FINANCIAL MANAGEMENT-

IN PUBLIC SECTOR ORGANIZATIONS

by SAFDAR SHAH

Ph. 03009549746.
 FINANCIAL MANAGEMENT
Which is related to deal all the financial activities.FM
means the operations designed to make funds available
to officials and to ensure their lawful and efficient use.
The principal parties involved are:-
– The executive bodies, which need funds
– The legislative bodies which alone can grant funds
– The executive offices that control the expenditures
of funds; and
– The auditing offices which determine the legibility
and propriety of the use of funds.
 Financial Management
Public Finance:-
Public means “Collection of people/belonging to the people
“Finance means money. It also signify money matters and
their management . Taken together the term means “money
matters pertaining to a state”.
The term “Public Finance” means income and expenditure
of public authorities. A sum of resources owned by and
available to public Sector organization/Government for
running its business.
Public authorities means:- Federal Government, Provincial
Government, District Government, Autonomous and
Corporate bodies.
Fiscal means Purse
Fiscal year means financial year
Exchequer means Treasury of a state or nation
 Operations of Public Finance
• Transfer of purchasing powers/delegation of
powers under the system of financial control
and budgeting to public authorities according
to a set procedure regarding:-
• goods,
• works and
• services
 WHY PUBLIC FINANCIAL
MANAGEMENT SYSTEM?

1. To generate Public Revenues/Receipts

2. To incur Public Sector Expenditures
3. To use budget formats for Financial
/Fiscal Year
4. To exercise control over system of
Accounting and Auditing processes
3 PILLARS OF STATE
1.Legislature
2.Executive, and
3.Judiciary
Government is the Executive charged with

1.Responsibility to maintain law and order

2.Provide security to its citizens (life and property)
3.Carry out socio-economic development
4.Preserve territorial integrity and sovereignty of the
state.
Public Financial Management in
Pakistan
Components of Financial Management System are as
under
Finance
Accounts
Audit
 LEGAL AND ADMINISTRATIVE
FRAMEWORK FOR PUBLIC FINANCIAL
MANAGEMENT IN PAKISTAN

8
 FINANCIAL ACTIVITY FEDERAL PROVINCIAL
GOVERNMENT GOVERNEMNT

Consolidated Fund and Public Account

78 118
Custody of Federal Consolidated Fund and Public
Account
79 119

Annual Budget Statement

80 120
Expenditure Charged upon Consolidated Fund
81 121
Procedure relating to Annual Budget Statement
82 122
Authentication of schedule of Authorised
expenditure
83 123

9
Supplementary excess grants
84 124

Votes on accounts
85 125

Power to authorise expenditure when

Assembly is dissolved
86 126

Secretariats of majlis-e-shoora (Parliament)

87 127

Finance Committees
88

1
0
 LEGAL PROVISIONS FOR FINANCIAL SYSTEM
LEVEL Legal provision
Federal Articles from 78 to 88
Government
Provincial Articles from 118 to 127
Government

Districts Sections 107 to 112

Local Government
Ordinance

11
Consitutional provisions
Articles
78 - 84
Financial Procedures

12
 Consolidated Fund / Public Account
78. (1) All revenues received by the Federal Government, all
loans raised by the Government, and all moneys received by it
in repayment of any loan, shall form part of a consolidated
fund, to be known as the Federal Consolidated Fund.
(2) All other moneys -
a) received by or on behalf of the Federal Government; or
b) received by or deposited with the Supreme Court or
any other court established under the authority of the
Federation;
shall be credited to the Public Account of the Federation.

13
• The Public Account consists of trust accounts and
special deposit accounts. Trust accounts are generally
separated legal entities, and as such expected to
produce financial statements. Examples of trust
accounts are:
• general provident funds
• insurance funds
• benevolent funds
• relief and welfare funds
• reserves
 79. The custody of the Federal Consolidated Fund, the
payment of moneys into that Fund, the withdrawal of
moneys there from, the custody of other moneys received
by or on behalf of the Federal Government, their payment
into, and withdrawal from, the Public Account of the
Federation, and all matters connected with or ancillary to
the matters aforesaid shall be regulated by Act of ‘[Majlis-
e-Shoora (Parliament)] or, until provision in that behalf is
so made, by rules made by the President. .

15
80. 80. (1) The Federal Government shall, in respect of every
financial year, cause to be laid before the National
Assembly a statement of the estimated receipts and
expenditure of the Federal Government for that year, in this
Part referred to as the Annual Budget Statement.
(2) The Annual Budget Statement shall show separately:-
a) The sums required to meet expenditure described by the
Constitution as expenditure charged upon the Federal
Consolidated Fund; and
b) The sums required to meet other expenditure proposed to
be made from the Federal Consolidated Fund;
and shall distinguish expenditure on revenue account from
other expenditure.

16
81. The following expenditure shall be expenditure charged
upon the Federal Consolidated Fund -
a) The remuneration payable to the President and other
expenditure relating to this office, and the remuneration
payable to:-

i) the Judges of the Supreme Court;

ii)the Chief Election Commissioner;
iii)
the Chairman and the Deputy Chairman;
iv)the Speaker and the Deputy Speaker of the
National Assembly;
v) the Auditor-General;
(contd…)

17
b) the administrative expenses, including the remuneration payable
to officers and servants, of the Supreme Court, the department of
the Auditor-General and the Office of the Chief Election
Commissioner and of the Election Commission and the
Secretariats of the Senate and the National Assembly;
c) all debt charges for which the Federal Government is liable,
including interest, sinking fund charges, the repayment or
amortisation of capital, and other expenditure in connection with
the raising of loans, and the service and redemption of debt on
the security of the Federal Consolidated Fund;
d) any sums required to satisfy any judgment, decree or award
against Pakistan by any court or tribunal; and
e) any other sums declared by the Constitution or by Act of [Majlis-
e-Shoora (Parliament)] to be so charged.

18
82. (1) So much of the Annual Budget Statement as relates
to expenditure charged upon the Federal Consolidated
Fund may be discussed in, but shall not be submitted to
the vote of, the National Assembly.
(2) So much of the Annual Budget Statement as relates to
other expenditure shall be submitted to the National
Assembly in the form of demands for grants, and the
Assembly shall have power to assent to, or to refuse to
assent to, any demand, or to assent to any demand subject
to a reduction of the amount specified therein:
(contd…..)

19
(3) Nodemand for a grant shall be made
except on the recommendation of the
Federal Government.

21
 83. (1) The Prime Minister shall authenticate by his
signature a schedule specifying -
a) the grants made or deemed to have been made by
the National Assembly under Article 82, and
b) the several sums required to meet the expenditure
charged upon the Federal Consolidated Fund but
not exceeding, in the case of any sum, the sum
shown in the statement previously laid before the
National Assembly.
(contd…..)

22
(2) the schedule so authenticated shall be laid before the
National Assembly, but shall not be open to discussion or
vote thereon.
(3) Subject to the Constitution, no expenditure from the
Federal Consolidated Fund shall be deemed to be duly
authorised unless it is specified in the schedule so
authenticated and such schedule is laid before the
National Assembly as required by clause (2).

23
84. If in respect of any financial year it is found -
a) that the amount authorized to be expended for a
particular service for the current financial year is
insufficient, or that a need has been arisen for
expenditure upon some new service not included in
the Annual Budget Statement for that year; or
b) that any money has been spent on any service during
a financial year in excess of the amount granted for
that service for that year;
(contd…..)

