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A PUBLIC
SECTOR
Definition
• A budget is a quantitative expression of a
plan of action prepared in advance of the
period to which of relates.
• A budget expresses what is to be
undertaken next year and authorizes the
financial recourses that are needed.
OBJECTIVES OF ANNUAL
BUGDET
1. The establishment of the
required income
• It must be noted that in the public sector
come from taxes, charges and fees that
are levied by the government. Budget
income is arrived at by examining the
current levels of income and the level of
expenditure for the coming year.
2.Planing Service expenditure
levels
Authorization of expenditure
• Money must be spent on what has been
authorized in the annual budget.
4. The Central of Expenditure
5.A Common action device
6. Focus attention
• The budget process focuses attention on
the future. It there fore makes the service
manages plan method and cost of service
delivery.
7. Motivation of Managers
• The managers are motivated by the
budget but more so if they played the role
in formulating it. There is therefore alll
attachment that is created.
Revenue Budgets
It must be understood that most compelling
reasons for revenue budget is to
determine the income level and the
expenditure levels.
For services that are funded through
taxation and charges, the central
government need to fix the level of taxes
and charges to be levied.
Line Items Budgets -1.0
This type of budget places its emphasis on
the nature of the income and expenditure.
Disadvantage
• Cannot identify the amount allocated to
each individual service and would
therefore fail to reflect the planned level of
activity for each service.
Program Budget Structure
• This type of budgeting places its emphasis
on the purpose of expenditure e.g. crime
prevention, mental health care etc.
• This approach is believed to lead to better
planning and control because recourses
could be allocated more precisely to
specific activities and actual achievements
could be monitored more effectively.
Capital Budgeting
• If a public sector organization is be successful in
achieving its objectives it is to give consideration
to planning of capital expenditure.
• A Useful approach to the problem of planning
and controlling expenditure is to develop capital
programs which express the overall plan of start
, medium and long term capital schemes, and
reveal the allocation of priorities between
different parts of the organization.
APPROACHES TO THE
BUDGETARY PROCESS
We shall consider four modules that any
public sector can choose from
1. Incremental /Department
• This model bases next years budget on
current results plus extra amount for
estimated growth and inflaction.
2. Rational/ Corporate
• This is less concerned with the budget
base or past, but are more concerned with
using recourses to meet current
established objectives.
THE BID SYSTEM
Stage 1
Separate estimate Preparation
• Do the separate departments or services
prepare next years budget estimates in
isolation using the current expenditure aid
service levels as a starting point
Sage 2
Aggregation & Comparison