Requirements and Challenges of Operational Budgeting

Operational budgeting is an effective tool that reasonably relates consumed resources to outcomes of the programs in organizations. Important factors including effectiveness, efficiency, saving, and output from resource consumption are neglected in traditional budgeting system. Hence, the resources aren’t used properly and even are wasted. Thus, as a substituted for traditional budgeting, operational budgeting is one of the proposed solutions to better use and manage budget. As government interference in the economy of Iran is more than the developed and many developing countries, the importance of the budget plan is twofold. Accordingly, many Iranian economists believe that in seeking solution to the problems such as inflation, unemployment, reduced efficiency, and low economic grow, we should look at the budget document. The main goal of budgetary systems, which is to make the government accountable and evaluate its performance, represents itself in the form of efficiency, effectiveness and cost-effectiveness, so as to help the government in fulfilling its goal. In this study, conducted through library method, we examine the goals, elements and procedures of operational budgeting along with a review of history and evolution of budgeting and public audit act and the definitions in the literature. Finally, after examining and identifying the characteristics and benefits of this budgeting method, the requirements and necessities to implementing it will be discussed. Also, the obstacles and challenges of implementing operational budgeting will be examined and, in the end, suggestions for the desired implement of it will be presented.