The correct answer is: d) All of the above.
Zero-based budgeting (ZBB) is a budgeting process that requires all expenses to be justified for each budget period, regardless of whether the program or activity existed in the previous period. This differs from traditional incremental budgeting, which only requires increases or decreases to be justified.
ZBB is designed to improve efficiency and effectiveness by forcing managers to carefully consider all of their spending options. It can also help to align spending with priorities by requiring managers to justify their spending in terms of the government’s overall goals.
The Andhra Pradesh government has been using ZBB since 2006. In a 2012 report, the government found that ZBB had resulted in significant savings, as well as improved efficiency and effectiveness.
Here is a brief explanation of each option:
- a) Justify all expenditures: ZBB requires managers to justify all expenditures, regardless of whether the program or activity existed in the previous period. This helps to ensure that only essential expenditures are made and that resources are used efficiently.
- b) Increase efficiency: ZBB can help to increase efficiency by forcing managers to carefully consider all of their spending options. This can lead to the identification of ways to reduce costs or improve the delivery of services.
- c) Align spending with priorities: ZBB requires managers to justify their spending in terms of the government’s overall goals. This helps to ensure that spending is aligned with the government’s priorities and that resources are used in the most effective way possible.