Question

4. Why is the budget the most important policy document of a public organization?

Answer 1

Budget is regarded as the most important policy document of a public organization due to the below reasons -

1. It provides an estimate of all the expenses that the organization is planning to incur and spend in the coming financial year.

2. Year-on-year budgets can be compared, analyzed and assessed to better plan the future.

3. The actual expenses and spend can be compared with the budget estimates and improvement can be done in future.

4. The needs of various departments can be taken up by allocating the expenses as a part of the budget.