FISCAL ADMINISTRATION

(THEORY & PRACTICE OF ADMINISTRATION)

MAIKO GIL D. HIWATIG, LPT

MPA STUDENT
FISCAL ADMINISTRATION
Management of Financial Resources
Fiscal Management - Composition of
activities and operations to generate
revenue, make these available, and see
to it that funds are wisely, lawfully,
effectively, and efficiently spent.
ORGANIZING FOR FISCAL
ADMINISTRATION
(FISCAL ADMINISTRATION)
ORGANIZING FOR FISCAL
ADMINISTRATION
Department of Finance – is tasked for
revenue generation and collection, fund
custody, disbursement and keeping of
accounts.
Department of Budget and Management –
review of estimates and fiscal policy studies.
ORGANIZING FOR FISCAL
ADMINISTRATION
DBM, NEDA, Central Bank and Other
economic planning entities of the state -
are assigned for fiscal plans and programs
geared toward national development.
Commission on Audit – conducts audit to
see if expenditures are in accordance with
the Appropriation of Law approved by
Congress
ORGANIZING FOR FISCAL
ADMINISTRATION
Congress – is responsible for revenue and
expenditure policies.
FISCAL CONTROL
MECHANISM
(FISCAL ADMINISTRATION)
FISCAL CONTROL MECHANISMS
Set as a control device which defines and
specifies what should be accomplished
within a stipulated time framework and how
these should be done, and monitors
planning and implanting programs and
projects and its effects on the performance
of bureaucracy and society as a whole.
FISCAL CONTROL MECHANISMS
There are basically four justifications for
expenditure through the budget:
1. Prevent misappropriation of fund
2. Control to implement prospective policy
3. Ensure the wisdom and propriety of
expenditure
4. Prevent deficits
FISCAL CONTROL MECHANISMS
Fiscal supervision and control may be useful
but should not unduly interfere with agency
prerogative to carry out programs
mandated by constitutions and the laws.
The budget is only a criterion-setting device
in the control process.
BUDGETING CONCEPTS
(FISCAL ADMINISTRATION)
BUDGETING CONCEPTS
Planning-programming Budget System
(PPBS)
▪ Gives the assurance that the budget will help
achieve agency results.
▪ Unit heads defends the budget, explains its
contribution to the realization of agency goals
▪ Cost projection for each program
▪ Top management reviews programs and decides
on the final budget allocation.
BUDGETING CONCEPTS
Zero-based Budgeting (ZBB)
▪ The agency justifies the entire appropriation
request for the fiscal year as if the entirely
new
▪ Instead of justifying only the increase agency
is therefore obligated to defend programs
every year and rand these terms of priority
using the ratio between cost and benefit
criterion
BUDGETING CONCEPTS
Zero-based Budgeting (ZBB)
▪ Top management reevaluated the need for
on-going programs, compare these with the
proposed and prioritized for implementation.
LINE-ITEM VERSUS
PERFORMANCE BUDGETING
(FISCAL ADMINISTRATION)
LINE-ITEM VS PERFORMANCE
BUDGETING
Line-Item Budgeting
▪ Also termed as objective expenditure type
▪ The funds appropriated may not be
transferred from one category of expense to
another
▪ example: personal services to rental of
buildings or purchase of equipment to
payment of salaries.
LINE-ITEM VS PERFORMANCE
BUDGETING
Line-Item Budgeting
▪ A “rule of thumb” budgeting where figures of
past years are reflected but without
indicators as to how effective a unit
performed its task.
LINE-ITEM VS PERFORMANCE
BUDGETING
Performance Budgeting
▪ Lump-up budgeting
▪ Program budgeting which spells out
functions, activities, and projects.
▪ Allows transfer of funds from one
organizational unit to another, between work
activities and objects to spent for.
NEW POLICY GUIDELINES
FOR BUDGETING
(FISCAL ADMINISTRATION)
New Policy Guidelines for Budgeting
(Estrada Administration)
Formulation of the national budget must be in
context of a three-year planning and
framework which expenditures will achieve
program targets and support development
strategy. Agency programs will be supportive
of identified priority area which include:
▪ Modernization of the agricultural sector for
better farmer income, boost production and
attain food security.
