ACCA Performance Management (F5) Certification Practice Exam

How does a participatory budget differ from an imposed budget?

1. It is more complex in nature

2. It involves input from various levels of management

3. It ignores past expenditures

4. It focuses on previous financial success

The correct answer is: It involves input from various levels of management

A participatory budget is characterized by the involvement and input of various levels of management within an organization, which distinguishes it from an imposed budget. In participatory budgeting, managers at different levels collaborate to develop the budget, allowing them to provide insights into their operational needs, departmental challenges, and realistic financial projections. This collaborative approach enhances motivation and accountability among staff, as they feel a sense of ownership over the budget they help create. Imposed budgets, on the other hand, are typically formulated by top management without consulting lower-level managers. This can lead to budgetary targets that may not be attainable or aligned with the actual resource requirements of various departments. By including the perspectives of managers who are directly involved in specific operations, a participatory budget is more likely to reflect the true operational demands of the organization and can increase commitment to achieving budgetary goals. Other options, while they may present characteristics associated with budgeting processes, do not accurately capture the essence of how participatory budgets function compared to imposed budgets. For example, the complexity of the budget formulation process (option one) is not inherently tied to the participatory nature; both types can vary in complexity. The notion that participatory budgets ignore past expenditures (option three) is misleading, as such budgets often