Compilation of a Government Budget
1: Preparation
Instructions Preparation of draft budget Review of draft budget Consideration of draft budget
2: Approval
Budget Speech Budget debate
3: Execution Expenditure takes place
1. Auditor-General
4: Control 2. Accounting officers 3. Public Accounts Committee
Table 1: The budget cycle
The budget, as members of the public know it, is the result of a long process which starts with a budget request which in turn is based on a programme. The budget programme is directed towards satisfying the needs and demands of the public – they might be educational, safety or protection needs. The cycle itself may be divided into the following phases: the preparation phase; approval, execution and control.
1 Preparation
Giving instructions – individual government departments are given guidelines by the Treasury. The Treasury and the Department of Finance concern themselves with the overall financial and economic situation of the country itself. Guidelines might include, for example, a maximum limit on expenditure – departments might be told to limit spending to not more than a certain percentage increase over the previous financial year. In addition to this, overall policy direction and priorities are communicated to these various departments.
Preparation of the draft budget – A finance division of each government department provides a written motivation report which accompanies estimates of what it will cost to continue with existing activities and to develop or initiate new activities or projects. This means that the Treasury can clearly see what is planned and how much it will cost.
Review of the Draft Budget – The operational departments submit the draft budget to a budget department which consolidates the estimates of expenditure and also the motivation reports into one document. The budget department will then check to see if the draft budget complies with departmental policy, the directives of the executive authority, and more importantly with the overall political policy of The Legislature.
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