Budgeting is one of the most effective methods of organizing government activities. It helps decision-makers estimate and predict their expenditures and revenues to accomplish strategic tasks (Kasdin, 2017). To control adequate budget execution, various departments are demanded to submit performance reports monthly, quarterly, or annually. The former often implies that the administrative bodies are restricted to use one-twelfth of their yearly budget every month.
Some managers find such a system highly beneficial as it ensures equal cost distribution during a year, while others argue that this decision harms their departments’ performance due to inadequate match with the expenses. Thus, this essay seeks to discuss why certain departments support the usage of one-twelfth of their annual budget each month, and others oppose that strategy. Moreover, the paper argues that managers should consider the unit’s actual performance to address the methods’ disadvantages.
Having budgetary control reports with each month representing one-twelfth of the overall budget further increases the ability to organize one’s activity. Under such a system, managers enjoy constant expenditures each month, which protects their departments from spending all the resources unthoughtfully before the end of the year. Moreover, it motivates decision-makers to reduce expenditures as they cannot use additional resources for the operations from other months.
One of the government bodies that would enjoy this system is the Department of Health and Human Services. Contrary, such departments as the Ministry of Agriculture would be harmed from using one-twelfth of the annual budget each month due to seasonality, which means that their costs are distributed unequally throughout the year. Therefore, some months in the year would certainly be associated with unfavorable budget variances, which, for instance, can significantly affect the department’s performance assessment. For this reason, decision-makers must identify each department’s special activities and develop a system that would recognize seasonality and unequal distribution of the costs.
Overall, the current essay analyzed the current opposing views concerning the monthly restrictions to use one-twelfth of the annual budget. It was found that the difference in work specifics of various departments is the main reason determining the perception of the system mentioned above. The departments that have their expenditures equally distributed are prone to support it, whereas those who do not – hold opposing views. Therefore, it was argued that decision-makers should recognize these differences and adapt the budget usage accordingly.
Reference
Kasdin, S. (2017). An evaluation framework for budget reforms: A guide for assessing public budget systems and selecting budget process reforms. International Journal of Public Administration, 40(2), 150-163.