24
the Federal Government shall have power to authorize
expenditure from the Federal Consolidated Fund,
whether the expenditure is charged by the constitution
upon the Fund or not, and shall cause to be laid before
the National Assembly a Supplementary Budget
Statement or, as the case may be, an Excess Budget
Statement, setting out the amount of that expenditure,
and the provisions of Articles 80 to 83 shall apply to
those statements as they apply to the Annual Budget
Statement.

25
 Financial Management
Responsibilities of the Government
The Government of Pakistan plays a
central role in the economic and social
well beings of the nation .As a result the
people, the general public, as tax payers
and users of the public services have a
right to know of the financial implications
of policies and other actions of
Government that effect them.
National and Provincial Assemblies
• As a representative of the public expect
and demand that taxpayer’s money be
spent for the purpose, on the objects for
which it was provided and in accordance
with the rules/regulations and laid down
procedure of the government.
 Government Managers
• are responsible for delivering services
and other policy out comes, in
accordance with legislative
requirements. These managers should
expect to be held accountable for their
performance in delivering these out
comes.
Responsibilities of the Govt. Managers

 To protect the public purse –

 to protect against the loss, theft or misuse of public
money,
 to handle collection and disbursement of money
prudently and
 maintain safe custody of cash.
 public-to provide financial information that explain
how much funds have been allocated and employed
in social ,economic and other programs.
To safe guard the assets of the Government-
 to protect and maintain investments in the
infrastructure and other assets of the government
and
to properly dispose of assets no longer required.
to manage and control the Government’s financial
positions-
to manage and monitor existing public debt, and
ultimately strengthen the overall financial position of
the Government.
To be accountable to the public
 FINANCIAL CONTROL
• It is an integral part of financial
administration.
• Fiscal Management is based on
check & balance system in which control is
divided into public authorities i.e.
i) Administrative Control
ii) Assembly Control
iii) Control & Audit by the AGP.
• Administrative Control: it is exercised by the
executives through the MOF (Federal), FD
(Provincial) and EDOs in case of Districts.
• Parliamentary Control is exercised by the
Parliament / Assembly i.e. levying taxes and
authorization of funds.
• Control by Audit:- Independent control in the
system of Finance is embodied in the
functions of the AGP
 OBJECTIVES OF THE FINANCIAL CONTROL

• To ensure fidelity on the part of public

officials.
• To accomplish programmed targets at
minimum and in short possible time.
• To ensure that financial outlays are
programmed with in the available resources.
• To ensure proper accounting of all receipts /
assets and expenditure without loss or
leakage.
 GENERAL PRINCIPAL OF THE FINANCIAL
CONTROL
• Economy
Economy means getting full value
of money you are going to spend.
Regularity:-
means spending of money for the purpose and
on the object for which it was provided and in
the manner prescribed by Law.
* Funds are spent for the purpose for
which they are allocated.
* Funds are spent in accordance with
the relevant rules and regulations.
* Expenditure should not exceed the
budgetary limit.
STANDARDS OF FINANCIAL PROPRIETY
That expenditure is incurred with due regards
to high standards of financial propriety.
i) A public servant should exercise same
vigilance as a person of ordinary
prudence that he exercises for the
expenditure of his own money.
ii) That the expenditure is not prima-
facie more than the occasion demands.
iii) No authority should exercise its power
for sanctioning of expenditure or pass
order, which affects directly or indirectly
to his own advantage.

iv) Public moneys are not utilized for the

benefit of a particular person or a
section of the community unless it is:-
 In-significant
Claim of the amount can be enforced in a
court of law.
In pursuance of recognized policy or customs.

v) The amount of allowances granted

to meet expenditure of a particular type is
not a Source of Profit to the recipients.
ENFORCEMENT OF FINANCIAL CONTROL

It depends upon the system of Financial

Administration and cooperation and
involvement of the managers.
 INSTRUMENTS OF FINANCIAL CONTROL

• Annual Budget/ ADP/ Period Plans.

• Expenditure proposals and sanctions.
• Internal Audit and Reports.
• Maintenance of Accounts. (Receipt and
Expenditure)
• Post Audit and Audit Reports.
• Administrative reviews, Progress Reports etc.
 AGENTS OF THE FINANCIAL CONTROL

• Principal Accounting Officers

• Financial Advisors/Deputy Financial Advisors
• Finance & Accounts Officers.
• Controlling Officers.
• Drawing & Disbursing Officers
• Audit Officers
• Treasury Officers
 RESPONSIBLE AGENCIES
• Parliament
• MOF
• Administrative
Ministries/Departments.
• Audit.
 Accountability Cycle
The public sector auditing function is an
important element in the accountability cycle,
which has four elements:
 a) The legislature,

 b) The executive,

 c) The Auditor General, and

 d) The Public Accounts Committee PAC).

Financial Reporting and
Accounts keeping
• Accounting Terms/Concepts
 • Accounting Entity:-
Any unit of the Government i.e. Ministry,
Division and Department, whose
principal source of funding is an
appropriation from the Government of
Pakistan.
 Types of Accounting Entity
• Centralized Accounting Entity:- Any
Accounting Entity for whom the Accountant
General has primary responsibility for the
transaction processing, recording and
reporting functions of that entity.

• Self Accounting Entity:- An Accounting entity

for whom the PAO has primary responsibility
for Accounting and Reporting functions.
• Exempt Entity:- These include independent
entity and commercial undertaking and
entities established under a state resolution or
a notification of the Government or under
companies ordinance.
• Accounts Office:- The office which carrying out
the accounting work.

• Accounting Period:- The time period over

which financial information is reported (Year
or month).

