Question

Explain why public sector budgets change over time. Why is it important for a senior budget manager to understand revenue and expenditure trends?

Answer 1

Public sector has the objective to deliver welfare along with the objective to generate profits. Here, profile of people and societies keep changing, and makes budget to change. Further, each year sales and other targets get modified according to the forecasting. It makes different profit centres to deliver different budgets. As a result, public sector budgets vary and gets changed over a period of time.

It is important to understand for manager, because it will make an appropriate budget that can cover all expenses as per revenues. Further, each SBU or function has different trends that is different from each other. Hence, different budget can be analyzed properly by the manager. It only happens when manager understands the trends.