2. Budget word was first coined by the British Kings in early days
from the word ‘BOUGETTE’ which means leather bag or
pouch.
A budget is a tool for planning, quantifying the plans and
controlling costs.
- Flinker, 1984
A budget is a plan that uses numerical data to predict the
activities of an organization over a period of time and it
provides a mechanism for planning each unit’s needs and
contributions.
- carruth, carruth and Noto, 2000
3. A budget can be defined as ‘a tool used to relate
planned resource consumption to a period of time’.
- Mellett et al. 1993
This definition highlights the three main features of a
budget:
• It is a plan that is developed before an event has
occurred;
• It can include a broad range of resources – not just
money;
• It relates to a specific period of time.
4. WHAT IS UNION BUDGET ?
•The union budget of India, referred to as annual Financial
Statement in Article 112 of constitution of India, is the annual
budget of the Republic of India, presented each year on the
last working day of February by the Finance Minister of India
in Parliament.
•The budget has to be passed by the parliament house before
it come into effect on April 1, the start of India's financial year.
The Union Budget 2013-14 presented by P.Chidambaram on
28 February 2013,11 am, the Financial Minister of India.
•The budget implemented on 1st April 2013.
5.
6. 1 2 3 4
BUDGET APPROVAL
BUDGET
ESTIMATE
PREPARATION
BUDGET MONITORING
STEPS IN BUDGETARY PROCESS
BUDGET ALLOCATION
8. THE GOVERNING BODY
• Responsible for the general planning function
• Selects the budget steering committee, determines
the budgetary objectives, and reviews and
approves the master budget.
THE ADMINISTRATOR
• Responsible for the formulation and execution of
the budget
• by correlating the governing board’s goals with the
guidelines for budget preparation and supervising
the budget preparation.
9. THE BUDGET DIRECTOR
•Responsible for the budgeting procedures and
reporting.
•Establishes a completion timetable.
•Forms prepared, and supervises data collection and
budget preparation.
•serves as the chairperson of the steering committee,
which approves the budget before it is submitted to the
governing board.
10. DEPARTMENT HEADS
•Prepare and review goals and objectives and
prepare the budgets for their departments.
•Departmental budgets need to be prepared and
coordinated.
•During this phase, units of service, staffing patterns,
salary and non-salary expenses and revenues are
forecasted so that preliminary rate setting can be
done.
13. The revised estimate is an estimate of
the probable receipts or expenditure for a
financial year, framed in the course of
that year.
It does not authorise any expenditure,
nor does it supersede the budget
estimate as the basis for regulation of the
expenditure.
If an excess is anticipated in the revised
estimate under any particular head, it is
necessary for controlling authority to
apply separately in proper time for
REVISED ESIMATION
14. PLAN EXPENDITURE
Plan expenditure is estimated after
discussions between each of the
ministries concerned and the
Planning Commission.
Plan expenditure forms sizeable
proportion of the total expenditure
of the Central Government.
The demands for Grants of the
various Ministries show the Plan
expenditure under each head
separately from the Non-Plan
expenditure.
15.
16. NON-PLAN REVENUE EXPENDITURE
Non-plan revenue expenditure is
accounted for by interest payments,
subsidies (mainly on food and
fertilizers), wage and salary
payments to government employees,
grants to States and Union Territories
governments, pensions, police,
economic services in various sectors,
other general services such as tax
collection, social services, and grants
to foreign governments. The
expenditure in developing ‘planned’
17. Non-plan capital expenditure mainly
includes defence, loans to public
enterprises, loans to states, union
territories and foreign governments.
The maintenance and running of the
existing projects is known as non-plan
expenditure.
NON-PLAN CAPITAL EXPENDITURE
21. ZERO-BASED BUDGETING
one of the budgets that do not utilize any
historical data to determine activity level of
expenses anticipated.
All the expenses are justified based on
expectation or desires for the upcoming year.
Zero based budgeting was adopted in India in
1986 as a technique for determining
expenditure budgets.
22. According to the ministries of Finance
instructed all the administrative ministries to
review their respective programmes and
activities in order to prepare expenditure
budget estimates based on the principles of
zero based budgeting.
24. ADVANTAGES
• Forces the nurse managers to plan each program
package afresh.
• Avoids the common tendency in budgeting of looking
at changes from a previous period
• Efficient allocation of resources, as it is based on
needs and benefits
• Cost effective ways to improve operations
• Detects inflated budgets
• Useful for service departments where the output is
difficult to identify.
25. • Increases staff motivation by providing greater
initiative and responsibility in decision-making.
• Increases communication and coordination within the
organization
• Identifies and eliminates wasteful and obsolete
operations.
• They force managers to set priorities and use
resources most efficiently.
• Identifies opportunities for outsourcing
• Forces cost centres to identify their mission and their
relationship to overall goals.
26. DISADVANTAGES
• Difficult to define decision units and decision
packages, as it is time-consuming and exhaustive.
• Forced to justify every detail related to expenditure.
• Necessary to train managers.
• Difficult to administered and communicate the
budgeting because more mangers are involved in
process.
• Compressing the information down to a useable size
might remove critically important details.
• Honesty of the managers must be reliable and
uniform.
27. CAPITAL BUDGET
• It consists of capital receipts and payments.
Capital Budget also incorporates transactions
in the Public Account.
28.
29. • Capital receipts: The main items of capital
receipts are loans raised by Government from
public which are called Market Loans,
borrowings by Government from Reserve
Bank and other parties through sale of
Treasury Bills, loans received from foreign
Governments and bodies and recoveries of
loans granted by Central Government to State
and Union Territory Governments and other
parties.
30. • Capital payments: Capital payments consist of
capital expenditure on acquisition of assets
like land, buildings, machinery, equipment, as
also investments in shares, etc., and loans and
advances granted by Central Government to
State and Union Territory Governments,
Government companies, Corporations and
other parties.
