Budgeting Systems Overview
📌 The budgeting system is defined as a logical, systematic, and standard arrangement comprising interconnected work procedures, guidelines, and protocols for budget compilation.
⚙️ Budget components include budget preparation, setting budget targets, budget revision, budget evaluation, and feedback mechanisms.
📑 The primary types of budgeting systems discussed are Traditional Budgeting, Performance-Based Budgeting, and Zero-Based Budgeting (ZBB).

Traditional Budgeting System
📌 This method constructs budgets based on incrementalism, simply adding or subtracting amounts from existing line items, rather than analyzing the required activities to meet set objectives.
📝 Its structure is line-item based, categorized by the nature (or *nature*) of revenues and expenditures.
👍 Advantages include relative ease of preparation and a reduced scope for conflict between units regarding the budget.
👎 Disadvantages include a weak link between annual budgets and long-term development plans, and failure to thoroughly review large portions of expenditure due to the instrumental approach.

Performance-Based Budgeting System (PBBS)
📌 PBBS is oriented towards the organization's output and is closely aligned with the organization's vision, mission, and strategic plan.
🎯 Core elements of this system include programs, activities, performance measurement (output), and program reporting.
📈 It emphasizes measuring work results and ensuring that every activity is viewed through the lens of efficiency and maximizing output.
⚠️ A key weakness is that many government agencies lack adequately skilled staff in budgeting or accounting to effectively identify necessary units or measure performance accurately.

Zero-Based Budgeting (ZBB)
📌 ZBB is a method where budgeting starts from zero for every activity, without referencing plans or results from the previous period; budgeting begins anew.
🚫 This system does not rely on the previous year’s budget but bases allocations strictly on current needs.
✅ A major benefit is the potential for increased budget efficiency because ZBB involves selecting from beneficial alternative packages, emphasizing value for money.
📉 Drawbacks include being time-consuming and potentially favoring short-term activities susceptible to frequent changes.

Key Points & Insights
➡️ The budgeting process involves critical steps: preparation, setting targets, revision, evaluation, and incorporating feedback.
➡️ Performance-Based Budgeting necessitates measurable inputs and outputs to ensure activities align with strategic goals.
➡️ Zero-Based Budgeting requires accurate data to determine decision packages, as it forces stakeholders to justify every single expense from the ground up.
➡️ Traditional budgeting can reduce internal conflict but risks overlooking the necessity of long-term strategic alignment.

📸 Video summarized with SummaryTube.com on Nov 13, 2025, 13:37 UTC