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Enron Mail |
The budgeting period for 2002 is now upon us. In order to assist you in developing a budget for 2002 and meeting the potential expense reduction required by the Office of the Chair, we would like you, with assistance from your management accountant/BUC, to follow the steps below in preparing your budget. All budgets need to be complete by FRIDAY SEPTEMBER 21st.
STEP 1 - Calculate Potential Cost Reduction As part of our ongoing focus on cost the Office of the Chair has asked that you prepare an analysis of possible cost reductions. Targets for these proposed cost reductions have been set at 10% to 20% of the lower of your 2001 Plan and your CE2 submission. Your management accountant will prepare this analysis for you. STEP 2 - Prepare Your 2002 Budget The attached pack will assist you in preparing your 2002 budget. The pack identifies 5 key steps in preparing a budget and should only take a few minutes to read. As a starting point to the 2002 budget process your management accountant will work with you to calculate your SUSTAINABLE/BASELINE spend. This is the most important step in the budget process, as by fully understanding your baseline spend the remaining budget for 2002 can be built around that baseline, depending on commercially-driven projects or initiatives anticipated for 2002. Sustainable/ Baseline spend is defined as: Support Groups Your 2001 operational run rate - i.e. the minimum cost required to run your area. This does not include projects or other non-recurring items. If your area includes teams that work on deals then your baseline should include the employee needed to support the current level of deals. Commercial Based on your 2001 run rate and the headcount required to maintain current revenue levels. This will include trading and origination staff. Your management accountant has a completed pro-forma template that they will use to help you calculate your sustainable/baseline budget. Once you have agreed and understood your spend then the remainder of the budget process can be completed. STEP 3 - How to Meet Your Targets. Once Step 2 is complete you will be in a position to assess the calculated cost base reductions in Step 1. If you have not met the target then you will be required to formulate a plan as to how the target reductions could be achieved and what services, tasks or initiatives cannot be performed if you were asked to meet the targets. This analysis will be used during your budget meeting and will allow the Office of the Chair to decide if the specified services, tasks or initiatives could be cut. Your management accountant/BUC will assist you in preparing this analysis. WHAT NEXT? Your management accountant will be contacting you shortly to discuss the budget process in more detail. A pro-forma final budget pack is available from your management accountant. This pack will be used as the main discussion document in your budget meetings with the Office of the Chair. We will be arranging times in your diary for meetings with the Office of the Chair which will commence in Mid September. If you have any question please contact your management accountant or either myself or Suzanne Lane on x34254 regards, Stephen x34738
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