The State budget is a set of documents, voted by Parliament, which forecast and authorise the State’s revenue and expenditure over the course of a year. It is: (i) an act of annual forecasting and authorisation for collecting taxes and spending public money; (ii) a statement of the government’s priorities and vision; and (iii) a legal framework and a political commitment.
The State budget cycle divides into three essential phases: (i) preparing the budget; (ii) executing it during the budget year; and (iii) controlling that execution.
The budget is drawn up for one year, but the budget cycle runs beyond that period.
Preparation phase: this comprises an administrative stage and a parliamentary stage.
The administrative stage: preparation and adoption of the economic policy note for the General State Budget, technical meetings to examine that note, issue of the budget framework letter, preparation of the first outline of sectoral budgets, and budget arbitration.
The parliamentary stage: parliamentary debate and adoption of the budget.
Budget execution phase: this has two parts, one administrative and one accounting.
The administrative part has three steps: (i) commitment, which creates or records a debt of the State — for a supply of goods or a provision of services, say — and is evidenced by a formal act; (ii) validation, which recognises the existence of the State’s commitment, or debt, where services have been rendered, supplies actually delivered or works completed, and establishes its amount, evidenced by an act approved by the parties concerned; and (iii) authorisation to pay, the act by which the authorising officer instructs the accounting officer to settle the public body’s debt in accordance with the result of the validation.
The accounting part: payment, being the transfer to the supplier’s account, or the handing over to the supplier, of the amount authorised by the public treasury.
The execution phase is supported by budget execution reports.
Phase of control over budget execution. Three kinds of control may be distinguished: (i) administrative controls; (ii) parliamentary control; and (iii) judicial control.
- Administrative controls, comprising (i) financial control and (ii) control exercised by an inspectorate — the Inspectorate of Finance, the General Control of Public Services and the like.
- Parliamentary control: concurrent control, through parliamentary committees of enquiry during the execution of the Finance Act and the reporting of periodic execution statements; and retrospective control, through the vote on the budget settlement act.
- Judicial control, which consists of: (i) a report on the execution of the State budget; (ii) a general declaration of conformity between the management accounts and the administrative accounts; (iii) adjudication of the public accounts; (iv) verification of the stewardship of public officials; and (v) control at any time, on its own initiative or at the instance of a competent authority.
AUDICO’s experts have a complete command of the State budget cycle and are at your disposal, through their professional services or their training work.