Zero Based Budgeting

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Zero Based Budgeting

A system of budgeting where each department or division of a company must justify all expenditures and allocations rather than simply increases over the previous fiscal year. That is, the budget is made with every department starting at zero dollars to spend, and each department must demonstrate need for what it wants to receive. Zero-based budgeting is advantageous because it is more detail-oriented than other forms of budgeting; among other things, it makes it easier to detect and eliminate over-inflated budgets. On the other hand, zero-based budgeting is more difficult and time consuming to put together and often has a bias toward departments that directly produce revenue instead of departments like R&D.
References in periodicals archive ?
Skip Campbell, D-Tamarac, said he supports zero-based budgeting but wanted to see specific instances where the committee could cut waste instead of asking general questions about whether certain percentages could be cut from various budget lines.
Tim Buzard, vice-president of finance at the Chicago White Sox, uses a modified zero-based budget to ensure the organization's plans are in sync with its true current financial position.
The FNC also passed a Dh41 billion zero-based budget for 2011 after a marathon seven-hour session.
He noted by following the zero-based budgeting approach, 'we were able to work with fewer resources, enhance the efficiency of government spending by 6 per cent, direct our resources toward highly-efficient programs, the phase out the less efficient activities.
He argued the zero-based budget the government will now implement for three years means no new projects will be implemented and as such there will be no growth.
This can and must be achieved by every department of local government being obliged to produce zero-based budgets, that should only identify continuing expenditure on priority front line jobs and services.
This course illustrates the benefits of budgeting to the work of a manager and describes a range of commonly used budgeting methods, such as zero-based, fixed, incremental, rolling, and flexible.
We will be taking a zero-based approach throughout - asking departments to justify the economic value of every single line of their capital budgets.
According to the report, the 2011--13 zero-based budget initiative of the UAE government was most prominent in increasing efficiency of government spending.
The UAE Cabinet yesterday approved a zero-based federal budget of Dh122 billion which will run from 2011 to 2013.
This can be achieved by zero-based budgeting in all major departmental service expenditure, a freeze on senior officers and all councillors' salaries, and all other financial economies in inter-departmental expenditure used to peg any increases to council tax.
Recent budget challenges were met with budget reductions, implementation of zero-based budgeting and internal cost methodologies, and successful labor negotiations that curbed rising salaries and benefits.