What does a carryover policy allow management to do?

A carryover policy specifically provides a framework for permitting unused budgeted funds to be carried over into the following fiscal year, typically subject to specific conditions or justification. This allows management to maintain flexibility in financial planning and execution by enabling them to utilize funds that were allocated but not spent, rather than losing those funds entirely.

The requirement for "clear justification" ensures accountability and encourages departments or units to adhere to guidelines, ensuring that carryover does not lead to unregulated spending or misuse of funds. Essentially, this structured approach to fund management promotes more efficient use of financial resources and aligns future expenditures with the original intent of the budget.

This illustrates good fiscal management by allowing governmental or organizational entities to adapt their budget to actual needs while ensuring oversight and adherence to financial protocols.