Budgeting Approaches Overview
📌 The session detailed four primary budgeting approaches used in public sector accounting: Traditional Budgeting, Performance Budgeting, Planning Programming and Budgeting System (PPBS), and Zero-Based Budgeting (ZBB).
⚙️ The goal is to understand the framework and selection criteria for each method used in budgetary preparation.

Traditional Budgeting Approach
➕ Advantages include simplicity, suitability for accountability accounting, and inherent continuity for most expenditures.
➖ Key drawbacks are the lack of adequate information for decision-making and an excessive focus on controlling expenditures rather than planning and evaluation.
📋 Example breakdown showed expenses purely listed by category (e.g., salaries, travel) totaling IDR 48 million for the Police Station.
📈 Generally calculated based on the previous year's budget plus a fixed margin, often resulting in incremental spending.

Performance Budgeting Approach
🎯 This method addresses weaknesses in traditional budgeting by emphasizing the measurement of performance outcomes and the efficiency of service delivery.
📊 Activities are measured using standards to achieve maximum efficiency, comparing budgeted figures against actual realization, and utilizing performance indicators (e.g., reducing traffic accidents by 50%).
➕ Benefits include requiring narrative descriptions of activities, focusing on both output and input needs, and allowing the legislature to add or reduce requested funds based on performance needs.
➖ Challenges involve the difficulty of quantifying services and activities into standard output units or per-unit costs, and data collection issues (cash basis).

Planning Programming and Budgeting System (PPBS)
🔗 PPBS integrates budgeting as an inseparable part of the overall strategic planning and program formulation process, linking all activities to strategic goals.
🗺️ Key steps involve defining the mission, translating objectives, identifying resource constraints, developing the overall program structure, resource allocation, and subsequent evaluation.
➕ Strengths include a focus on long-term planning (multi-year programs) and decisions made at the top management level, ensuring alignment with strategic objectives.
➖ Weaknesses include the difficulty in achieving unified government objectives due to diverse political and cultural interests, and the constraint imposed by the remaining tenure of officeholders.

Logical Framework Approach (LogFrame or LFA)
🛠️ LFA is a technique used to implement PPBS, designed to help structure results-oriented programs; it was developed by Lonis Rosenberg in 1969.
🗺️ The nine steps involve defining the Point of View (organizational level), determining the Project Development Objective (Impact), defining outputs, activities, inputs, indicators, assumptions/risks, monitoring/evaluation, and Means of Verification (MOV).
❓ Monitoring focuses on verifying the process (input to output conversion), while evaluation assesses the final impact and success of the achieved output.

Zero-Based Budgeting (ZBB)
💯 ZBB requires that every activity be evaluated annually to determine if it should continue, regardless of whether it was funded in previous years.
💰 Advantages include annual reviews of all programs, cost savings through the elimination of irrelevant programs, and better justification for budget proposals.
📉 Disadvantages include the high demand for resources and the difficulty in gathering necessary data to calculate costs for alternative activity options.
📊 The example demonstrated prioritizing activities (e.g., computer training vs. electronics training) based on the available funding level, showing trade-offs and expected outcomes for different budget scenarios.

Key Points & Insights
➡️ Budgeting methods evolve from simple expenditure control (Traditional) to efficiency measurement (Performance), and finally to strategic alignment (PPBS/ZBB).
➡️ Performance Budgeting demands clear, measurable performance indicators (quantifiable metrics) to justify funding for activities.
➡️ ZBB forces management to actively re-justify all expenses annually, leading to cost reduction by eliminating legacy, irrelevant programs.
➡️ The Logical Framework Approach requires clearly defined assumptions and risks external to the project team that could impact success (e.g., weather affecting agriculture projects).

📸 Video summarized with SummaryTube.com on Nov 13, 2025, 13:31 UTC