Priority Incremental Budgets as Economic Compromise to Zero-Based and Incremental Budgeting - Essay Example

The paper “Priority Incremental Budgets as Economic Compromise to Zero-Based and Incremental Budgeting” is an outstanding example of a finance & accounting essay. Governments and organizations alike are faced with one of the most sensitive and undoubtedly crucial facets of planning – budgeting. Budgeting assists organizations determine the amount of money they will require for a given period of time in the future. Organizations allocate these monies on different sets of activities to be undertaken based on several cost and other driving factors. This way, the organizations are able to determine things like the amount of revenue to be generated in the next fiscal year, the profit anticipated from that year, and consequent planning and evaluation of progress so far on long-term projects and decisions. Governments and business organizations will undertake the task of budgeting according to the constitution in place that governs them. In most countries as well as business institutions, this exercise is carried out and a report given once a year – defined as a fiscal year.

During budgeting, there are a couple of setbacks that call for high levels of evaluation of different activities to be undertaken. This helps in prioritizing which activities get what percentage of the total expenditure expected and why. Sometimes, due to the perpetually changing environment, funding may be increased or cut-down for a particular activity e.g. there will be a need to increase the funding allocated to education if the total population of a given country is constantly increasing (Frederickson, 2010, 67). Using a more common example, when the world woke up to a rude shock that was the outbreak of HIV/AIDS, governments, health institutions and concerned parties all over the world had to factor in the cost of research on the endemic malady, distribution of ARV drugs and protective tools to even the most remote areas in all the corners of the world, funding for the education of masses about the disease and better living practices among other activities. This affects these institutions' expenditure so that they increase, decrease or maintain the funds allocated to different activities based on their sound judgment and evaluation.