PSA:

Management Accounting and

Control
Budgeting Systems in Malaysia
 Budgeting systems in malaysia

• Traditional Budgeting System

• Programme and Performance Budgeting System
• Modified Budgeting System
• Outcome Based Budgeting
 Traditional Budgeting System
• The first budgeting system adopted by Malaysian government in
1969
• Also known as "incremental budgeting or line-item budgeting"
• Example:
Total
Code “Who” Department Amount (RM)
(RM)
10000 Emoluments: 284,000
11000 Salary and Wages 120,000
12000 Fixed allowances 60,000
13000 Statutory contributions to employees 20,000
3
14000 Overtime allowances 48,000
15000 Other financial benefits 36,000
 Approach
Total Allocation = Last years spending level
+ Current year budget
Increase in cost of material and labour
+
due to inflation
+ Cost for new projects or programmes
• Assumptions:
1. All activities making up last year's spending were essential to
achieve the ongoing objectives
2. All activities must be continued during the coming years and
are more urgent than newly created programmes
3. All increases are because of the increase in costs of material 4
and labour due to inflation
PROGRAMME & PERFORMANCE
BUDGETING SYSTEM
Used by majority developing nations in the
world
Introduced in Malaysia in 1969
Purpose:Aids management to make better
decisions to meet changing environment
 Programmebudgeting
Planning-oriented ( ≠ evaluation/control)
Communication-oriented
 OBJECTIVES
Setting out clear terms for purpose of
organisation
Encourages:
Better and meaningful planning
Consideration of other alternatives to meet
objectives
Avoids duplication of functions within
departments across an organisation
Overall, enables better and firm decision
 Modified Budgeting System
 Major initiative by the Treasury for financial reform
and restructuring.

 Implemented in 1990 by issuance of TC No. 8.

 As an amendment to “Programme and Performance
Budgeting System” (PPBS) through TC No. 11.

 Focuses on the relationship between input, output

and impact.
 MBS MANAGEMENT SYSTEMS

 Input - emoluments, supplies and service and assets.

 Output – product or services produced by agencies.
 Impact could be view from three perspectives:
positive or negative changes on targeted activities.
achievement level of actual objective (efficiency of
activity).
changes to overcome the problem (before and after).
 Outcome Based Budgeting
Objectives:
1. Provide structural mechanism to translate policy and
concept of National Transformation. Programme
(NTP) to outcome and results.
2. Empower Controlling Officer to manage resources
under their control.
3. Increase accountability at all levels through
strengthening of governance framework.
4. Ensure government will achieve the concept of value
for money for budget expenditure management.
PRINCIPLES OF DESIGNING OBB
1. Planning and constructing of budget is based on
Programme-Based Approach.
2. Roles and responsibility of MOF, EPU & PSD in
examining ministry’s budget.
3. Ministry’s programmes aligned to the NRF.
4. Medium-term perspectives in planning and budget
5. Strengthen performance management
6. Empowering Controlling Officer
7. Incentives for results achievement
8. Continuous development of ability