Questions on Public Finance Administration - Paper Example

Question 3: Planning-Programming-Budgeting System (PPBS) succeeded within the Department of Defence (DOD) but failed in other institutions because the former had a pre-established system consisting of functions, departmental assignments, and information and intelligence objectives. These existing structures made it easy to implement all the five aspects of the PPBS. The five primary elements of the PPBS which easily interacted into the DOD framework include a program structure, approved plan document, a process of making decisions and mechanisms of qualifying measuring efficiency and alternatives, decision-making and an information system that supplies the data for implementing the system.

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Question 4: Time horizon in budgeting refers to a fixed projected time in the life cycle of a project within which finances are allocated, inputs and activities streamline to achieve a set of desired objectives. When the terminal end of the time horizon, resources, achievements, and output are subjected to an evaluation against the pre-set goals.

Question 5: Merits of and demerits of an Operating Budget (Annual and biennial budgets)

Effective management depends on setting up of the essential elements of control in a trajectory that keeps objectives, input, processes, and achievements. Establishment of a running budget has many advantages and disadvantages in both the long-term and short-term operations of institutions. Some benefits of annual and biennial budgets include facilitating proactive management of current expenses; actively monitoring the operating costs including the cost of office supplies makes it easy to locate the areas where considerable savings are possible. These savings reduce the financial strain on the aggregate budget. They also help in forecasting on future expenses.

Through assessment of the past costs, it is possible to adjust future budgets hence avoiding shortages or extreme excesses in financial allocations. The two types of budget enhance the building of reserves by enabling savings, investments and planning for unprecedented situations. Annual and biennial budgets help in mainstreaming accountability. Moreover, an articulate budget makes it easy for one to avoid unplanned expenditures which if not checked may lead to derailment of set goals. Through annual budgets, institutions can exercise increased control over various programs and policies that they institute. Biennial budgets reduce the workload placed on instructions to consider or repetitive issues; they allow oversight agencies to undertake long-term program review and enables long-term planning for funds allocated to every activity.

Despite the advantages of the biennial and annual budgets, they also have marked shortcomings in the corporate management. Biennial budgeting is done so much early hence making it difficult to predict the specific program needs or other special factors that might influence such needs. Due to this inherent lack of precision in budget projections. In the practice of budgeting, businesses and institutions have either annual, monthly or biennial budgets. Setting up an appropriation that covers a long time makes it less responsive to the changing situations hence a frequent need for reviews. Therefore, they are subject to constant revisions and massive supplemental appropriations to meet emerging needs. Another disadvantage of annual and biennial budgets is that long-term funds have a tendency of protecting the status quo yet it is necessary to reorder such appropriations to confront the real time stakes that may favor only discretionary programs. The incentives for project advocates or institutions to support a two-year budget (biennial budget) is often based on the anticipated outcomes.