Notification of budget preparation instructions for 1406 pension funds

The head of the General Directorate of Economic Studies and Risk Management of the National Pension Fund announced the announcement of the comprehensive regulation of the program and budget and the executive instructions for the preparation of the budget for the year 1406.

According to Ambassador Arjan Peyman Noshadi, referring to the notification of the comprehensive program and budget regulations and the executive instructions for the preparation of the budget of 1406, he stated: This action is not limited to the preparation of financial documents and budget forms, but is a fundamental step for the establishment of a new military in management, planning, performance monitoring and promotion of corporate governance in the fund and the group of holdings and subsidiaries.

Referring to one of the challenges of the budgeting system in the past years, he added: the gap between strategic plans and annual budgets has caused that in some cases, the budget is limited to a short-term financial document and does not have sufficient connection with strategic goals, operational plans, development projects, performance indicators and value creation for the beneficiaries.

Noshadi clarified: The main purpose of developing these regulations and instructions is to create a single framework for turning strategic plans into operational plans and then a measurable and monitorable budget. In this approach, the budget is not just a collection of numbers and costs, but the company's management commitment to achieve the approved goals, increase productivity, control liquidity and improve the value of assets.

Integrating the budgeting process and strengthening managerial accountability

Stating that the absence of a budgeting unit framework can make it difficult to compare the performance of companies, control deviations and make managerial decisions, the head of the General Directorate of Economic Studies and Risk Management of the National Pension Fund said: "The new regulation aims to transform the budget from an administrative process into an effective tool for managing and evaluating performance by determining roles and responsibilities, review and approval processes, control mechanisms and reporting requirements."

He continued: In this regard, the preparation of executive instructions for the budget of 1406, the notification of macroeconomic assumptions and the determination of joint policies are of particular importance. Companies should set their budgets based on unit assumptions and real business drivers, not just a percentage increase on previous years' numbers.

According to Noshadi, production capacity, productivity, cash flow, profit margin, ongoing projects, operational risks and market conditions are among the indicators that should be considered in the financial and operational forecasts of companies.

Standardization of formats and establishment of budget in the observation system

He considered the unification of budget templates at the level of holdings and subsidiaries as another important axis of this development and added: the use of standard forms and formats provides the possibility of receiving, analyzing and integrating financial and operational information in a specific structure. In addition to increasing the speed of reviewing budgets, this action will strengthen the field of comparing companies' performance, identifying weaknesses, analyzing deviations, and making data-based decisions.

Referring to the role of the monitoring system in the implementation of this system, Noshadi said: information standardization is a prerequisite for establishing an effective management system. By implementing the budget in this system, it is possible to create management dashboards, monitor monthly performance, control deviations and match real information with the approved budget.

He added: According to the instructions, the establishment of a dedicated budget panel in the observation system is foreseen with a three-month deadline; An action that can help strengthen continuous monitoring and improve the quality of management reporting.

Simultaneous attention to profitability, liquidity and economic justification of projects

The head of the General Directorate of Economic Studies and Risk Management of the National Pension Fund said: In the new approach, the budget is based on three main financial statements, including the profit and loss statement, the financial position statement, and the cash flow statement, so that in addition to profitability, liquidity status, the structure of assets and liabilities, and the ability to fulfill obligations are also taken into account.

He pointed out: capital projects, operating costs and development plans should have economic justification, specific responsible, implementation schedule and evaluation indicators. Also, managing capital expenditures, controlling unnecessary costs and prioritizing investments are important requirements for the effective use of company resources.

Pointing to the necessity of continuous improvement of management processes, Noshadi clarified: in the new system, it is not enough to simply identify deviations from the budget; Rather, the cause of the deviation should be determined and to correct it, the person responsible for the implementation, the required resources, the timing and the financial effect of the corrective action should be determined. In this way, the performance of managers can be evaluated based on the degree of achievement of goals and how to manage deviations.

Moving towards performance-oriented and value-creating budgeting

In the end, he emphasized: The successful implementation of this structure requires management support, official notification of regulations and budget executive instructions, compliance with single formats by holding companies and companies, setting up a budget system, and continuous monitoring and improvement of processes.

Noshadi noted: The final goal is to create a complete cycle of planning, budgeting, implementation, monitoring and correction; A cycle in which strategic plans are transformed into executive actions with specific financial resources and performance results are continuously evaluated. The establishment of such a system can provide the basis for moving from traditional budgeting to a performance-oriented, transparent and value-creating system in the national pension fund and its subsidiaries and help protect assets and strengthen the economic stability of the group.