New Policy Guidelines for Budgeting
▪ Modernization of the agricultural sector for better
farmer income, boost production and attain food
security.
▪ Improvement of quality of basic services like
health and sanitation, nutrition, education, social
welfare and housing.
▪ Acceleration of countryside infrastructure
development
▪ Enhancement of global competitiveness through
liberalization, deregulation, and privatization
New Policy Guidelines for Budgeting
▪ Instilling fiscal discipline, prudent government
spend and efficient revenue generation.
▪ Reform in governance to make it responsive to
the current domestic and global environment.
These priorities call of intensified privatization
through sale of government assets, build, operate
and transfer and joint ventures; entering into
management contracts to rationalize government
corporate sector.
New Policy Guidelines for Budgeting
Principles for Agency guidance under budget
ceiling of NEDA and DBM include the following:
▪ Prudent Spending – calls for rational fund allocation
among agencies and units of governance
▪ Entrepreneurial Budgeting – involves mobilization of
government resources for development program
▪ Performance-based Budgeting – Key results areas
(KRA’s) and commitment for specific programs are
identified to optimize effective use of resources
New Policy Guidelines for Budgeting
▪ Wholistic Budgeting – expenditure levels of regional
units are provided by the agency as guide for
preparing the regional budget.
▪ Consistency with the sub-sectoral development
objectives – like TESDA and R&D in the material,
technological, and engineering sciences,
implementation of the Systems Designated
Statistics pursuant to Executive Order 352 (PSA)
BUDGET PREPARATION
FORMS
(FISCAL ADMINISTRATION)
BUDGET PREPARATION FORMS
Based on the FY 2000 National Budget Call 13
forms have to accomplished by the agency
Budget Officer and Planning Officer:
▪ BP 100 – Statement of Revenue
▪ BP 101 – Statement of Other Receipts and other
Expenditures
▪ BP 200 – Comparison of Appropriations and
Obligations
▪ BP 201 – Summary of Obligations and Proposed
Programs/Projects
BUDGET PREPARATION FORMS
▪ BP 202 – Locally Funded Project Profile
▪ BP 203 – Foreign Assisted Project
▪ BP 204 – Proposed Staffing and Modification
• CNP – Creation of New Positions
• AP – Abolition of Position
• REC – Reclassification of Positions
• UP – Upgrading of Positions
BUDGET PREPARATION FORMS
The Geographic and Organizational deployment
of positions are indicated in this form:
▪ BP 205 – Staffing and Summary for Non-Permanent
Positions
▪ BP 206 – Agency Performance Measures
▪ BP 207 – Grants-in-Aid
▪ BP 208 – Details of Scholarship Program
▪ BP 300 – Proposed Provisions
▪ BP 400 – Project with Private Sector Funding and
Participation
INCOME SOURCES
(FISCAL ADMINISTRATION)
INCOME SOURCE
There are two (2) general sources of government
income.
1. Tax Revenue – includes income tax, property tax, tax
on domestic goods and services, tax on international
trade and transactions. Sales, tax, VAT, selective
excises of goods, selective taxes on services, licenses
and permits are example of domestic goods and
services.
INCOME SOURCE
2. Non-Tax Revenue (6 kinds)
▪ Operating and Service Income
▪ Income from Public Enterprises
▪ Miscellaneous Income
▪ Capital Revenue
▪ Grants
▪ Borrowings
APPROPRIATIONS AND
OBLIGATIONS
(FISCAL ADMINISTRATION)
APPROPRIATIONS AND OBLIGATIONS
These are the estimates and projections of what
the department of agencies incur or expect to
incur. These include the following:
1. New General appropriations as provided for in the
General Fund, Fiduciary Fund or Special Account on
General Fund
2. Supplement Appropriations
3. Automatic Appropriations
4. Continuing Appropriations
5. Budgetary Adjustments
THE BUDGET, THE PHILIPPINE NATIONAL
BUDGET, AND THE PHILIPPINE BUDGETARY
PROCESS
(FISCAL ADMINISTRATION)
 THE BUDGET, THE PHILIPPINE NATIONAL
BUDGET, AND THE PHILIPPINE BUDGETARY
PROCESS
The budget is a management tool to account for
what has been received and how this will be spent
at a given period of time.
