Budget Process

Line-item budgeting is still the most widely used approach in governmental organizations.  The line-item budget approach has several advantages that account for its wide use.  It offers simplicity and ease of preparation.  It is a familiar approach to those involved in the budget development process.  Structuring budgets by organizational unit and object and is consistent with the lines of authority and responsibility in organizational units.  As a result, this approach enhances organizational control and allows the accumulation of expenditure data at each functional level.

Although this approach offers substantial advantages, critics have identified several shortcomings that may make it inappropriate for certain organizational environments.  The most severe criticism is that it presents little useful information to decision makers on the functions and activities of organizational units.  Since this budget presents proposed expenditure amounts only by category, the justifications for such expenditures are not explicit.

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