Certified Professional Public Buyer (CPPB) Practice Test

Which stage comes first in the budget cycle?

1. Formalization

2. Implementation

3. Planning

4. Evaluation

The correct answer is: Planning

In the budget cycle, the planning stage comes first as it sets the groundwork for the entire financial planning process. During this stage, entities assess their priorities, goals, and resources, which allows for a comprehensive understanding of what needs to be achieved within a specified timeframe. This initial step is crucial because it involves gathering relevant data, conducting needs assessments, estimating revenues and expenses, and identifying funding sources. Following the planning stage, subsequent steps such as formalization, implementation, and evaluation build upon the scenarios established during planning. The actions and decisions made in the planning phase directly influence how the budget will be formalized, how funds will be allocated, and ultimately how the budget's effectiveness will be evaluated after implementation. This sequential flow is fundamental to ensuring that financial resources align with organizational objectives and priorities.