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Budget Execution

Budget Execution. Sanjay Vani PREM Learning Week – Public Finance Analysis and Management Course April 24, 2007. What is budget execution?. Processes and institutions that implement the budget Laws, rules, regulations, practices Line ministries, MoF, treasury Control framework

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Budget Execution

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  1. Budget Execution Sanjay Vani PREM Learning Week – Public Finance Analysis and Management Course April 24, 2007

  2. What is budget execution? • Processes and institutions that implement the budget • Laws, rules, regulations, practices • Line ministries, MoF, treasury • Control framework (Note : Budget is not a comprehensive statement of financial flows; it is limited to those transactions included in the budget. Budgets do not include off-budget or extra-budgetary funds, nor do they accurately reflect assets, liabilities and risks.)

  3. Why is budget execution important? • It affects • the cost and quality of services • the volume of government expenditure, and • the relations between citizens and government. Citizens know their government through the services they receive from it.

  4. Objectives of Budget Execution • Manage Spending and Revenues per budget • support choices of elected officials • allow budget to be planning and steering tool • promote macrofiscal discipline • reduce opportunities for corruption • Enable program implementation • ensure resources flow to programs • enable program managers to achieve objectives • Ensure accountability • timeliness in reporting • authenticity of reporting

  5. Phases in Budget Execution • Phase 1: Allocation • Phase 2: Ministry Spending Plans • link actions with finances; cash flow needs • Phase 3: Commitments (award contracts) • Phase 4: Actual receipt of goods/services • Phase 5: Payment • Phase 6: Accounting • Phase 7: Reporting • Phase 8: Audit • Phase 9: Parliamentary Scrutiny (Note : These phases are not necessarily sequential)

  6. Roles of various players in Budget Execution - internal control - program management - spending (commitments) - recording & reporting - payment orders - verification of receipt of goods/services - program/cash plans

  7. Issues in Budget Execution • Predictability in the availability of funds – cash rationing • In year transfers – credibility of the budget • Weak procurement planning – bunching of expenditures towards the year end • Weak procurement management - use of less competitive methods • Lack of a commitment control system - arrears • Delay or a lack of reconciliation and clearance of suspense accounts and advances – violation of budget discipline

  8. Issues in Budget Execution • Weak internal controls – waste and abuse of resources • Lack of internal audit – weakens internal control framework • Delays in accounting and reporting – managers having no access to full information before making decisions • Weak external audit - delay in audits - little evidence of response or follow up on audit reports • Legislature’s review is non-existent or extremely limited – weak accountability

  9. Reforms in Budget Execution • Treasury Modernization – cash management • FMIS • Accounting Reforms – Accrual accounting - IPSAS • Procurement Reforms • PIFC reforms – Managerial Accountability • Internal Audit Reforms • External Audit Reforms • Legislature Reforms - PAC

  10. PEFA: The PFM High-Level Performance Indicator Set • C(ii) Predictability and Control in Budget Execution • PI-13 Transparency of taxpayer obligations and liabilities • PI-14 Effectiveness of measures for taxpayer registration and tax assessment • PI-15 Effectiveness in collection of tax payments • PI-16 Predictability in the availability of funds for commitment of expenditures • PI-17 Recording and management of cash balances, debt and guarantees • PI-18 Effectiveness of payroll controls • PI-19 Competition, value for money and controls in procurement • PI-20 Effectiveness of internal controls for non-salary expenditure • PI-21 Effectiveness of internal audit • C(iii) Accounting, Recording and Reporting • PI-22 Timeliness and regularity of accounts reconciliation • PI-23 Availability of information on resources received by service delivery units • PI-24 Quality and timeliness of in-year budget reports • PI-25 Quality and timeliness of annual financial statements • C(iv) External Scrutiny and Audit • PI-26 Scope, nature and follow-up of external audit • PI-27 Legislative scrutiny of the annual budget law • PI-28 Legislative scrutiny of external audit reports

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