- 10 Marks
Question
The importance of classification code as a system driven for budget cannot
be over emphasised as it forms the basis for budgeting and budgetary
control mechanism. Thus, for a country, state or local government to
achieve a reasonable level of success in accountability, transparency,
performance evaluation and adherence to Appropriation Act, the
application of unified chart of accounts is paramount.
Required:
Discuss FOUR uses of budget and FOUR steps to be followed to ensure completeness of using the National Chart of Accounts for budgeting.
Answer
Uses of Budget:
- Planning: The budget assigns monetary values to targets set for future time frames, typically one year.
- Communication: Budgets communicate objectives vertically and horizontally within government, allowing input from various sectors.
- Performance Standard: Budgets set performance targets, which can be measured and evaluated against actual outcomes.
- Policy Evaluation: Budgets aid in assessing economic and social policies, addressing issues such as inflation and unemployment.
Steps to Ensure Completeness of National Chart of Accounts for Budgeting:
- Identify government institutions (cost and revenue centers) from the hierarchical administrative list and codes provided in the chart.
- Identify the economic items for execution within the fiscal year.
- Define functions performed by government institutions for revenue and cost centers.
- Specify programs and sources of financing for each budget line, along with intended locations for transactions
- Topic: The Budgeting Process in the Public Sector
- Series: MAY 2021
- Uploader: Kwame Aikins