Being accountable to taxpayers is an important component of any government expen

Question

Being accountable to taxpayers is an important component of any government expenditure. This applies to any level of government. In the past we have seen abuses of government funds (as well as corporate) and even though we try to keep these expenditures in line as well as transparent there are always those willing to try and scam the system. The line item budget seems to be an effective tool (given appropriate prework such as bids and other controls) in allowing managers to effectively control their budgets. Any thoughts or comments on line item budgets and budgetary control? Being accountable to taxpayers is an important component of any government expenditure. This applies to any level of government. In the past we have seen abuses of government funds (as well as corporate) and even though we try to keep these expenditures in line as well as transparent there are always those willing to try and scam the system. The line item budget seems to be an effective tool (given appropriate prework such as bids and other controls) in allowing managers to effectively control their budgets. Any thoughts or comments on line item budgets and budgetary control?

Explanation / Answer

Line item budget is a traditional form of budget in which past expenditure is taken into account and department wise expenditure estimate is included. this is simplest form of budget and easily understandable. It depicts the historical expenditure trend of a department and thus it finds if there is any deviation from past trend.

However, line item budget has one biggest disadvantage- it lacks analysis. It works on the trust in past. if this budgeting worked well in the past, it should continue in future even if there is need to deviate from the past trend.

Line item budget also encourages the philosophy of "Use it or lose it". the head of department remains in hurry before the next budget if some fund remains unused. it is because if not used the amount may be reduced from next budget.

Hence if there is no major deviation from the past, line item budget will work well. however, in depth analysis of the expenditure is necessary.

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