Académique Documents
Professionnel Documents
Culture Documents
TOPIC 3: BUDGET
TOPIC OUTLINES
Introduction Definition of terminologies Legal Requirement The objectives of budgeting The functions of Budgeting Components of budgeting Types of Budgeting Structure of Code of accounts for budget item Budget Format Budgeting process Budgeting techniques/methods Conclusion
TOPIC 3: BUDGET 2
Introduction
Budgeting is the first activity in the government financial management. In public sector budget is the only way for the government to withdrawal the money from CF. It is there for, normally the government will table the budget in September or October every year.
TOPIC 3: BUDGET
Definition of terminologies
Type of Budget refer to the way of budget -Deficit Budget -Surplus Budget -Balanced Budget Budget component
Refer to the main items in the budget, Revenues and Expenditures
Budgeting - a plan showing how resources will be acquired and used over a specified time interval Budgetary Control Establishment of budgets relating to the responsibilities of executives to the requirement of a policy. Budgeting technique Refer to the technique or system in formulating the budget figures
TOPIC 3: BUDGET 4
Legal Requirement
Budgeting need to be prepared by the government every year as required by the. Article 99 & 100, 101 of FC Sec 15 FPA, 1957 Treasury Instruction (TI) no 29-51(The procedure for preparation of budget) Treasury Circulars, no. 2, 2009
TOPIC 3: BUDGET
TOPIC 3: BUDGET
b.
Management instrument
Manage financial resources budget ensures objectives are achieved as planned Control help management to control cost and use of resources Performance measurement compare actual with budget so that appropriate action can be taken to correct the situation
TOPIC 3: BUDGET
Components of budgeting
Components of budget consist of
Estimated Revenues
Estimated Expenditure
TOPIC 3: BUDGET
10
Components of budgeting .. Cont (Revenues) Tax Revenues all the revenues collected based on the law passed by the legislative.
Compulsory payment Can be divided into direct and indirect
TOPIC 3: BUDGET
12
TOPIC 3: BUDGET
13
TOPIC 3: BUDGET
14
TOPIC 3: BUDGET
15
TOPIC 3: BUDGET
16
TOPIC 3: BUDGET
17
TOPIC 3: BUDGET
18
TOPIC 3: BUDGET
20
Object Name
Emolumets (General object) Salary and wages (Spesific object) Salary for Public service (Group- detailed object) Common Salary for public service (Detailed object)
Revenue
Code 70000 74000 74100 74101 Object Name Non-tax revenue (GO) Rentals (SO) Land rental (G-DO) Land rental for agriculture (DO)
TOPIC 3: BUDGET 24
Types of Budgeting
Refers to the proposed net effect of the budget. There are three possibility, deficit, surplus or balance. Deficit Budget
Government aims to spend more than its revenue earning. Example. Estimated Revenue RM232.8 b Estimated Expenditure RM357.9 b Deficit (RM125.1 b) The deficit is expected to be covered by bonds/borrowing The deficit budget is a source of govt. debts Suitable for countries experiencing recession/depression (high unemployment and low output) Govt spend more on operating and development expenditure
TOPIC 3: BUDGET
25
Example
TOPIC 3: BUDGET
26
Example:
Estimated Revenue RM357.9 b Estimated Expenditure RM357.9 b Surplus RM0
TOPIC 3: BUDGET
27
Budget Format
Operational Budget
Have a spesific format provides by the FTC Currently, need to prepared for two years, Current year and following year (FTC, 2/2009) The budget need to be prepared in summary and detailed format Summary format disclose item at general object (Detailed, Refer to illustration)
Development budget
No spesific format No need to table in legislative bodies
TOPIC 3: BUDGET 28
xx
xx
TOPIC 3: BUDGET
30
2011 xx xx xx xx xxx
2010 xx xx xx xx xxx
TOPIC 3: BUDGET
32
TR (M)
134,815
TE (M)
157,496
OE (M)
112,986
DE (M)
44,510
D/S
22,681(D)
2006
2005 2004 2003 2012
123,500
106,304 99,397 92,608 186.9 B
143,500
128,278 120,162 114,577 232.8 B
107,700
97,744 91,298 75,224 181.6 B
35,800
30,534 28,864 39,353 51.2 B
20,000 (D)
21,974 (D) 20,765 (D) 21,969 (D) 45.9 B (D)
TOPIC 3: BUDGET
33
Implementation Agency
Ministries Department Statutory Bodies
TOPIC 3: BUDGET 34
BUDGET CYCLE
10) Allocation warrant to ministries/dept.
1) Treasury Circular
Budgeted debated and approved by parliament, given consent by YDPA & issuance of allocation warrant Oct Budget documents printed and presented in Parliament
Sept MoF atten annual meeting of World Bank and IMF July- Aug Dialogue session between MoF and significant business and community group
May- July Preliminary budget hearing and actual budget hearing March-April Budget examination process March Submission of budget byagencies Jan Circular sent by Secretary Gneral MoF to agencies
TOPIC 3: BUDGET 36
Budgeting techniques/methods
Spesific only for Operational Budget Refer to the way how to formulate and determine the amount to allocate for the purpose of expenditure There are for technique available; - Line-item Budgeting System (LIBS) - Programmed and Performance Budgeting System (PPBS) - Modified Budgeting System (MBS) - Zero based Budgeting System (ZBB)
TOPIC 3: BUDGET 37
Budgeting techniques/methods
Development of budgeting Technique in Malaysia Prior to 1969 Traditional/line items Budget System (LIBS) was used Due to numerous weaknesses of the LIBS, a new technique, Program Performance Budgeting System (PPBS) was introduced in 1969 following the issues of Treasury Circular no. 5-1968 After 20 yrs of using PPBS, a study was conducted to overcome certain weaknesses of PPBS In 1990, govt. introduced a new system, a modification of the PPBS, known as MBS
TOPIC 3: BUDGET 38
TOPIC 3: BUDGET
39
TOPIC 3: BUDGET
40
TOPIC 3: BUDGET
43
TOPIC 3: BUDGET
44
TOPIC 3: BUDGET
48
Medical care service Dental service Manpower planning and training Pharmacies and supplies Research and administration etc
Example of activities (under Medical Care Service Program) - General patient care - Psychiatry service - Leprosy service - Medical administration and service
TOPIC 3: BUDGET 52
TOPIC 3: BUDGET
54
TOPIC 3: BUDGET
57
TOPIC 3: BUDGET
59
TOPIC 3: BUDGET
61
New policy
All the new program and activities which approved by the treasury including the extension, expansion and continuation of existing policies. Examples of NP : Establishment of new unit
New activities, etc.
TOPIC 3: BUDGET
64
TOPIC 3: BUDGET
65
TOPIC 3: BUDGET
67
TOPIC 3: BUDGET
70
- increase awareness and understanding of top management priorities (through program agreement to which they are held accountable) - greater flexibility in the deployment of resources within aggregate constraints
TOPIC 3: BUDGET 71
THE END
TOPIC 3: BUDGET
74