The purpose of performance measurement in financial management is to evaluate the efficiency and effectiveness of programs. This process involves assessing how well resources are utilized to achieve desired outcomes and goals within an organization. By analyzing performance metrics, financial managers can identify areas where programs excel or need improvement, guiding strategic decisions and resource allocation.
Evaluating programs through performance measurement allows organizations to ensure they are not only meeting their financial objectives but also achieving their overall mission effectively. This systematic assessment provides valuable insights into program operations and contributes to informed decision-making, fostering accountability and transparency in the management of public resources.
In contrast, setting future budget limits, preparing financial forecasts, and determining salary increments all relate to financial planning and human resource management but do not directly capture the essence of evaluating program performance. These activities are secondary to the primary goal of performance measurement, which focuses on assessing and improving the impact of financial resources on program outcomes.