Question

In: Accounting

Discuss why budgets are particularly important for public sector organizations as opposed to private sector organizations

Discuss why budgets are particularly important for public sector organizations as opposed to private sector organizations

Solutions

Expert Solution

Let us understand why Budget is required!

Budget is an estimation of Organisations expenditure towards different activity, this is required to ensure that organisation is moving in the right direction in spending the cost, that is incommensurate to the business standards

Now Why is that the budget is more important to Public sector organizations as opposed to private sector organizations? When the expenditure of public is concerned there is Public Interest involved which makes the organisation more accountable towards the public

Now because the expenditure is of the funds relating to Public (funds received by the organisation from taxes and others similar sources). It becomes imperative to the organisation that what ever actual expenditure is incurred is more or less to Budgeted/ standard expenditure decided by the organisation

For Private organisation, which is a closely held company, the funds is received from known sources or within a group of people, its not that so important compared to Public sector companies


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