from the forecast figure, the budget may be not achievable (e.g. the available cash is too low for fixed investments even). Then the current year figures are added, following the same structure as budget (four stages for income, four stages for expenses, and five stages for cash).
Source:
https://en.wikipedia.org/wiki/Conditional_budgeting#Budget_review:_analyzing_conditions