Turkey: The Subtleties Of Budgeting

Last Updated: 12 September 2016
Article by İzel Levi Coşkun
Most Read Contributor in Turkey, September 2016

When I started the first grade of school, my grandfather wanted to talk to me. He said: "Son, you are now starting school. You have got to learn what it is to save and spend your own money. I will give you some pocket money every week." I did not understand what he said back then but I have to say that I enjoyed holding my first weekly 5 Lira coin in my hand. Except for the coins I found on the floor, I did not have any savings before that time. I did not know what to do with the 5 Lira, which was half the size of my hand. I thought to myself:" I had better start saving these", hoping that one day I could be able to buy something bigger than the famous crackers whose jingle I knew by heart...

This is how I was first introduced to the concept of a budget. As I grew up, coupled with the effect of inflation, my weekly pocket money of 5 lira became 150 lira. In the following years I got interested in collecting stamps. I used to choose the stamp that would be good for my collection and save for it from my weekly pocket money. When I finally had the targeted amount of money, I would buy that stamp. The sums I spared for extras would never exceed my weekly limit. The target was to get the stamps so I would never buy anything else, even when I really wanted to. If I was going to buy that one stamp in three weeks time I would keep saving my money to reach my target in the end. Buying that stamp and placing it next to the other ones in my stamp book was quite a unique excitement and joy.

Budgeting is a process that requires planning, coordination and control and almost all enterprises follow these three stages whether they are aware of it or not. These may be income / expense budgets as well as purchasing, general production, investment, spending, cash or even time budgets. However, as I have explained above, budgets are in fact an integral part of our personal lives too.

Budgets can be adapted to anything but in order to be able to do budgeting it is necessary to begin by making projections and undertaking planning to set some goals for the enterprise's needs. The subtlety here is to make sure that the management acts in communication with the relevant departments. Generally in enterprises, the boss makes the projections for budgeting based on their past experience and without consulting with the department managers, whereas budgeting is really a process that requires not only planning but also coordination. Therefore when determining budget figures and planning for the future, the managers of the relevant departments should be consulted at the planning stage to ensure coordination and harmony between the departments.

Towards the end of the year, budgeting tends to become a nightmare for department managers in most large enterprises. I have seen managers who are trying to balance the budget of the current year and settle the figures for the coming year with swollen eyes from exhaustion and lack of sleep. The subtlety here is not to leave this to the last minute but make necessary revisions in the interim periods...

In one of the companies to which we provided internal auditing services, budgeting was done and controlled annually. Towards the end of every year, all the department managers would go through a budgeting syndrome, with one exception: the purchasing department. Although budgeting was requested to be done annually, the purchasing manager would divide this into months and check the situation monthly. This manager's budget would generally be quite accurate. As the members of this department had a monthly budgeting and control discipline, they would immediately inform the manager of monthly deviations or price movements in the market to help him take precautions. When it came to the end of the year, they would not be pressed for time and would go about their jobs at their regular pace, whereas everybody else had to stay in the office all night. To me, budgeting is a process that needs to be managed by dividing it into parts. It is possible that not everything will go as planned but if the budget is controlled monthly or in longer intervals to make any necessary revisions, this will lead to a far more realistic result at the end of the year. Another advantage brought about by revising the budget periodically is that it ensures that timely precautions are taken when necessary, which, in my opinion, is far more important than meeting the budget figure.

The second insight comes from my experience with associations. Generally associations make annual budgets and each year the administration revises the budget in line with inflation. The supervisory board usually takes a brief look at the order of the documents, the decision book and the counterfoil books and declares that the income and expenses are consistent with the budget. This is an approach that causes many associations to experience cash flow problems in the long run and even leave them without any targets. In my opinion, the healthy approach is to first determine the targeted number of new members for the coming year. After this, a budget should be made for the income that is expected to be collected from all the members in that year, including the new ones, along with a separate budget that shows the sums that may not be collected. Following this, all the committees within the association should be requested to list their yearly projects and to budget their projected income and expenses. The administrative board should create an expense budget that will list separately, from the largest to the smallest, each item of expenditure that must to be made to keep the association alive. This budget should contain everything from the salaries of the personnel working at the association to rental payments, electricity and travel expenses. Then the budget figures given by the committees should be consolidated. The subtlety here is to add an "others" item at the bottom of the expense budget which consists of 10% of the total expense budget and take this into account as a reserve.

There are 2 main types of budgets in the budget literature. The first one is "Incremental Budgeting" and the second is "0-Based Budgeting". Briefly speaking, incremental budgeting is based on the previous budget and includes the increases in the new budget. For example, the distribution of income or expenses in the budget is made in line with the previous period. The advantage of using this method is that it is simple and easy to understand but it has a static structure and is not very flexible. Furthermore, it is based on the principle that the budget is fully used so that consistency with the budget is ensured and nothing is carried forward from the end of the period to the coming year. 0-Based Budgeting on the other hand is a different system. As its name suggests, everything is done from scratch. Starting from the bottom, each item is compared to the previous period and studied not only on an increase-basis but also on a reduction-basis. Although it is more complicated compared to the former method, with computer support 0-Based Budgeting is becoming increasingly frequently used as it allows for a more detailed study of causal links.

However, regardless of the method used the main subtlety that lies behind success is controlling the system. I believe that controlling what was budgeted for and what took place in reality, analysing the reasons for any differences and being able to call to account where necessary are the most important factors for success. Controls, which may be carried out by forming a supervisory board or by direct accountability liability to the administrative board, are an integral part of budgeting. If the necessary authorities, or the public, do not ask for accountability when there are deviations from the budget, as in the case of state budgets, it will not be possible to make any progress and all the effort made will unfortunately go down the drain.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.