• Accounting Record:- Any document upon

which accounting transactions are recorded or
any other document issued or used in the
preparation and processing of accounting
transactions.
• Annual Financial Statement:- A set of financial
reports, produced after the close of the
financial year by the AGP for Federal and
Provincial Government.
• Appropriation:- An allocation of funds to a
spending Ministry, Division and Department
on the basis of schedule of authorized
expenditure.
• Approval:- The permission given by an
authority or a delegated authority to
undertake a particular action such as incurring
expenditure.
• Assignment Account:- A Government bank
account established with the National Bank
of Pakistan to provide independent drawing
facility within the prescribed limitation.
• Audit Trail:- The capability to trace a
particular balance from the financial
statements down to its source documents.
• Cash Accounting:- A method of accounting
that records the cash payments and cash
receipts only.
• Cash Balance:- The amount held in a
particular bank account at any point in
time.
• Cash Flow:- The net movement in the cash
balance over a particular reporting period,
given by the sum of payments and receipts.
• Cash Flow Statement:- A financial report
provided to show the net movement in
cash over a particular reporting period,
showing how and where the cash has been
applied.
• Certification:- A process undertaken by the
account offices involving verification
(proper approval and validity) and audit
scrutiny against irregularities of a payment
prior to it being made (Pre-audit).
• Claim Voucher:- A document submitted by
the DDOs to the account offices containing
the particular of valid and duly approved
claim for payment against a nominated
budget head (Bill).
• Contingent Expenditure:_ All non-
development expenditure other than salary
and salary related expenditure.
• Delegated Authority:- An officer formally
empowered by the responsible authority to
perform a particular function.
• Excess:- An amount of expenditure exceeding
the approved budget.
• Expense:- Decrease in future economic
benefits in the form of reduction of assets or
increase liabilities of an entity.
• Out flow of Cash:- Arising as a result of
payments.
• Financial Year:- Commencing 1st July and
ending 30th June (12 months)
• Fund:- A pool of money set aside a used for an
intended purpose, as provided by legislation.
• Funds available:- A term used in budgetary
control.
• Grant:- Funding provided to Ministry or
Department through the schedule of
authorised expenditure.
• Imprest Account:- Petty cash system for making
small payments.
• Receipt voucher:- A form with which amount
collectable by the Government or deposited with
the bank. (Challans)
• Reconciliation:- A process of substantiating
recorded financial information against an
alternative source of data (Bank reconciliation,
Reconciliation between the account office and
spending department).
• Exchange Account:- A General Ledger account
through which transactions between centralized
accounting entities and self accounting entities of
the federal government are recorded.
• Settlement Account:- A General Ledger clearing
account through which cash transaction between
governments are recorded.
• Special Deposit Accounts:- Accounts comprising
of public accounts moneys that are operated
under the authority of M/O finance but are not
trust account.
• Surrender:- An amount included in the original
approved budget i.e. given back because it has
not or will not be spend in the finical year by
that entity.
• Suspense Accounts:- An account used if the
correct head to be debited or credited is
unable to be identified at the time of
transaction, which shall be cleared once the
correct head identified.
• Trust Account:- Legal Entity in its own right,
under the stewardship of the Government and
as such expected to produced financial
statements in their own name.
PUBLIC SECTOR ACCOUNTABILITY/
INSTITUTIONAL FRAME WORK
 Finance Division/Department
• The Finance Division in Federal Government and
Finance Departments in provincial Governments play
a key role in the accounting process
• so far as they are a key users of financial information
produced by the accounting system and in certain
cases are a source of input to the accounting system
(eg. Budget information, details of borrowings and
other liabilities).
• MOF regulates all financial aspects of Government incomes
and expenditures. Being a rule making authority in this
context, major financial rules are:-
a) GFR deal with detailed procedures for custody, withdrawal
and spending of public money. Regulation wing of Finance
Division is custodian of such rules.
b) FR&SR deal with financial eventualities relating to pay and
allowances of Government servants. Ownership of these rules
is also with Regulation wing of the Finance Division.
c) System of Financial control and Budgeting. This
document prescribes head-wise financial powers delegated to
the PAOs and HODs. Expenditure Wing of Finance Division is
custodian of this document which primary deals with
expenditure issues
d) FTR
• Treasury rules of the Federal Government,
primarily deals with the procedure which
should be followed in treasuries including
offices or agencies of state bank conducting
the cash business of treasuries. These rules
provide principles and important safeguards of
general applicability for the departments
which generally deal with the receipt ,custody
and disbursement of Government money
(regulation wing of the Finance Division is the
custodian of this document
• Public Procurement Regulatory Authority. It is
an autonomous body under cabinet Division and
custodian of PPRA Rules 2004 which provide
detailed procedure of procurements from the
public Fund.
• FBR the major revenues collecting authority of the
Federal Government which collects major taxes like
income and sale tax and other duties according to a
mandate given by the constitution. Customs and income
tax departments are since under administrative control
of FBR, all relevant executive and legislative initiatives
are managed by FBR in shape of Rules, Instructions and
Statuary Regulation Orders(SRO’s)
 Auditor-General
• The Auditor-General’s role and powers are
established in the Constitution of Pakistan 1973
(Articles 168 to 171) and defined further in the
Auditor General Ordinance 2001. While retaining
overall responsibility for the accounts of the
Federation and Provinces, this responsibility is
delegated to the Controller-General, in order to
maintain independence between the audit functions
and the accounting functions.
 Constitutional Mandate of
Auditor-General of Pakistan
Article 168:
Terms & Conditions of Service
Article 169:
Functions & Powers with respect to the Accounts of the
Federation, Provinces and bodies setup thereupon
Article 170:
Powers of AGP to give directions as to the format of
accounts
Article 171:
Reports of Auditor-General
65
AGP ORDINANCE 2001- SALIENT FEATURES
1.Replaces Audit and Accounts Order, 1973
2.Separates Accounts from Audit
3.Introduces Certification Audit
4.Highlights Audit of Receipts
5.Includes District Audit
6.Greater powers to call for accounting records

66
 Controller-General
• The Controller-General is responsible for matters of
accounting policy and procedure in relation to the
accounts of the Federation and Provinces, as
delegated by the Auditor-General. The Controller-
General is responsible for the overall operations of
the accounting offices within Pakistan Audit
Department and for the production of timely
financial reports of the Government and its
accounting entities.
1. CGA to prepare accounts of the Federation,
Provinces and the Districts on the formats and
timing prescribed by AGP
2. Make payments & withdrawals from
Consolidated Fund & Public Account on the
authority of Federal/Provincial Government
3. CGA to lay down principles governing internal
financial controls
4. CGA to assist in the resolution of audit
observations

68
 AGPR
AGPR is the department of CGA which keeps detailed
accounts of income into and expenditure from
federal Consolidated Fund/ Public Account. The
AGPR maintain liaison with State bank of Pakistan on
daily basis. On expenditure side , O/O the AGPR
exercises virtual control on withdrawal of public
money from the SBP on behalf of any Ministry/
Division/Department of the Federal Government
• The Accountant General Pakistan Revenue is
responsible for the centralized accounting and
reporting of Federal transactions. Additionally
the AGPR is responsible for the consolidation
of summarized financial information prepared
by Federal Self-Accounting Entities.
 The AGPR receives accounts and reports from the
sub-offices of the AGPR, district accounts officers,
principal accounting officers of self accounting
entities, federal treasuries and the State Bank of
Pakistan/National Bank of Pakistan. The AGPR, in
turn, provides annual accounts to the CGA.
 There are sub-offices of AGPR in each of the
provinces that act as the district accounts officers
in respect of federal government transactions.
 Accountant Generals
• The Accountant Generals are established in
each Province, and each reports to the
Controller-General of Pakistan. These officers
are responsible for the overall operations of
accounting offices within their jurisdiction
(e.g. in each Province), and deal with matters
of accounting policy and procedure in those
areas.
 District Accounts Offices
• Each Province is further divided into districts.
Each district contains its own District Accounts
Office (DAO). The DAOs are responsible for
processing all accounting transactions from
the various departments in that district. The
DAOs maintain records of payments and
receipts, for Federal and Provincial
transactions (in separate ledgers) and submit
consolidated monthly accounts to the
respective AGPR sub-office or AG office.
 Departmental Treasuries. Departmental
treasuries are established to record specific
accounting transactions such as income and sales
taxes and customs duties.
 Drawing and Disbursing Officer (DDOs). The
DDOs are responsible for the accounting, cash and
personnel functions of specific entities. They
submit bills for pre-audit to the district accounts
officers, and report to the district coordination
officers of each district. They also report to the
principal accounting officer of their entity.
 “DDO” means the officer who prepares estimates of
expenditure and actually incurs expenditure in respect of the
offices of which he is the Drawing and Disbursing Officer as
appointed by the respective Head of Office under his
administrative control; He reports to the Principal Accounting
Officer of his entity
‘DDO’ The head of the office or any other officer authorized or
declared by notification by the government under whose
signature the salaries of the employees, contingent and other
claims are submitted for drawl of payments from the public
fund and disbursed to the employees, vendors and
contractors
SPENDING DIVISIONS AND DEPARTMENTS

• Each spending division and department is

responsible for allocating their own budget
into the various controlling units, from the
Principal Accounting Officer down to each
drawing and disbursing officer (DDO). The
DDOs initiate accounting transactions (eg.
Purchase orders and claim vouchers) for
submission to PAD and maintain their own
accounting records and subsidiary registers
where appropriate, for departmental
requirements.
 Self-accounting entities
• Certain divisions and departments of
Government are established as ‘self-
accounting’ entities. These entities process
and record their own accounting transactions
and at the end of each month submit a report
to the respective AG/AGPR office.
 State Bank of Pakistan

