Corporate Fin Mgt NDLM.PDF

Learning Unit - 3

Reading material

Performance Budgeting

1. Definitions:

1.1. It is an input-activity-output analysis.

2. Goal:

2.1. The goal of performance budgeting is to establish the relationship between

financial input and physical output, both tangible and intangible in

accountable terms with scope for proper performance measurement to

strengthen the accountability systems and to present the same to

representatives of people for discussion and voting during the budget session.

3. Objectives:

Ë To adopt concepts of economy and efficiency

Ë To plan and budget with the mission of customers satisfaction

Ë To set targets under each variable by following the principles of operationality

and attainability.

Ë To measure the performance, both tangible and intangible

Ë To match responsibility, authority and accountability

Ë To serve the purpose of systematic monitoring and evaluation

Ë To enable internal customers and supervisory level staff to undertake performance

inspection

Ë To enable external evaluating agencies to conduct performance audit.

Ë To develop an activity oriented system to fill the gap between benchmark and

defined standards in terms of quantity, quality and time.

Ë To present performance results to board level or to the representatives of the

people, as the case may be.