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Municipal Budgeting

and Accounting
Ideal Municipal Budget Structure
ABC Municipal Body

Revenue Budget Capital Budget Extra Ordinary Budget

Budget Part I Budget Part II Budget Part III

Own Sources New Loans Grants Part Deposits Part of Advances Part
Part of Capital Part of Capital of Capital Extra Ordinary of Extra-
Budget Budget Budget Budget Ordinary Budget

Receipt Payment

Receipt Payment
Receipt Payment

Receipt Payment
Receipt Payments Receipt Payment
Loan Repay
Municipal Budget - Structural Analysis
 Object Heads – The objects which an organisation has.
They are known as Budget Heads or Cost Centers. –
water, sewerage, public health, streetlight etc.
 Subject Heads – These are generic heads found in any
organisation. They are generic accounting heads and
cut across all the object heads. Salary, electricity bill,
loan charges, revenue from own sources.
 Function – It is variant of Object head. It can be any
function performed or geographical units or
administrative department of an organisation.
Municipal Budget - Structural Analysis
 Unified or Single Budget Format – Only one
document, divided into receipt and expenditure
parts at first level. Subject & Object heads
follow later on in matrix format.
 Multi-Document Budget Format – More than
one budget document. Multiple documents are
prepared either following object or subject
classification at first and second level and each
budget document to have receipt and payment
sides at the end.
Municipal Budget - Structural Analysis
M u n ic ip a l B u d g e t S t r u c t u r e
S u b je c t & O b je c t H e a d s

M u n ic ip a l B u d g e t

S u j e c t ( A c c o u n t in g ) H Be au d sg e t ( O b j e c t ) H e S a ud b s j e c t ( A c c o u n t i n g ) H e a
R e c e ip t S id e C o m m o n f o r A l l B u d g e t Es x p e n d i t u r e S id e

R e v e n u e G e n . A d m in i R e v e n u e

L a n d & E s t a t e
T a x R e v e n u e E s t a b lis h m e n t
S t r e e t L ig h t
N o n - T a x M a in t e n a n c e
F ir e B r ig a d e
G r a n t s L o a n C h a r g e s
W a t e r S u p p ly
C a p it a l C a p it a l
S e w e r a g e
O w n S o u r c e P u b lic H e a lt h O w n R e s o u r c e s

L o a n s S o lid W a s t e L o a n s

G r a n t s R o a d & B r id g e G r a n t s

E x t r a - O r d in a r y G a r d e n s , Z o o E x t r a O r d in a r y

S t o r m W a t e r D r a
D e p o s it s D e p o s it R e f u n d s
P u b lic B u ld in g s
F u n d s N e w A d v a n c e s
P r im a r y E d u c a
A d v a n c e s A d ju . F u n d s U t ilis a t io n
Municipal Budget - Receipts Analysis
Tax Non Rev Rev own New Cap Cap Depo Fund Adva Extra Total
Rev Tax Grant Incom cap Loans Grant Incom sits s nces Ordi Receip
s e rece s e Rece ts

1 2 3 1+2+3 5 6 7 5+6+7 9 10` 11 9+10+ 4+8+1

=4 =8 11 = 2 = 13
Gen Adm
Prim Edu
Municipal Budget - Expenditure Analysis
Estab Maint Loan RevEx own Loan Cap Cap Depos Fund Adva Extra Total
lishm enan Intere pendit cap Expe Grant Expen its s nces Ordi Expen
e ce st ure expen nd s Exp diture Refun Expe Giv Expen diture
ditu d nd ditur

1 2 3 1+2+3 5 6 7 5+6+7 9 10` 11 9+10+ 4+8+1

=4 =8 11=12 2= 13

Gen Admi
Pub Work
Prim Edu
Basic Accounting Framework
 Income
Income & Expenditure Account
 Expenditure
 Assets
Balance Sheet
 Liability
Income & Expenditure Heads
Income Heads Expenditure Heads
1. Tax Revenue 1. Establishment Expenditure
2. Assigned Revenue & 2. Administrative Expenditure
3. Operation & Maintenance
3. Rental Income from
Properties 4. Interest & Finance Charges
4. Fees & User Charges 5. Programme Expense
5. Sale & Hire Charges 6. Revenue Grants,
contributions, subsidies
6. Revenue Grants,
Contributions, Subsidies 7. Provisions & Write Off
7. Income from Investments 8. Misc. Expenses, losses,
8. Interest Earned
9. Depreciation
9. Other Income
10. Prior Period Expenditure,
10. Prior Period Income Transfer to Reserves
Income & Expenditure Heads
Liability Heads Asset Heads
1. Municipal Fund 1. Fixed Assets
2. Earmarked Funds 2. Accumulated Depreciation
3. Capital Work in Progress
3. Reserves
4. Investment
4. Grants Contributions Received 5. Stock in Hand
for specific purpose
6. Sundry Debtor (Receivables)
5. Secured Loans 7. Accumulated Provisions against
6. Unsecured Loans debtors (Receivable)
8. Cash & Bank Balances
7. Deposits Received
9. Loans & Advances and Deposits
8. Deposit Works with others
9. Other Liabilities/provisions 10. Accumulated Provisions against
assets, Pre-paid Expenses,
Miscellaneous Expenditure to be
10. Prior Period Expenditure, written off
Transfer to Reserves
Revenue and Capital - Concepts
Three way classification of receipts and payments of any organisation

Revenue Capital Extra-ordinary

Revenue Income Capital Income EO Income

All types of recurring incomes All types of one time All receipts received on
coming from assets owned, receipts collected towards behalf of others or against
goods produced and sold, capital cost, assets sold, advances given to others
services rendered, and new loans raised and which does not affect
unconditional grants received conditional grants received finances of an organisation

Revenue Expenditure Capital Expenditure EO Expenditure

All types of recurring All types of expenditure All payment made to others
expenses incurred for incurred to create assets, against the receipts
running assets owned, or for to enhances life of existing received on behalf of others
producing and selling assets greatly or to repay which does not affect
goods /services, and all types loans or any other liability finances of an organisation
of interest and financial costs

Profit (Surplus) Go to Form Balance Sheet

Income & Expenditure A/c
or Loss (Deficit)
Revenue vs. Capital Actual transactions
Loan from HUDCO
Capital receipt

Construct a building
Capital expenditure Sell the building
Capital receipt

Rent the building

Operational expenses
Revenue receipt
Revenue expenditure

Difference equals

surplus or deficit

Investment in developmental NO investment and perhaps not

works OR make up for revenue enough money for operational
shortfalls elsewhere in the expenses or eating share of other
Revenue vs. Capital Actual transactions
own sources | Govt. Grant
Revenue receipt | Capital receipt

Construct a crematorium
Capital expenditure

Charges of cremation
Operational expenses services
Revenue expenditure Revenue receipt

Difference equals
surplus deficit

Lower the cost of services the Perhaps not enough money for
following year operational expenses, Need money from
elsewhere in budget
Restructuring the data
Stage I - Sourcing Stage II - Assessment Stage III - Analysis

Municipal Finances Recast Data: *Extra-ordinary account heads comprising

Data as obtained • Extra-ordinary cesses, advances, deposits etc is not
from ULB considered for financial assessment and
account heads further projections, as these items would
• Budget books not affect the financial health of the ULB.
• DCB statements
• Taxation
information Recast Data:
• Debt/ non-debt • Revenue Account ULB
liabilities’ data • Capital Account
Liabilities: Assessment/
• Debt Liabilities Credit Standing
• Non-debt Liabilities
Municipal Budgeting
and Accounting
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