• The State Bank of Pakistan is an autonomous body entrusted

with functions of the federal reserve bank. All moneys
credited to or withdrawn from federal Consolidated Fund and
Public accounts are credited to or withdrawn form SBP either
by itself or through NBP acting as agent of the SBP for
Government Transactions.
• The State Bank of Pakistan plays a critical role in the execution
of Government financial transactions. Branches of the State
Bank of Pakistan, along with the National Bank of Pakistan
acting as its agent, collects money and makes payments on
behalf of the Government, and maintains a number of
Government bank accounts.
• Principal Accounting Officers (PAOs).
Each ministry and department has a PAO. For
the self accounting entities, the PAOs have
been delegated authority to maintain their
own accounts. They provide monthly
accounting data to the AGPR and to the
Accountant Generals concerned.
 The Role of the PAO
1.The PAO in case of the Federal Government
Department is the Federal Secretary; in case of
Provincial Government Department, the Provincial
Secretary and in the district; the District Co-
ordination Officer (DCO)

2.PAO plays the pivotal role in the system and

process of Public Financial Management system of
Pakistan

80
3. Essentially, the main function of the PAO is the
proper management of the departmental “Grants;
Development & Non-Development” placed at
his/her disposal during the course of a particular
Financial Year

4. The PAO is expected to exercise adequate control

over the flow of expenditures/receipts during the
course of a Financial Year

81
5. The PAO is duty bound to ensure the propriety of
all departmental expenditures and to certify that
all departmental receipts are collected and
deposited in the government accounts in line
with the current instructions of the government
on the subject

6. The PAO is to ensure the “Reconciliation” of

departmental expenditures with the AG/DAO and
receipts with the Accounts of the NBP
82
7. The PAO is to maintain a proper set of
Accounts of the Expenditures and Receipts of
his/her department for each Financial Year;
and to have these Accounts audited by the
department of the Auditor-General of Pakistan
(AGP)
8. The PAO is to ensure the adequacy of “Internal
Controls” in the department so as to ovoid any
lapse in the Financial Management System and
processes of his/her department
83
9. The PAO is expected to attend to the
observations of the Department of the
Auditor-General of Pakistan as highlighted
by them in their Audit Reports

10.The PAO is to personally appear before the

Public Accounts Committee in their
meetings and to satisfy the Committee on
all issues relating the Accounts and Audit
Reports of his/her department; as
presented by the AGP

84
The Budget
Budget Preparation
Process in Pakistan

86
 Contents
1. Budget Definition and Functions

2.
2. Budget
BudgetCycle
Cycle

3.
3. Classification
Classificationof
ofBudget
Budget
4.
4. Budget
BudgetPreparation
Preparation
5.
5. Special
Special Budgetary
BudgetaryProcesses
Processes

6. Exercise

87
 Budget
A budget (from old French bougette, purse) is a
financial plan and a list of all planned expenses
and revenues. It is a plan for saving, borrowing
and spending.
In the public sector, the Budget is an instrument
by which the Government expresses its priorities
and allocates resources to implement its policies.
The budget allocates resources among project,
schemes and programmes, of varying degree of
importance, compete with each other for inclusion
in the national budget.

88
 BUDGET

IMF defines Budget

A statement of the projected revenues,
proposed expenditures, and planned financing
of any surplus or deficit of an entity, especially
government.
 Budget is a statement of receipts and
expenditure during a financial year of the
government and thus reflects the
government policies, priorities, financial
strategies and operational plans in financial
terms.

90
 Annual Budget statements
• Statement of the annual revenue receipt and
expenditure of the federal government, together
with all other receipts and disbursements arising
both in and outside Pakistan, prepared by the
Finance Division and presented to the legislatures as
required by the article 8 of the constitution is called
the Annual Budget Statement.
 CLASSIFICATION OF BUDGET
• A Budget can be classified into two areas.
• Non-development Budget
• Development Budget
 Non-development Budget

• The non-development budget caters to the

recurring costs of offices and service delivery. The
concerned Finance and Budget official is
responsible for the preparation of the non-
development budget which includes
establishment charges and other costs. The non-
development budget is prepared by functions
and by objects.
 Heads of Expenditure

Establishment charges
Purchase of durable Goods
Pre investment project analysis
Construction of work
Repair and Maintenance of durable goods
Commodities and services
Transfer payments
Investment
Loans and repayments
Miscellaneous expenditures
 Development Budget

The development budget caters to the

development needs of the Governments.
The funds are used for creation of new
assets or for improving existing ones. In
general the development funds are the
monies available after deducting all
recurring costs and liabilities.
• “Budget Year” or “Financial Year”
means the period from July 1st to
June 30, both days inclusive;
 Classification of expenditure

“Charged expenditure” means such items of

expenditure which are not subject to vote of the
Parliament. It comprises:-
(a) The remuneration payable to the president
and other expenditure relating to his office
(b) The remuneration payable to
The judges of the supreme court
The chief election commission
Chairman/Dy Chairman of Senate
The speaker/dy.,Speaker National Assembly
The AGP
 Charged expenditure

c) All administrative expenses and remunerations

payable to the officers and staff of above
organizations
(d) All debt charges for which federal government is
liable to pay.
(e) Sums required to justify any judgment decree, or
reward against Pakistan by any court or tribunal
(f) Sums required to pay loan to Provinces
(g Sums required for making grants in aid for the
revenues of the provinces
(h any other sum declared by the constitution or by act
of the parliament
 “Voted expenditure”
• means expenditure that is submitted to the
vote of the Parliament,
 Non-development expenditure
• refers to the on going administration
operations within a Ministry or Department in
fulfilling its policy objectives. These include
salaries and allowances of the officers and
staff. There are two types of non development
budgets.
• A) Permanent Budget:-
Previously approved non development
expenditures that are continuing. These include
permanent staffing establishment, traveling, fixed
allowances and contingent expenditure.
• B) Temporary Budget:-
New items of non-development expenditure
such as temporary addition to existing
establishments or continuing temporary items.
 Development Expenditure
Refers to activities that typically involves the construction
or improvement of infrastructure and other assets or the
development of human resources.
Any expenditure on development projects on new
construction, whether of entirely new works or additions
and alterations to existing works.
It also includes all repairs to newly purchased or
previously abandoned buildings or works required for
bringing them into use and means expenditure on
operations undertaken to maintain in proper condition
buildings and works in ordinary use;
• “Current Budget” means the sum of approved
estimates of the current expenditure for a
financial year;

• “Current expenditure” means expenditure

that is not development expenditure;
• “Demand for Grant” means the proposal
made to the Government for withdrawal of a
certain sum out of the government fund;
• “appropriation” means an allocation of funds to
an office on the basis of the Schedule of
Authorized Expenditure;
• “Re-appropriation” means the transfer of savings in
the appropriations of one or more units of
appropriations to meet excess expenditure
anticipated under another such unit;
• “Revised estimates” means the estimate of
the probable receipts or expenditure, for a
financial year, framed, in the course of that
year, with reference to the transactions
already recorded;
• “Schedule of Authorized Expenditure” means
the schedule prepared, after the approval by the
Parliament of the Annual Budget Statement or
Supplementary Budget in respect of a financial
year and authenticated by the PM;
• (Expenditure is deems to be duly
authenticated if :-
1. It has been specified in the schedule of
authorized expenditure.
2. The schedule has been signed by the P.M.
3. The schedule has been laid before the N.A.
(It is valid for that financial year only.)
• “Supplementary Budget Statement” means the
statement to be laid before the National
assembly showing the amount of the additional
expenditure estimated to be required during a
financial year, over and above the expenditure
already authorized, for that year;
• “Surrender” means an amount included in
the budget that is given back, as it shall not
be spent in the financial year by the office;
• Budget Classification.-

• The Budget shall be prepared in accordance

with Chart of Classification of accounts issued
by the Auditor General of Pakistan.

