Compilation of a Government Budget
debated and discussed, the opposition parties might also discuss and challenge policies which are reflected in the budget speech.
3 Execution
On conclusion of the budget debate the Budget Act is promulgated – only now may expenditure be authorised.
It is here that the budget becomes an operating programme (see p.98). The Budget is then used to check spending – the following is important: • Funds are made available for specific purposes itemised in the budget documents; • Ministers may approve of excess spending, but only up to an amount of 2%; • Funds allocated must be spent within that financial year – they may not be carried over to the following year;
• Funds are not simply spent without the approval of the Accounting Officer of each department; • Approval of The Legislature is needed if departments consider spending funds on anything other than what they were voted for – e.g. money for an increase in teachers’ salaries, when those funds were originally voted for more schools, for instance.
It is here that the budget becomes an instrument to ensure that programmes are executed efficiently and effectively – in short, to make sure that the needs of the citizens of the country are met, as outlined in the budget.
4 Control
A vital component of the budget cycle is the control of expenditure. The Legislature is responsible is responsible to the individual taxpayer and without control measures, expenditure may not take place according to the wishes of Parliament, and therefore, the people. Various powers and authority are invested in the Auditor-General, Accounting Ffficers and the Public Accounts Committee – see Module 3 for full explanation.
The main tool of control is the audit – this is the examination of financial records by various authorities to make sure all revenue and expenditure has been properly and dutifully recorded and accounted for. As discussed in the previous module p.98, control may take two different forms – a priori and ex post facto control, where the former is prescribed control or control measures which are framed before any expenditure takes place. The second, ex post facto, is a control measure which takes place after expenditure has taken place through audits. Both control measures exist in order to make sure that expenditure has taken place in accordance with the wishes and directives of The Legislature, and to make sure that the two overriding principles of public financial management – the effective and efficient use of public funds – have been obeyed. As shown on p.43, it becomes a matter of deep concern when the Auditor General reports that out of 278 local authorities, only 17 received a clean audit in 2012.
Types of Budgets
Although one speaks of The Annual Budget, there are in fact two different budgets – one called the Revenue Budget, showing expected income or revenue (where the money is coming from) and another budget called the Expenditure Budget showing proposals for expenditure by the executive authority. These two budgets are drafted independently.
The Revenue Budget All income or revenue is paid into one account – the State Revenue Fund. Generally the layman speaks about the Receiver of Revenue as being that institution which demands personal income tax, now known as the South African Revenue Service (SARS). From a public finance management
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