Chapter 2 The Budget Process

Government budgeting
➢ is the critical exercise of allocating revenues and borrowed funds to attain the economic and social
goals of the country. It also entails the management of government expenditures in such a way that will
create the most economic impact from the production and delivery of goods and services while
supporting a healthy fiscal position.
➢ Government budgeting is important because it enables the government to plan and manage its
financial resources to support the implementation of various programs and projects that best promote
the development of the country. Through the budget, the government can prioritize and put into action
its plans, programs and policies within the constraints of its financial capability as dictated by
economic conditions.

National Budget- is the government’s estimate of the sources and uses of government funds within a
fiscal year. This forms the basis for expenditures and is the governments key instrument for promoting
its socio-economic objectives.

The Philippine Constitution and other laws require government funds to be utilized in accordance
with national budget that is duly approved by legislation. Government accounting therefore is,
concerned with providing information useful in assessing the conformance of utilizations of
government funs with the approved budget.

Government Accounting is primarily budgetary accounting. It does not only aim to provide information
on past events and transactions but also budget information in accordance with PPSAS 24.
➢ PPSAS 24/IPSAS 24 (Presentation of Budget and Information in Financial Statements)
-prescribes a comparison of budget amounts and the actual amounts arising from
execution of the budget to be included in the financial statements entities.
This Standards
also requires disclosure of an explanation of the reason for material differences
between the budget and actual amount.

BUDGET PROCESS
Budgeting for the national government involves four (4) distinct processes or phases :
1. budget preparation,
2. budget authorization,
3. budget execution and
4. Budget accountability