Question 1
A budget is basically a public document that aims at determining the futuristic plans of a country or an organization. It usually contains financial data on the projected expenditures and revenues that an entity anticipates to operate on. This may include details on the specific activities that will generate income or consume the resource pool. This is especially crucial for purposes of responsibility and accountability. This is because the budget can have some form of justification as to exactly how money is being generated and consumed. It also acts as a control against illegal business activities.
The budget may also have specific details concerning the goals and purposes of a certain entity or country. This has to be coupled with a critical analysis of the modes of assets management that will be utilized. The government may also have to provide specific details concerning trading such as reports on investment plans and other long term expenditures.
The whole process of budgeting can also be viewed from the point of view of how well resources have been used in the past. This may require professional consultancy to help reveal previous weaknesses in the public expenditure. Past decisions on allocation of resources can be used to chart the way forward by critically analyzing the success of previous projects and accountability of the personnel who were mandated to oversee proper use of the resources
A thorough understanding of such previous knowledge can help chart the way forward by avoiding foreseeable pitfalls. The information contained in a budget is primarily of a technical or political nature. Therefore, it can be used to make objective decisions affecting the allocation of resources in a country. Comparisons with previous years are necessary as a measure of whether the decisions made each year by the government are progressive or retrogressive.
The budget obtains its justification from citations of the law that justify the costs as necessary. Mandatory expenditures may include basic things without which the country’s economy would permanently stall. These are referred to as base expenditures. In the determination of base expenditures, the government has to consider the past, present (actual) and projected expenditures while including tolerances for changes in market prices of various commodities. Justification of the budget proposal helps in enhancing the public’s perspective and approval of the budget and activities that will accompany it.
Question 2
The budget process comprises of a calendar whose time-frame is nine months. The budget development manual, prepared by the chief executive officer, is used as a guide in the process of developing the budget. Perpetual meetings are also unavoidable to aid in the accurate determination of appropriation of resources.
The four phases of a budget cycle are the preparation and submission of the budget by an executive office based on past and future objectives. This phase sets out the mission and values necessary for attaining the goals of the budget. This has the effect of improving the efficiency and effectiveness of the budget. This is followed by the approval of the budget by a legislative body (usually Congress) hence making it a legally binding document. The actual execution of the budget comprises of the program implementation with adjustments to balance revenues with expenditure. This helps to prevent a situation of bankruptcy through setting aside sufficient controls on the expenditures.
Finally, the audit and evaluation of the budget acts as a measure of how shrewd and honest the execution process was handled. Implementation of this last phase helps to set a standard of performance based budgets hence increasing efficiency. Approval of the budget by the legitimate committee may have effects on the political parties in a country. It may lead to fragmentation based on financial ideologies and even an oversight of the general budget process.
