Which budgeting approach requires justifying all expenses from a zero base each period?

Zero-based budgeting (ZBB) demands that every expense in the budget be justified for each new period, starting from a "zero base." This means that instead of carrying over previous budgets and only accounting for changes, ZBB requires a thorough review of all expenditures, ensuring that each item is needed and justified based on current goals and objectives. This approach promotes greater accountability and encourages resource allocation towards operations that align closely with the organization's current priorities, rather than perpetuating past budget decisions without re-evaluation.

This method stands out because it challenges assumptions and examines the value of every program or function being funded, fostering a culture of efficiency and cost-effectiveness. As a result, ZBB often leads to more strategic planning and resource management compared to other budgeting approaches, which may not require the same level of scrutiny for each expense.