• The expenditure shall be classified into

Development or Current expenditure.
 FUND

• Fund – the pool of money from which

budgetary allocation is made (eg.
Consolidated Fund), and is further sub-
divided into grants.
 Importance of Budget

 Budget not a mere forecast of revenue and

expenditure but an important policy document

 It is a means of balancing revenues and

expenditures

 It reflects intentions of policy makers

 It is a system of accountability where legislature

holds executive accountable
114
 Importance of Budget

• “The budget system of the Government

provides the framework within which
decisions on resource allocation and
program management are made in relation
to the requirement of the Nation,
availability of the Federal resources,
effective financial control and
accountability for use of resources”.
 Budget Types

Balanced Budget
Surplus Budget
Deficit Budget

116
 Other Classification

Annual Budget Statement

Supplementary Budget Statement

Excess Budget Statement

117
 Grants
• Token supplementary Grant to open and operate
a new budget head

• Technical supplementary grant to transfer funds

from a grant where there is saving to a grant
which needs additional funds

• Regular supplementary grant when saving is

not available either through re-appropriation or
technical supplementary grant.
 Grants
• Allocation of funds and its execution as per
schedule of authorized expenditure
 Supplementary Grant
• ;- The Regular Supplementary Grant is
sanctioned when saving is not available either
through re-appropriation of funds from within
the same Grant/Demand
 Grants
Technical Supplementary Grant :-
• The Technical Supplementary Grant is
sanctioned to transfer funds from a
Grant/Demand as a result of accrual of saving
to another Grant/Demand. Which needs
provision of additional funds.
• Token Supplementary Grant :- The is
sanctioned to open and operate a new budget
head.(Rs.1000)
 Difference
• Technical Supplementary Grant does not
imply any additionality to the sanctioned
budget grant, whereas, the Regular
Supplementary Grant involves and upward
change in the sanctioned budget grant.
• All Supplementary Grants have to be
presented to the Parliament for ex-post
authorization.
• The funds obtained through Supplementary
Grants shall be expended for the purposes for
which these have been sanctioned.
• The last date for submission of Schedule of
Supplementary Grants/Technical
Supplementary Grants to the Finance Division
(Budget Wing) shall be 31st May of the
financial year.
 Budgetary procedure
Setting of Budget Policy and initiatives:- The
Cabinet meets at an early stage of the current
financial year to determine budget policy,
initiatives and priorities for the following year
budget. At this stage the broad economic
thrust of the budget will be determined in the
light of prevailing financial position of the govt.
and the planned size of the deficit or surplus. If
there is deficits, consideration is then given on
how it will be financed.
 Budget Overview

 One of the main activities of Ministry of

Finance is formulation of Federal
Government Budget.

 The budget year in Pakistan is from 1 st

July to 30th June.

 The process of budget formulation

starts at the lowest level of the
Government and is completed at the top
level after various checks and exercises.
125
 Budget Overview

 The original estimates are framed in

minute detail by the agencies and
departments.

 The estimates, as demanded by the

Administrative Ministries and Divisions, are
subject to detailed scrutiny by the Financial
Adviser organization and Ministry of
Finance.

126
 Government
Accounts

Federal Public
Consolidated Fund Account

Receipts Expenditure Receipts Disbursement

Revenue Capital Current Development

External
Tax
Resources

Direct Public
Debt etc.

Indirect

Non-Tax

127
 Method of Budgeting

Method used for budgeting by ministries and

departments will be determined by Finance
Div/Department.
Incremental
Zero based
Programme based

Budgets should be framed according to

planned outcomes and not inputs.
Medium Term Budgetary Framework

128
 Incremental Budgeting.
• In traditional approach of budgeting, the
managers start with last year's budget and add
to it (or subtract from it) according to
anticipated needs.
• This is an incremental approach to budgeting in
which the previous year's budget is taken for
granted as a baseline.
• This approach is called incremental budgeting.

129
 Zero-based budgeting
• Zero-based budgeting is an approach to
planning and decision-making which
reverses the working process of
traditional budgeting.
• By contrast to incremental budgeting , in
zero-based budgeting, every line item of
the budget must be approved, rather than
only changes.

130
 ...... Zero-based budgeting
• During the review process, no reference is
made to the previous level of expenditure.
Zero-based budgeting requires the budget
request be re-evaluated thoroughly,
starting from the zero-base.
• This process is independent on whether
the total budget or specific line items are
increasing or decreasing.

131
 Advantages of ZBB
• Efficient allocation of resources, as it is based
on needs and benefits rather than history.
• Drives managers to find cost effective ways to
improve operations.
• Detects inflated budgets.

132
 Advantages of ZBB
• Identifies and eliminates wasteful and
obsolete operations.
• It helps in identifying areas of wasteful
expenditure and, if desired, it can also be used
for suggesting alternative courses of action.

133
 Disadvantages of ZBB
• More time-consuming than incremental
budgeting.
• Justifying every line item can be problematic
for departments
• Requires specific training, due to increased
complexity vs. incremental budgeting.
• In a large organization, the amount of
information backing up the budgeting process
may be overwhelming.
134
 Executive Depts.
Cabinet Ministry of Finance,
CGA , EAD etc
Preparation
Auditor General Policy of Budget
National/Provincial Setting
PACs/Assemblies

Review of Authorization
Budget of Budget
Budget Cycle

National /Provincial
Assembly
Reporting Implementation
&
Monitoring of Budget

Executive Departments,
DAOs, AGs/AGPR, Ministry of Finance, FDs
CGA, Executive AGPR, AG, CGA etc
Departments
135
 STAGES OF BUDGET
Following are the seven stages of Budget :-
i) Preparation
ii) Compilation
iii) Authentication
iv) Execution
v) Monitoring
vi) Accounting
vii) Auditing

136
• Preparation:-
Based on the parameters set by finance
division, ministries then prepare and submit
their budgetary estimate through the financial
advisor. These officers coordinate the budgets
of the Ministry and its various Attached
Departments with the Finance Division.
• Authorization:-
This stage involves submission of the annual
budget statement before the national
assembly for approval as required under the
constitution. The approved budget referred to
as the schedule of authorized expenditure,
which is then authenticated by the P.M.
• Implementation:-
The next stage is the communication of
the approved budget to the spending
Ministries/Departments and the incurring of
expenditure of those entities in accordance
with the accounting policies and controls.
• Reporting and Monitoring:-
Throughout the year, expenditure and
receipts are progressively monitored against
budget estimates.
• Review:-
From time to time the government will
review actual expenditures and receipts and
the achievement of policy objectives. Where
necessary, supplementary and excess budget
may be prepared and authorized for major
changes to the annual budget.
Budget Preparation Forms , Guidelines and
Procedures for submission of B/Es and
R/Es
Integrated Budget Call Circular 2016-
17 ,dt.30th November 2015,
Government of KPK.
Form- BM 1,2, 6,9 and 20

142
Guidelines for filling of the column
a) Detail heads, Function Codes and Object Codes according to
COA.
b) Actual expenditures of the FY just closed i.e.2014-14
c) Sanctioned estimates of the current year i.e.2015-16
d) R/Es regarding Receipts and Modified Grant after surrender
pertaining to current FY i.e.2015-16
e) Proposed estimates of the next FY i.e.2016-17
f) Forecast for the year 2017-18 according to MTBF and future
requirements with in the limits of ceilings provided for these
year.
g) Forecast for the year 2018-19 according to MTBF and future
requirements with in the limits of ceilings provided for these
year.

