Comparative Budgetary Approaches in Public Organizations

Research Journal of Finance and Accounting ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online) Vol.4, No.15, 2013

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Comparative Budgetary Approaches in Public Organizations

Mukdad Ibrahim Ittihad University,P O Box 2286,Ras Al Khaimah,United Arab Emirates Mukdad@yahoo.com Abstract The aim of this article is to give a comprehensive discussion of the four main approaches to budgeting, starting off with line item budgeting, program and performance budgeting, planning programming budgeting system and zero-base budgeting. The discussion covers the history, concept, procedures, advantages and disadvantages of each specified approach. The motivation behind this discussion was to seek a better understanding and familiarity with each of the various approaches to budgeting. None of them, however, can be regarded as a complete solution to budget problems. Each approach carries both strengths and weaknesses and thus cannot be applied indiscriminately to any given situation or financial environment. A solution for any budget problem depends on the nature of the organization affected and hence would require a thorough assessment of its operating environment before being carried out. Keywords: Line item budget, Program and performance budget, Planning programming budgeting system, Zerobase budgeting, Decision making, Financial planning 1. Introduction Considerable volumes of literature have been written about budgeting in general. Although each writer tends to have his/her own approach or method of writing, each must define “budget”, discuss the origin of the term, why one ought to study budgeting, budget cycles, budget processes, budgeting purposes, budget games and politics, types of budgeting, budgeting functions, and so on. Volumes of literature covering the above areas are available and continue to grow as greater efforts toward more effective budgets take place. This paper, however, will discuss the four landmark approaches. Recognizing that the budget is the...