Blanket Appropriation

Posted in Finance, Accounting and Economics Terms, Total Reads: 387

Definition: Blanket Appropriation

It means those expenditures which are passed on the blanket basis which means no specification about individual projects is mentioned. Mostly, this term is used in in the government-level finances.

Blanket appropriations might have to be monitored closely to make sure that no misuse of funds id there and the allotted funds are being spent only for the approved purpose. It can also be used in non-public sector for smaller projects which have the lower capital outlays. Such projects are generally delegated to the middle level management for the fast actions. It is an appropriation to a project or a department which does not specify the things on which they are spending the money. I.e. the blanket appropriation gives the chiefs of those departments the complete authority to spend the money as they see fit. Projects having smaller outlays and which can be decided by the executives at lower levels are often covered by blanket appropriation for expeditious action. Generally, they are not included in the capital budgeting & require approval only once. Once approval is done, the lower level managers have all the decision making power.

Example: A lump sum amount of 10 million USD is assigned to upgrade highways in some area, but actual money to be spent per highway is not mentioned.

Advantages: Its main advantage is that it reduces the hold between the proposal and its implementation because project approval is not needed on case-by-case basis.

Disadvantages: Since detailed costs are not discussed here, there is a scope for frauds and corruption. A close eye on the project is required to avoid those frauds.



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