Content Pages
1. What advantages, if any, does the system of performance budgeting have over other forms of budgeting such as incremental line budgeting, programme budgeting, and zero-based budgeting?
1.1. Introduction
1.2. Discussion
1.2.1. Definitions of forms of budgeting
1.2.2. Advantages and disadvantages
1.2.3. Comparison of the forms of budgeting
1.3. Conclusion
1.4. Recommendations
2. To what extent is budgeting in South Africa meeting the requirements of a performance budgeting system? Area appropriate institutional mechanisms in place for an effective PB system
2.1. Introduction
2.2. Discussion
2.3. Conclusion
2.4. Recommendations
3. References
1. What advantages, if any, does the system …show more content…
In other words, PBB can create a lot of extra work for analysts.
Definition of zero-based budgeting: McKay, (2010). “Under zero-base budgeting (ZBB), administrators start the budgeting process at zero every year and they must substantiate all expenditures, new and continuing. ZBB allows top-level strategic goals to be executed into the budgeting process by capturing them to detailed functional areas of the organization.”
Advantages
- It is based on needs and benefits rather than history.
- It motivates managers to find cost effective ways to improve operations.
- It is able to detect inflated budgets and increases staff motivation by providing greater initiative and accountability in decision making.
- Increases communication and harmonization within the organization.
- Identifies and eliminates wasteful and obsolete operations.
- Zero-based budgeting helps in identifying areas of wasteful expenditure, and can also be used for proposing alternative courses of action.
Disadvantages
- More time-consuming than incremental budgeting.
- Justifying every line item can be problematic for departments with intangible outputs.
- Requires specific training, due to increased complexity vs. incremental