| Zero
Based Budgeting - ZBB |
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Method
of budgeting in which all expenditures must be justified each new
period, not just amounts in excess of the previous period.
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For
example, if an organization used ZBB, each department would have to
justify its funding every year. That is, funding would have a base
at zero. A department would have to show why its funding efficiently
helps the organization toward its goals.
Encouraged
especially for Government budgets because expenditures can easily
run out of control if it is automatically assumed what was spent last
year must be spent this year.
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Dictionary