144
 Form BM-2
1. Detail heads, Function Codes and Object Codes according to COA.
2. to be filled from Sanctioned Strength
3. to be filled from Sanctioned Strength
4. Actual expenditures of the FY just closed i.e.2014-14
5. Sanctioned estimates of the current year i.e.2015-16

6. R/Es i.e. Modified Grant after surrender pertaining to current FY i.e.2015-16

7. Proposed estimates of the next FY i.e.2016-17.( The salary budget may be picked from BM6)
8&9- next year for cost according to the BIC(Budget Indicative Ceiling)
10. B/Es i.e Budget allowed for the year 2014-14.
11. Actual expenditure for the year 2013-14
12. Actual expenditure for the year 2012-13
13. Actual expenditure for the last 8 months of FY2014-15( i.e.Nov.14-June 15)
14. actual for the 4 month of the current FY. i.e 2015-16 ( June-Sept 2015)
15. R/Es for the current Fyi.e.15-16
16. Proposal for the next FY.i.e 2016-17

146
K P K, Government -Departmental
Budget
 Non-development expenditure
• refers to the on going admn.
operations within a Ministry or
Department in fulfilling its policy
objectives. These include salaries
and allowances of the officers and
staff. There are two types of non
development budgets.
• A) Permanent Budget:- Previously approved
non development expenditures that are
continuing. These include permanent staffing
establishment, traveling, fixed allowances and
contingent expenditure.
• B) Temporary Budget:- New items of non-
development expenditure such as temporary
addition to existing establishments or
continuing temporary items.
 Development Expenditure
Refers to activities that
typically involves the
construction or improvement
of infrastructure and other
assets or the development of
human resources
 General classification of receipts
• Forecasts of revenues shall be prepared by
those entities responsible for administration
of those revenues, on the basis of expected
collection. This includes tax authorities such as
CBR (FBR) in the federal govt. and respective
excise and taxation departments in the
province.
Revenue Receipts – (Direct Taxes)

Income tax:- includes

personal and company
income taxes. It is regulated
under the income tax
ordinance 1979.
• Property and wealth tax:-
Includes taxes on wealth, Capital
Value Tax (CVT), and tax on
immoveable property and land-
regulated under the wealth tax
ordinance 1963.
Revenue receipts – (Indirect taxes)
Custom duty :- Includes custom
duty imposed on imports and
exports and custom related fines,
fees and penalties. These receipts
are normally recorded by the
custom treasuries.
Excises:- include federal and
provincial excise duties on a
range of products,
commodities and services. It is
regulated by the custom act
1969.
• Sales tax:- applies to goods
imported, exported or produced
in Pakistan. Specific procedure,
levies and exemptions in relation
to sales tax is regulated by the
sales tax act 1990.
• With Holding Tax:- On interest
earned in bank account shall be
deducted by bank, transferred to the
bank account. With holding tax
payable by the contractor is
deducted at source.- it is regulated
under income tax ordinance 1979
 Revenue Receipts – Other Income (non
taxes)
Income from trading enterprises:-
these includes proceeds of excess
wheat and other commodities,
recoveries, subsidies and receipts
from the sale/ privatization of
trading enterprises.
• Interest received:- At the
time of loan and advance
are repaid or upon
encashment of government
investments.
• Dividend received:- Dividend
received from any trading
enterprises in which a govt. is a
share holder – It forms as the
part of Federal Consolidated
fund.
Proceed from sale of stores and
assets:- It forms the part of federal
consolidated fund. where the initial
purchase was made from the
consolidated fund. if initial purchase
made from the public account, the
amount should be credited back to
the public account head.
Grants and Contribution
received:- Any grant or
contribution received by the govt.
which results in an inflow of cash
or cash equivalent is to be treated
as consolidated fund revenue.
Judicial receipts:- Refers to any fees,
fines or penalties levied by the civil and
criminal courts arising from the judicial
process. These receipts are distinguished
from judicial deposits (which are placed
into public account) and judicial stamp
duties which are classified under indirect
taxes.
 Capital Receipts
• Recoveries of Investment:- Refers to
recoveries made from various capital
works including drainage and
irrigation work. It also include
recoveries from investment in
financial institutions.
Recoveries of Loan and Advances:- Where
the govt. provides loans to provinces, local
bodies or other institutions, where govt.
servants take out advances such as HBA,
Motor vehicle Adv. The recoveries are also a
capital receipts and will be recognized when
repayments are made by salary deductions.
Public Debt:- Receipts arising
from all public debt including
internal and external borrowings
or placed into the consolidated
fund and called capital receipts.
 Budgeting Cycle

 Setting of budget policy and initiatives

 Preparation
 Authorisation
 Implementation
 Reporting and Monitoring
 Review

175
 Executive Depts.
Cabinet Ministry of Finance,
CGA , EAD etc
Preparation
Auditor General Policy of Budget
National/Provincial Setting
PACs/Assemblies

Review of Authorization
Budget of Budget
Budget Cycle

National /Provincial
Assembly
Reporting Implementation
&
Monitoring of Budget

Executive Departments,
DAOs, AGs/AGPR, Ministry of Finance, FDs
CGA, Executive AGPR, AG, CGA etc
Departments
176
Budget calendar

177
Responsibilities

178
Roles and Responsibility in
Ministries

179
 Responsibilities for Budgeting

Spending ministries to prepare budget estimates,

both for Expenditure and Receipts.
Estimates for Receipts are prepared by the
concerned collecting organizations like FBR,
Excise and Taxation etc
Those providing support in the budget process
include:
Planning Commission,
Economic Affairs Division and
the Accountant General.
180
 Responsibilities for Budgeting

 The original estimates are framed in

minute detail by the offices and
departments.

 The estimates, as demanded by the

Administrative Ministries and Divisions, are
subject to detailed scrutiny by the Financial
Adviser organization and Ministry of
Finance.

181
 Budget Classification
 Annual budget statement - Summary of the overall
budget position (revenue and expenditure)
 Schedule of Authorised  Expenditure
Expenditure  Current (Non- development)
covering ongoing administrative
 Detailed estimates -current operations
expenditure  Permanent (Part 1)-
 Detailed estimates - Development expenditure that has
Expenditure previously been approved
 Temporary (Part 2) - New
Item statement
 Receipts –  Development - New Item
 Federal Receipt budget prepared by FBR statement
(Direct/Indirect Taxes)  Must show separately
 Provincial receipt budget developed by • Other than charged
their respective Prov. Excise & Taxation • Charged
Departments • Expenditure on Revenue A/C
 Non-Tax by concerned Ministries/Depts • Expenditure on Capital A/C
182
Key Controls to the Budgeting Process

Estimates must be reviewed, approved and

signed off by the Financial Advisor before it is
submitted to the Finance Div/ Department.
Estimates and supporting schedules be
prepared in a prescribed format.
Budgets must be authorised by the
National/Prov. Assembly.

183
Key Controls to the Budgeting Process

Authorised budgets must be communicated to

the A/c Offices.
Finance Div/Dept must communicate the
authorized budgets to the spending DDOs
through the system
PAO for each entity must monitor actual
transactions against budget.

