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.
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References in periodicals archive ?
Of course, doing zero-based budgeting correctly isn't easy.
Zero-based spend (ZBS) helps companies optimize selling, general, and administrative (SG&A) expenses by providing forensic visibility into all spend and underlying cost drivers.
Zero-based budgeting is a powerful methodology, but when implemented without careful forethought, it can do as much harm as good.
My personal preference is a true zero-based budget, with a crosscheck for feasibility against prior year, using the prior year base for comparison, but not budgeting off prior year actuals.
Zero-based budgeting favors areas that bring in direct revenues, such as production and services, because their contributions are measured more easily than those of departments such as the administrative or accounting functions.
The circular stresses the need for federal entities and independent bodies' to commit to the principles of the zero-based budgeting system, as well as the rules and regulations stated in the consolidated financial procedures manual for the preparation of the draft budget for the next year.
Members of the Federal National Council pressed for more equitable federal finances and a plan to stop the zero-based budget irregularities.
"Fingerprints will be stored in a digital form and represent zero-based and one-based collections.
Some of the governance reforms under the Aquino administration include the "zero-based budgeting" and the "performance-informed budgeting" systems, which are geared toward prudent handling of public funds.
But it is a specific Odessaone of chaos and street clashes; one where children may be evacuated for protection; one with low wages, zero-based production demand, and rising unemployment; one with over a million citizens, some of whose embattled photos dominate the front-page news during Ukraine's intense struggle for self-definition.