CH 03

3 Budgetary Processes
Learning Outcomes
 Explain the significance of public sector budgets

 Understand the legal requirements
 Identify the budget components
 Explain the budgeting process
 Describe budgetary control mechanisms
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 3–3
Introduction
 A budget is an organisation’s formal estimates

of its revenues, expenses, cash inflows and
cash outflows for a future period.
 Article 99(1) of the Federal Constitution defines

budget as a statement of the estimated receipts
and expenditure of the Federation for the year.
Context 3–4
Introduction
Context 3–5
Significance of Budget
to be carried out during a

Activities fiscal year in order to achieve
the public sector’s aims and
objectives
Budget as a
Monetary
management allocated to each
amount activity
tool defines:
Sources to finance the activities

of funds and the estimated
values.
Context 3–6
Significance of Budget
Budget
as a
fiscal
policy
tool
Context 3–7
Legal Requirements
 Treasury Instructions 29-52: the responsibility of

preparing the budget
 Financial Procedures Act, Section 15: format of
estimates and support information
 Federal Constitution, Article 99(1): approval of
budget
 Federal Constitution, Article 99(2): contents of
budget documents
Context 3–8
Legal Requirements (cont.)
 Federal Constitution, Article 100: approval of

the Supply Bill
 Federal Constitution, Article 101: supplementary
estimates
 Federal Constitution, Article 103(1) and (2):
Contingencies Fund for supplementary
estimates
Context 3–9
Components of Budget
Context 3–10
Budgeting Process
 Request and submission of budget proposals

 Examination of budget proposals
 Budget consultation
 Presentation and approval of budget
Context 3–11
Budgeting Process (cont.)
MINISTRIES/
STAKEHOLDERS AGENCIES/ STATES MINISTRY OF FINANCE PARLIAMENT
Call for budget

Prepare budget proposals
JAN proposals
Determination of
expenditure ceiling
MARCH Submission of Preliminary budget

budget proposals examination
APRIL
MAY Prepare
Call for memorandum
memorandum
Budget examination
JUNE Majlis Konsultasi Bajet

Submit memorandum
SEPT Gathering economic information and other

Deliberation and
input, finalizing and presentation of budget in
approval of budget
the Parliament
DEC Budget execution Issue warrant for expenditure
Context 3–12
Budgetary Control
 Budgetary control: the actions taken to ensure

that allocated budget is not exceeded
– Determine actual results
– Compare against budget
– Analyze variance
– Continuous process
– Remedial action.
 More than cost control

Context 3–13
Budgetary Control (cont.)
 Legislative control:
– the authority held by the members of the
Parliament over input and resources as stated in
the budget proposals
– ensures that the budgets are approved according
to the laws and regulations, as well as the
approved allocation to each department are
clearly specified.
Context 3–14
 Executive control
– exercised by the Treasury, controlling offices, and
other authoritative bodies
– ensures agencies’ spending and budget
execution are in accordance to the approved
purposes.
Context 3–15
Ensures
Context 3–16
 Fiscal accountability
– financial integrity and compliance with the
relevant rules and regulations
– entails financial sustainability
– concerns the economy/inputs/resources needed
– emphasise cost minimisation and the avoidance
of waste.
Context 3–17
 Management accountability
– the efficient and responsible management of
public resources.
– links utilisation of resources and the achievement
of objectives
– maximum outcome with minimal effort, costs, or
resources.
Context 3–18
 Programme accountability
– achievement of programme objectives and
impacts
– effectiveness
– quality of the impacts or how well the
programmes fulfil stakeholder’s needs and
expectations.
Context 3–19
 Mechanisms
– Budget examination, approval and
implementation
– Continuous reporting and monitoring
– Control over virement
– Public Account Committee
– National Audit Department
– Sistem Perancangan dan Kawalan Belanjawan
(eSPKB)
Context 3–20
Learning Outcomes
 Explain the significance of public sector budgets

 Understand the legal requirements
 Identify the budget components
 Explain the budgeting process
 Describe budgetary control mechanisms
Context 3–21
Summary
• Management tool
• Fiscal tool
Significance • Fiscal/management/
program accountability
• Federal Constitution
Legal
• Treasury Circulars
requirements • Treasury Instructions
Budget • National Revenue

components • National Expenditure • Request and submission of
budget proposals
• Examination of budget
Budgetary
proposals
process • Budget consultation
• Budget approval,
implementation, monitoring • Presentation and approval
Budgetary • Control over virement of budget
control • PAC
• Audit
• eSPKB
Context 3–22

CH 03

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CH 03

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3 Budgetary Processes

 Explain the significance of public sector budgets

 A budget is an organisation’s formal estimates

 Article 99(1) of the Federal Constitution defines

to be carried out during a

Sources to finance the activities

 Treasury Instructions 29-52: the responsibility of

 Federal Constitution, Article 100: approval of

 Request and submission of budget proposals

Call for budget

MARCH Submission of Preliminary budget

JUNE Majlis Konsultasi Bajet

SEPT Gathering economic information and other

DEC Budget execution Issue warrant for expenditure

 Budgetary control: the actions taken to ensure

 More than cost control

 Explain the significance of public sector budgets

Budget • National Revenue

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