184
 Preparation of Non - Development
Budget

For Permanent Budget, to form basis for the

following year budget estimates, Revised
Estimates must be prepared for the current
financial year

185
 Revised Estimates….. Contd.
 Where revised budget exceeds Approved grant, the
ministry or dept must indicate:
how excess is proposed to be met (through
supplementary grant or re-appropriation) and
the delegated authority who authorised the
increase.
 Where revised budget is less than Approved grant by
more than 5%,
(an explanation of the saving must be provided by
the ministry or department)

186
 Revised Budget Estimates
Major Detailed Original Modified Actual For Actual for Total of Anticipated total Surrender Excess Revised
Object Object and Appropriation grant of the last 4 the last 8 Column Expenditure of estimates
Description of the current the current months of months of 5 & 6 the current adopted by
FY FY the current the year just financial year the Finance
financial year closed (Revised Department
Estimates) ©

1 2 3 4 5 6 7 8 9 10 11

187
 Estimates for Pay
1 2 3 4 5 6

Name & Ref. to Amount of Total

Increment falling due within
Designati Page of Sanctioned Pay of the Post provision Provision
the Financial Year
on Estimate for the of Pay for
Form Minimum Maximum Present coming Rate No. of Amount the next
(a) (b) (c) financial (a) Months © year i.e.
year at (b) (a x b) total of
the rate in Columns
column 3 4&5©
(c)

188
 Preparation of Non - Development
Budget - Contd.
Budget estimates for the next financial year are
prepared for each detailed head (detailed function and
object within each unit of appropriation).

For permanent budgets, following information are

provided at detailed head level:
actual for the last financial year and budget variances
budget estimate for the current financial year
revised estimate for the current financial year
budget estimate for the forthcoming financial year.

189
 Preparation of Non - Development Budget -
Contd.

Other relevant factors are considered in

developing estimate for next year’s budget. i.e.
Adjustments for expected inflation as provided, and
increase in salary costs
Known deferred liabilities, recorded on Liabilities
Register, for next year
Anticipated savings arising from productivity gains
and reduction or termination of specific programs.

190
 BASIC DOCUMENTS
TO BE KEPT IN VIEW
FOR COMPILATION OF BUDGET

• BUDGET ORDER (BO)

• NEW ITEM STATEMENT (NIS)

191
 Annex-III
FORMAT FOR BUDGET ORDER / NEW ITEM STATEMENT

Note: Shaded Portions are to be filled in only by Budget Wing

of Ministry of Finance

Government of Pakistan

Ministry

Division

Department

No. Islamabad, the

From: _________________

To: _________________

Contd…. 192
1 Budget Year 2008 - 2009

2 Type of Document    

(Tick the Box Applicable) BO Addl. BO NIS Addl. NIS

Fund
3 Fund Information : Demand No. Fund Code Description

Code Description

4 Attached Department/
Sub-Detailed Function

5 Fund Center (DDO Code)/Project Name

(Development Scheme)

6 Circle

7 Notes (if any)

Contd….
193
 TO BE FILLED IN ONLY BY BUDGET WING (MoF)

Document with Multiple DDOs/Departments  (Tick the box where applicable)

New Diary No.

Old Diary No.

Checked By (Name)

Entered By (Name)

Contd….
194
 Revised Estimates Budget Estimates
2006-2007 2007-2008

8 Function Code Function Description Billion Million Thousand Hundred Billion Million Thousand Hundred

000 000

Revised Estimates Budget Estimates

Commitment Item 2006-2007 2007-2008 Fund
No. of Center
9 Object Code (Object Classification) Billion Million Thousand Hundred Billion Million Thousand Hundred Posts Code

A 000 000

A 000 000

A 000 000

A 000 000

A 000 000

Contd….

195
 A 000 000

A 000 000

A 000 000

A 000 000

10 Total Provision (Gross) 000 000

11 Foreign Exchange 000 000

(i) Foreign Aid 000 000

(ii) Own Resources 000 000

12 Local Currency 000 000

(……………………..)
Name & Designation
Tele. No.
196
 Annex-III
FORMAT FOR BUDGET ORDER / NEW ITEM STATEMENT

Note: Shaded Portions are to be filled in only by Budget Wing

of Ministry of Finance

Government of Pakistan

Ministry Ministry of Health

Health Division
Division

Department Mother & Child Health (WPF), Karachi

No. F.1-18/2006-Budget Islamabad, the 17th February, 2007

From: Section Officer, Ministry of Health, Islamabad.

To: Ministry of Finance, Islamabad.
Contd…. 197
1 Budget Year 2008 - 2009

2 Type of Document    

(Tick the Box Applicable) BO Addl. BO NIS Addl. NIS

Fund
Demand No. Fund Code Description
3 Fund Information : 55 FC21H01 Health Division

Code Description

4 Attached Department/ DCHE

Sub-Detailed Function 073301 Mother & Child Health

Fund Center (DDO Code)/Project Name

5 (Development Scheme) KA0177 Mother & Child Health (WPF) Karachi

6 Circle AGPR Sub-Office, Karachi

7 Notes (if any)

Contd…. 198
 TO BE FILLED IN ONLY BY BUDGET WING (MoF)

Document with Multiple DDOs/Departments  (Tick the box where applicable)

New Diary No. 10160

Old Diary No.

Checked By (Name) Khalid Mahmood

Entered By (Name) Imran Ali

Contd….
199
 Revised Estimates Budget Estimates
2006-2007 2007-2008

Billi Milli Thou Hun Billi Milli Thou Hun

8 Function Code Function Description on on sand dred on on sand dred

0 7 Health 1 157 000 994 000

0 7 3 Hospital Services 1 157 000 994 000

Medical & Maternity
0 7 3 3 Centre Services 1 157 000 994 000

0 7 3 3 0 1 Mother & Child Health 1 157 000 994 000

Revised Estimates Budget Estimates

2006-2007 2007-2008
Fund
Commitment Item Billi Milli Thou Hun Billi Milli Thou Hun No. of Center
9 Object Code (Object Classification) on on sand dred on on sand dred Posts Code

A Expenditure 1 157 000 994 000

A 0 1 Empl. Related Exp. 633 000 626 000

A 0 1 1 Pay 319 000 319 000 4

A 0 1 1 - 2 Pay of Other Staff 319 000 319 000

A 0 1 1 5 1 Basic Pay 319 000 319 000 4

A 0 1 2 Allowances 314 000 307 000

A 0 1 2 0 1 Regular Allowances 223 000 257 000

A 0 1 2 0 2 House Rent All. 60 000 60 000

A 0 1 2 0 3 Conveyance All. 26 000 26 000

A 0 1 2 0 5 Dearness Allowance -- 000 48 000

A 0 1 2 0 9 Spl. Addl. Allowance 21 000 21 000

200
Contd….
 Revised Estimates Budget Estimates
2006-2007 2007-2008

Fund
Commitment Item Billi Milli Thous Hund Billi Milli Thous Hund No. of
Center
9 Object Code (Object Classification) on on and red on on and red Posts Code

A 0 1 2 1 7 Medical Allowance 20 000 20 000

A 0 1 2 7 0 Others 96 000 82 000

A 0 1 2 - 2 Other Allowances 91 000 50 000

A 0 1 2 7 1 Overtime Allowance 8 000 8 000

A 0 1 2 7 3 Honorarium 8 000 1 000

A 0 1 2 7 4 Medical Charges 40 000 40 000

A 0 1 2 7 7 Contingent Paid Staff 35 000 1 000

A 0 3 Operating Expenses 327 000 325 000

A 0 3 2 Communication 36 000 41 000

A 0 3 2 0 1 Postage & Telegraph 4 000 4 000

A 0 3 2 0 2 Tele & Trunk Calls 30 000 35 000

A 0 3 2 0 5 Pilot & Courier Service 2 000 2 000

A 0 3 3 Utilities 58 000 58 000

A 0 3 3 0 1 Gas 8 000 8 000

A 0 3 3 0 3 Electricity 50 000 50 000

A 0 3 4 Occupancy Costs 117 000 120 000

A 0 3 4 0 3 Rent of Residential Buil. 117 000 120 000

A 0 3 8 Travel & Transportation 86 000 Contd….