31. REVENUE BUDGET
• Revenue defined as total income produced by
a given source. The revenue budget consists
of revenue receipts of the governments
(revenues from tax and other sources) and the
expenditure met from these revenues.
32. Revenue Receipts: Revenue receipts are divided
into tax and non-tax revenue.
•Tax revenues are made up of taxes such as
income tax, corporate tax, excise, customs and
other duties which the government levies.
•Non-tax revenue consists of interest and
dividend on investments made by government,
fees and other receipts for services rendered by
Government.
33. • Revenue expenditure: Revenue expenditure is the
payment incurred for the normal day-to-day running of
government departments and various services that it
offers to its citizens.
• The government also has other expenditure like
servicing interest on its borrowings, subsidies, etc.
Usually, expenditure that does not result in the creation
of assets, and grants given to state governments and
other parties are revenue expenditures.
34. • The difference between revenue receipts and
revenue expenditure is usually negative. This
means that the government spends more than
it earns. This difference is called the revenue
deficit.
35. PERFORMANCE BUDGETING
• It is based on functions such as direct nursing
care, supervision, in service education, nursing
audit and so on.
36. STEPS IN PERFORMANCE BUDGETING
• Identify and analyse the work of organization
into functions, sub functions; programmes,
sub programmes, activities, sub activities in
result
• Lay down the targets of each scheme,
function, programs
• Set the performance norms or standards for
each activity or task.
• Identify specific indicators regarding each
task.
37. • Specify means of achieving them.
• Design the monitoring and evaluation
system or performance recording and
reporting system.
• Calculate the costs of all inputs, resources
to achieve the targets in terms of benefits
• Thus the performance budgeting tries to
define the physical and financial aspects of
each program and activities and thereby
establishes the relationship between
output and inputs. IT assesses each
programme in the light of financial and
economic factors.
38. Tools Used in Performance Budgeting
It involves the development and use of more
refined management tools :
•Work measurement studies to measure or to
identify various works.
•Performance standards and its specific
indications to measure the performance
•Monitoring methods like PERT
•Other methods like cost analysis.
40. MID TERM APPRISAL
• The Mid Term Appraisal (MTA) reviews the experience
in the first three years of the five year plan and seeks
to identify areas where corrective steps may be
needed.
• Provides an opportunity to take stock of the economy
and to introduce policy correctives and new initiatives
in critical areas in the context of the new priorities,
the success achieved on the investment front.
• MTA presents a candid assessment of the resources
position facing both the centre and the state and the
implications.
41. AUDIT
• Audit is an assessment of the management practices,
financials and operations of an organization.
• According to the institute of chartered Accountants
of India (ICAI) ‘Auditing is the independent
examination of financial information of any entity,
whether profit oriented or not, and irrespective of its
size or legal form, when such an examination is
conducted with a view to expressing an opinion
thereon.’
42. • The Marriam-webstar Dictionary defines an
audit as ‘a formal examination of an
organization or individual’s accounts or
financial situation.
43. PURPOSES
It makes sure that all the financial statement
of concern is presented fairly.
Audit gives a fair and true picture in
accordance with financial reporting
framework.
It enhances the degree of confidence of
intended users in financial statement.
45. EXTERNAL AUDIT
• An external audit is a review of the
financial statements or reports of an
entity, usually a government or
business, by someone not affiliated
with the organization or agency.
• The audit is conducted by regulatory
agency hired by the entity and the
auditors are generally in public
accounts.
46. For government or public sectors, an external
audit will include a review of the budget, the
allocation of funds and the actual expenses to
ensure the budgeted revenues and expenses
were correctly compiled and used.
47. In a private-sector, it includes a review of
the organization quarterly or monthly
financial reports as well as statement on
revenues and expenditure to ensure they
are correctly tabulated and reported.
Usually conducted once a year at the end
of fiscal year.
A yearend financial report is prepared by
the entity, which is one of the documents
verified in external audit.
49. FEATURES OF THE EXTERNAL AUDIT
• It generates a summary of overall validity of
the financial statement.
• It uncovers the discrepancies between the
statements. Presented by the organization
and the external the external auditor.
• It reflects the conclusion of the audit.
50. PURPOSE OF EXTERNAL AUDIT
• The main purpose of external audit is to ensure that
internal control, processes, guidelines are adequate and
in line with the government requirements.
• To provide an independent and unbiased assessment of
an organization’s internal governance and financial
matters.
• To verify internal procedures.
• To evaluate adherence of the organization to standards
and principals.
• To evaluate the adequacy and effectiveness of existing
internal control.
51. INTERNAL AUDIT
• Internal audit has been recognized as an aid to
management for monitoring the financial
performance and effectiveness of various
departments in the execution of various
programmes.
• According to the Institute of internal auditors
(IIA), internal auditing is an independent
objective assuring and consulting activity
design to add values and improve organization
operations.
52. OBJECTIVE OF INTERNAL AUDIT
• To suggest improvements to the functioning
of the entity organization
• To strengthen the overall governance
mechanism of the entity organization
including its strategic risk management as well
as internal control system
• To prepare for the external audit
53. PURPOSE OF INTERNAL AUDIT
• To establish standards and to provide
guidance in respect of internal planning.
54.
55.
56. ROLE OF INTERNAL AUDIT
Regulatory and compliance role
•Quality of public expenditure
•Proper implementation of rules and regulation
•Maintenance of proper records
•Accuracy in expenditure reporting
57. Efficiency cum performance roles
•Efficiency and economy in public expenditure
•Propriety of expenditure
•Effectiveness of expenditure
•Proper realization, accounting and reporting of
revenue receipts.
