What is the objective of performance budgeting

The objectives of performance budgets is to provide a closer linkage between planning and action and also to provide a common basis for review control and reporting. The basis issued involve in the preparation of these budgets are that of developing work programmers and performance expectative of the organization. It also establishes well defined responsibility centers and targets for each such center in terms of physical units so tat actual performance can be compared with it. It they are drawn up realistically after careful study feasibility and available resources. if also establishes well defined responsibility centers in terms of physical units so that actual performance can be compared with it. It forecasts the amount of expenditure needed to meet the physical plan and evaluates the actual with both physical and evaluates the actual with both physical and monetary targets.

Performance budgeting reports are to be submitted at regular intervals to higher authorities showing the physical performance achieved the expenditure incurred and the variances along with explanation for it. Here the government should adopt the accrual system of accounting. Such budgets are similar to the traditional system of budgeting and budgetary control and will be successful if they are drawn up realistically after careful study of feasibility and available resources.