Question

Budgeting

1. There are two parties of government that are involved in the approval of the annual budget of a country. Name and explain these parties?

2. List and explain the steps in the government budget cycle?                                            

Answer 1

ANSWER -1)

MEANING OF ANNUAL BUDGET :-

Annual budget is a plan of all the future expenditures and incomes of the organisation or a country. In this, country trys to evaluate the expenses and revenues that are going to happen in the future. It is prepared by the government parties for the country.

THERE ARE TWO PARTIES OF GOVERNMENT THAT ARE INVOLVED IN THE APPROVAL OF THE ANNUAL BUDGET OF A COUNTRY :-

As there are mainly legislative bodies who approve the annual budget of a country. But, these are classified into two that are as follows:-

a) CHIEF EXECUTIVE OR PRESIDENT

b) FINANCE MINISTER

EXPLAINATION OF THESE TWO LEGISLATIVE OR GOVERNMENT PARTIES ARE :-

a) CHIEF EXECUTIVE OR PRESIDENT - CHIEF EXECUTIVE OR PRESIDENT, is the most top level officers or senior managers who takes all the decision related to the organisation or a country. In government, President takes all the decision related to all the topics of country. No decision can go forward, without the approval of the president. All the reports related to the growth and development is taken by the president.

b) FINANCE MINISTER - Finance minister, is also one of the top level management in government, Finance minister takes all the decison related to the financial regulations or economic policy etc. It overlooks all the monetary policies, fiscal policy and prepare budgets of a country. Finance minister has the capacity or sufficent knowledge for budget formation.

ANSWER -2

BUDGET FORMATION, is one of the difficult work. It is not easy to prepare budget for a country, it takes lots of detailed information of all the expenses and income which happens or occurs in country. Budget is formed by steps by steps process and this whole cycle or process is called government budget cycle.

THE STEPS INVOLVED IN GOVERNMENT BUDGET CYCLES ARE :-

• PREPARATION AND SUBMISSION
• APPROVAL
• EXECUTION
• AUDIT AND EVALUATION

EXPLANATION OF STEPS OF GOVERNMENT BUDGET CYCLE-

• PREPARATION AND SUBMISSION - This is the first step for formulation of budget . This process starts with the carefull and clear thoughts at the lower level about what is needed and what new initiatives can be added or started or at the same time, with keeping leadership and vision ,it have to think that what should be included or excluded in the final budget.In easy language, first step includes, thinking of what to be included or what to be more added which can increase the growth and development of the country.
• APPROVAL - After making or formulation of budget, it is then approved by the legislative bodies of the government, i.e by finance minister and President. The approval of budget is not only by saying Yes or No, It is approved by keeping in mind the various strategy and tactics, priorities for the country, for the year.
• EXECUTION- After formation and Approval, the budget cycle not ends here, after the approval, next step is to execute the budget according to the plan. Most of the time, the expenses and all the reveues are goes according to the budget because of the efficient tactics, strategy for the country, So that the country runs financial smoothly.
• AUDIT AND EVALUATING THE BUDGET - After all the three steps, the final step is auditing and evaluating the budget. In this step, it ensures that how the money is being spent, is it lawful or not, is this spent efficienctly as per the budget. By this step, it ensures that budget has grown in scope or not.

THIS IS THE FOUR PHASE OR STEPS OF GOVERNMENT BUDGET CYCLE, WHICH HELPS TO FORM BUDGET.