Which budget type necessitates justification of every expenditure every year?

The zero-based operating budget is a budgeting approach that requires all expenses to be justified for each new period, rather than only the changes from the previous period. This means that every department within an organization must start from a "zero base" and justify their request for funds based on the needs and benefits of each proposed expense, regardless of previous budgets. This method encourages efficiency and cost-effectiveness, as departments that wish to receive funding must thoroughly evaluate the importance and necessity of each specific expenditure.

By requiring justification for all expenses, the zero-based budget helps organizations prioritize their spending and allocate resources more strategically based on current needs and goals rather than historical patterns. This approach can lead to a clearer understanding of where funds are being allocated and can help identify areas where cuts or reallocations may be necessary to improve organizational performance.