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    31st March Performance Budgeting

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    1986anu
    Performance budgeting is a system that emphasizes the relationship between funds budgeted and expected results. A performance budget presents program objectives, costs, and quantitative metrics to measure accomplishments. It was innovated in the US in 1949 and gained importance for providing precision and acceptance in government departments. Performance budgeting focuses on results, is flexible by allocating lump sums, and has a long-term perspective by linking strategic planning to resources. It improves accountability, public disclosure, and management practices by comparing objectives to achievements.

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    31st March Performance Budgeting

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    1986anu
    44 views13 pages
    Performance budgeting is a system that emphasizes the relationship between funds budgeted and expected results. A performance budget presents program objectives, costs, and quantitative metrics to measure accomplishments. It was innovated in the US in 1949 and gained importance for providing precision and acceptance in government departments. Performance budgeting focuses on results, is flexible by allocating lump sums, and has a long-term perspective by linking strategic planning to resources. It improves accountability, public disclosure, and management practices by comparing objectives to achievements.

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    31st March Performance budgeting

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    Performance budgeting is a system that emphasizes the relationship between funds budgeted and expected results. A performance budget presents program objectives, costs, and quantitative metrics to measure accomplishments. It was innovated in the US in 1949 and gained importance for providing precision and acceptance in government departments. Performance budgeting focuses on results, is flexible by allocating lump sums, and has a long-term perspective by linking strategic planning to resources. It improves accountability, public disclosure, and management practices by comparing objectives to achievements.

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    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    44 views13 pages

    31st March Performance Budgeting

    Uploaded by

    1986anu
    Performance budgeting is a system that emphasizes the relationship between funds budgeted and expected results. A performance budget presents program objectives, costs, and quantitative metrics to measure accomplishments. It was innovated in the US in 1949 and gained importance for providing precision and acceptance in government departments. Performance budgeting focuses on results, is flexible by allocating lump sums, and has a long-term perspective by linking strategic planning to resources. It improves accountability, public disclosure, and management practices by comparing objectives to achievements.

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    of 13

    Subject – Management Accounting

    Topic – Performance Budgeting


    Class - M.Com 2.2

    By: Dr. Anu Gupta


    Dept. of Commerce
    Date – 31st March 2020
    Performance Budgeting
    Performance budgeting is a system of planning,
    budgeting & evaluation that emphasizes the relationship
    between money budgeted and results expected.
    A performance budget is one which presents -
     the purposes and objectives for which funds are
    required,
     the costs of programmes proposed for achieving
    those objectives and
     quantitative data measuring the accomplishments
    and
     work performed under each programme.
    According to National Institute of Bank Management,
    Performance budgeting is,

    “the process of analyzing, identifying, simplifying and


    crystallizing specific performance objectives of a job to
    be achieved over a period, in the framework of the
    organizational objectives, the purpose and objectives of
    the job.”
    History

    In 1949, Hoover Commission of USA innovated this


    budget.

    The performance budgeting was gaining importance when


    Second Hoover Commission submitted its report in 1955
    for its wide range of precision and acceptance, particularly
    in Government Departments where some special
    information is required to be performed.
    EXAMPLE

     30% reduction in death ratio of HIV-Positive


    patients by the end of 2020.
     20% increase in production in 2018 by staff
    training on a monthly basis.
     50% reduction in infant mortality rate by
    implementing robust vaccination centers in
    all different parts of the country by 2022.
    PERFORMANCE-BASED VS
    TRADITIONAL BUDGET
    The amount of money to be spent for the particular purpose
    for example on staff salary, office supplies, equipment etc.
    are included in the traditional budget.
    However, what is to be accomplished by each dollar spent is
    indicated by the performance budget. Previously, the
    organizations were not following the performance-based
    approach. However, currently, the organizations follow the
    performance-based approach.
    FEATURES:
    • Focuses on results. Departments are held accountable to
    certain performance standards. There is a greater awareness
    of what services taxpayers are receiving for their tax dollars.

    • Is flexible. Money is often allocated in lump sums rather


    than line- item budgets, giving managers the flexibility to
    determine how best to achieve results.

    • Is inclusive. It involves policymakers, managers, and often


    citizens in the budget “discussion” through the
    development of strategic plans, identification of spending
    priorities, and evaluation of performance.

    • Has a long-term perspective. By recognizing the


    relationship between strategic planning and resource
    allocation, performance budgeting focuses more
    attention on longer time horizons.
    Advantages
     Forward planning is enhanced
     Clear appreciation of ongoing cost of pursuing
    government objectives
     Better management practices with the comparison of
    objectives with achievements
     Better public disclosure
     Improves the accountability of government in general
    and the public services in particular
    Disadvantages

    • Rationalizing the irrational (or highly


    political) process
    • Complete rationality involves listing of all
    available alternative ways in which money
    could be spent
    Steps in P.B.
     (i) To establish a meaningful functional
    programme and activity classification of
    Government undertakings.

     (ii) Financial accounting and financial


    management should be classified according to
    the classification of PB.
    (Contd.)

     (iii) Evaluate suitable norms, work units of


    performance and cost per unit, if possible.

     (iv) However, the report of the ARC uses the


    following items.

    Functions → Programme → Activity → Project


    THANK YOU

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