What does “the budget cycle” encompass?

The budget cycle encompasses the complete process of proposing, enacting, executing, and reviewing budgets. This definition captures the essential phases involved in the formation and management of a budget, beginning with the initial proposal where budgetary needs and priorities are identified. Following this, the budget must be enacted, usually through legislative approval or organizational sanction, which establishes it as an official financial plan.

Once enacted, the budget moves into the execution phase, where resources are allocated and spending occurs according to the approved financial plan. This phase involves continual monitoring and adjustments to ensure that budgeted resources are being used effectively. Finally, the review stage is critical for evaluating the budget's performance and refining future budgeting processes based on lessons learned.

Understanding this cycle is fundamental for effective financial management, as it demonstrates how budgetary decisions impact organizational operations over time. The other options, while related to aspects of financial management, do not encompass the full spectrum of what the budget cycle represents. They focus on narrower topics like timelines for funding, audit evaluations, or grant management, which do not capture the comprehensive nature of the entire budgeting process.