 The national budget represents the estimate of
expected income and projected expenditures
over a period of time generally referred to as fiscal
year.
 THE BUDGET, THE PHILIPPINE NATIONAL
BUDGET, AND THE PHILIPPINE BUDGETARY
PROCESS
The 4 Stages of Philippine National Budget:
1. Preparations and Formulations
2. Authorization
3. Implementation
4. Accountability
 THE BUDGET, THE PHILIPPINE NATIONAL
BUDGET, AND THE PHILIPPINE BUDGETARY
PROCESS
The 4 Stages of Philippine National Budget:
1. Budget Preparations and Formulations
 Determination of budgetary priorities and activities
guided by national development plan with the
ceilings and constraints imposed by available
revenues and borrowing limits.
 THE BUDGET, THE PHILIPPINE NATIONAL
BUDGET, AND THE PHILIPPINE BUDGETARY
PROCESS
The 4 Stages of Philippine National Budget:
2. Authorization
 Once a common bill has approved by both House
of Representatives and Senate, it is submitted to the
President for approval into law known as General
Appropriation Act, which mandates the DBM, to
execute and implement the expenditure program.
 THE BUDGET, THE PHILIPPINE NATIONAL
BUDGET, AND THE PHILIPPINE BUDGETARY
PROCESS
The 4 Stages of Philippine National Budget:
3. Implementation
 DBM requires the different agencies to submit their
respective work and financial work plans, the
information will be the basis of the DBM to release
the government funds
 THE BUDGET, THE PHILIPPINE NATIONAL
BUDGET, AND THE PHILIPPINE BUDGETARY
PROCESS
The 4 Stages of Philippine National Budget:
4. Budget Accountability
 Refers to the evaluation of actual performance and
initially-approved work targets, obligations incurred,
personnel hired and work accomplished by
comparing all these with the targets set at the time
agency budgets were approved.
 THE BUDGET, THE PHILIPPINE NATIONAL
BUDGET, AND THE PHILIPPINE BUDGETARY
PROCESS
Budgetary Process at the Local Government Level:
1. Budget Preparation
2. Budget Authorization
3. Budget Implementation
4. Budget Review
 THE BUDGET, THE PHILIPPINE NATIONAL
BUDGET, AND THE PHILIPPINE BUDGETARY
PROCESS
Barangay Budget:
1. Budget Preparation and Authorization
2. Budget Implementation
3. Budget Review
AUDIT OF FUNDS
(FISCAL ADMINISTRATION)
 AUDIT OF FUNDS
Accounting of funds as management tool is best
to ensured by the audit functions.
Audit is the systematic examination of books and
records in order to evaluate the financial
operations of an entity.
There are two types of audit
1. Pre-audit – audit is performed before money is actually
spent
2. Post-audit – audit after money has been spent on
order to find if funds are spent in accordance with the
approved appropriation.
COMMISSION ON AUDIT
(FISCAL ADMINISTRATION)
 COMMISSION ON AUDIT
A constitutional body independent from the three
branches of government with vests in it the power
of:
• Authority and Duty to examine
• Audit and Settle all Accounts pertaining to the revenue and
receipts of
• And Expenditures or uses of funds appropriately
• Owned and held in trust by, or pertaining to, the
government, or any its subdivisions, agencies, and
instrumentalities, including government-owned or controlled
corporations
 COMMISSION ON AUDIT
Limitation of Commission on Audit
• Inhibited from inquiring into the classification of
positions and compensation scales attached to
such positions. Responsibility of DBM
• Responsibility for determining tax liability (belongs
to BIR)
• Classification of the customs duties and their
imposition are a prerogative of the Bureau of
Customs