A budget is the financial representation of a planning process, usually annual. It is finalised before the beginning of a financial year and actual income and expenditure are measured against it as a means of reviewing performance and controlling expenditure.
The University’s planning process considers not only the following year’s budget but projections for the immediate years beyond it. By planning further ahead and revising those estimates every year the aim is to ensure the medium-term financial sustainability of our activities.
Forecasting is a shorter-term activity, usually performed at regular intervals e.g. quarterly and limited to updating our view of the current year. It considers actual income or levels of expenditure and projects these forward to the end of the financial year.
It provides useful information about expected current year out-turn so that corrective actions may be taken where appropriate.
In addition, because forecasts are updated regularly, they often provide a more accurate guide to expenditure levels than a budget set before the financial year began. In turn, this may mean that a revised current year forecast is more appropriate than the original budget as a basis for future expenditure when setting the following year’s budget.