Importance The improvement of higher educational institutions necessitates a modern budgeting system as a tool to measure performance and efficiency of the higher educational institution, control and coordinate operations of each organizational units and employees, thus directing them to the common strategic goal and making finance and performance correlate. Objectives The research develops a conceptual framework and mechanism for budgeting in the higher educational institution that would embrace functional budgeting per process. New conceptual budgeting generates financial and non-financial information that would help higher educational institutions adapt to projected changes in the external environment and implement its strategy. Methods The dialectical approach to phenomena and business processes became a methodological underpinning of the research. We also apply the systems and process-based approaches to issues under study, analysis and synthesis, induction and deduction, modeling and abstraction, historical and logic method, testing techniques and experimental tests, systematization. Results We devise a conceptual (organizational and methodological) model for functional and strategic performance-based budgeting. We determined the purpose, principles, objects, subjects, methodological instruments, organizational phases, types of key regulatory documents, and developed the principle chart of functional and strategic performance-based budgeting of higher educational institutions that cascaded objectives and strategic tasks per management level, outline the financial and budgetary structure of higher educational institutions as a mechanism to put the said budgeting into operation. Conclusions and Relevance The new conceptual vision of budgeting in the higher educational institution allows formulating a mixed-use and effective management accounting system, being seamlessly embedded into strategic management.
Keywords: functional, strategic, performance-based budgeting, balanced scorecard, business process, budget
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