What key information is included in a budget narrative?

The budget narrative plays a vital role in the budgeting process by providing context and justification for the financial figures presented in the budget. It specifically includes the rationale for budgeted amounts and expected outcomes, which allows stakeholders to understand why certain decisions were made. This explanation is crucial because it connects the financial data to the organization's overall goals and priorities, illustrating how the budget aligns with strategic objectives. By detailing the reasoning behind budget allocations, the narrative enhances transparency and helps foster trust among stakeholders, including funding bodies, board members, and the public.

While other options contain relevant information that could be part of the broader budget documentation, they do not specifically capture the purpose of the budget narrative itself. Detailed financial statements are generally numerical and complex, providing a snapshot of financial health but lacking interpretative context. A summary of stakeholder feedback offers insights into external perspectives but doesn't directly justify the financial decisions. Historical financial data may inform the current budget decisions but does not encompass the necessary rationale for the current budget's amounts or projected outcomes. Thus, the inclusion of the rationale and expected impacts in the budget narrative is essential for effective communication and understanding of the budget's intent and purpose.