81 000 201
 A 0 3 8 0 5 Traveling Allowance 40 000 30 000

A 0 3 8 0 7 POL Charges 36 000 35 000

A 0 3 8 0 8 Conveyance Charges 16 000 16 000

A 0 3 9 General 30 000 25 000

A 0 3 9 0 1 Stationery 15 000 10 000

A 0 3 9 7 0 Others 15 000 15 000

A 0 9 Physical Assets 150 000 3 000

A 0 9 6 Purch. of Plant & Mach. 150 000 3 000

A 0 9 6 0 1 Purch. of Plant & Mach. 150 000 3 000

A 1 3 Repair/Maintenance 47 000 40 000

A 1 3 0 0 1 Transport 30 000 30 000

A 1 3 1 0 1 Machinery & Equip. 17 000 10 000

10 Total Provision (Gross) 1 157 000 994 000

11 Foreign Exchange 000 000

(i) Foreign Aid 000 000

(ii) Own Resources 000 000

12 Local Currency 1 157 000 994 000

Verified
Sd/-
Sd/- (XYZ)
(ABC) Section Officer
Dy. Financial Adviser Tele. No. 9207123 202
(Health)
 OBJECT
CLASSIFICATION

Major = 14
Minor = 64
Detailed & Sub-Detailed = 483
203
A01 Employee Related Expenses
A011 Pay
A011-1 Pay of Officers (A01101-50)
A01101 Basic Pay
A01102 Personal Pay
A01103 Special Pay
A01104 Technical Pay
A01105 Qualification Pay
A01106 Pay of Contract Staff
A01107 Index Pay
A01108 Pay of Shaheed Police Officers
A01109 Command Pay
A01150 Others
A011-2 Pay of Other Staff (A01151-99)
A01151 Basic Pay
A01152 Personal Pay
A01153 Special Pay
A01154 Good Conduct Pay
A01155 Qualification Pay
A01156 Pay of Contract Staff
A01157 Index Pay
A01158 Pay of Shaheed Police Officials
A01170 Others
A012 Allowances
A012-1 Regular Allowance (A01201-70)
204
A01201 Senior Post Allowance
A01202 House rent Allowance
A01203 Conveyance Allowance
A01204 Sumptuary Allowance
A01205 Dearness Allowance
A01206 Local Compensatory Allowance
A01207 Washing Allowance
A01208 Dress Allowance
A01209 Special Additional Allowance
A01210 Risk Allowance
A01211 Hill Allowance
A01212 Telecommunication Allowance
A01213 Expatriation Allowance
A01214 Postal Operation Allowance
A01215 Extra Departmental Employees
Allowance
A01216 Qualification Allowance
A01217 Medical Allowance
A01218 Fixed Contingent/Stationary
Allowance
A01219 Foreign Allowance
A01220 Language Allowance
A01221 Accreditation Allowance
A01222 Hardship Allowance
A01223 Exchange Compensation Allowance
A01224 Entertainment Allowance 205
A01225 Instructional Allowance
A01226 Computer Allowance
A01227 Project Allowance
A01228 Orderly Allowance
A01229 special Compensation Allowance
A01230 Dusting Allowance
A01231 Drinking Water Allowance
A01232 Performance Evaluation Allowance
A01233 Unattractive Area Allowance
A01234 Training Allowance
A01235 Secretariat Allowance
A01236 Deputation Allowance
A01237 Design Allowance
A01238 Charge Allowance
A01239 Special Allowance
A01240 Utility Allowance for Gas
A01241 Utility Allowance of Electricity
A01242 Consolidation Traveling Allowance
A01243 Special Traveling Allowance
A01244 Adhoc Relief
A01245 Indexed House Rent Allowance
A01246 Indexed Conveyance Allowance
A01247 NAB Allowance
A01248 Judicial Allowance
A01249 Utility Allowance to
Ministers/Ministers of State
A01250 Incentive Allowance 206
 A01251 Mess Allowance
A01252 Non Practicing Allowance
A01253 Science Teaching Allowance
A01254 Anesthesia Allowance
A01255 Hostel Superintendent Allowance
A01256 Special Adhoc Relief Allowance
A01257 RC Allowance
A01258 Prime Minister's Secretariat
Allowance
A01259 Fuel Allowance
A01260 Ration Allowance
A01261 Constabulary Allowance
A01262 Special Relief Allowance
A01263 Research Allowance
A01264 Technical Allowance
A01265 Cash Handling Allowance
A01266 Disturbance Allowance
A01267 Warden / Boarding House
Allowance
A01268 Cost Of living Allowance
A01269 Basic Science Allowance
A01270 Other
A012-2 Other Allowances (Excluding TA)(A01271-
99)
A01271 Overtime Allowance
A01272 Night Duty Allowance 207
A01273 Honoraria
 A01275 Rest and Recreation Allowance
A01276 Outfit Allowance
A01277 Contingent Paid Staff
A01278 Leave Salary
A01279 Extra Duty Allowance
A01280 Out Station Allowance
A01281 Danger Money Allowance
A01282 Session Allowance
A01283 Field Allowance
A01284 Firewood Allowance
A01285 Motor Cycle Maintenance Allowance
A01286 Suspension Allowance
A01287 Land Revenue Collector's Allowance
A01299 Others
A02 Project Pre-Investment Analysis
A021 Feasibility Studies
A02101 Government Based Feasibility
Studies
A02102 Consultant Based Feasibility Studies
A022 Research and Services and Exploratory
Operation
A02201 Government Based Research and
Surveys
A02202 Government based Exploratory
Operation
A02203 Consultant based Research and 208
Surveys
 A03101 Bank Fees
A03102 Legal Fees
A032 Communications
A03201 Postage and telegraph
A03202 Telephone and Trunk Call
A03203 Telex, Tele printer and Fax
A03204 Electronic communication
A03205 courier and Pilot Service
A03270 Others
A033 Utilities
A03301 Gas
A03302 Water
A03303 Electricity
A03304 Hot and Cold Weather Charges
A03370 Others
A034 Occupancy Costs
A03401 Charges
A03402 Rent for Office Building
A03403 Rent for Residential Building
A03404 Rent for Other Building
A03405 Rent for Other than Building
A03406 Royalties
A03407 Rates and Taxes
A03408 Rent of Machine and Equipment
A03409 Insurance
209
 Preparation of Development Budget

PM GUidelines
 Estimates should only be prepared for projects
approved in accordance with these procedures.
 Estimates of development expenditure for each
project/scheme must be furnished to the Financial
Advisor.

210
211
 Preparation of Development
Budget….Contd.

 The level at which development budgets will

be submitted is as follows:
development grant and scheme (project)
within each grant
at detailed function and object level (for those
heads pertaining to project expenditures) (as
against one liner)

212
 Preparation of Development Budget – contd.

 Local Currency component shown separately

from Foreign Currency component.
 Once satisfied with these estimates:
Financial Advisor must obtain approval from the
PAO, who will sign off the budgets.
Subsequently the Estimates of Dev. expenditure
must be submitted to the Budget Wing of the
Finance Div/ Dept, in the form of a New Item
Statement (NIS).

213
 Preparation of Development Budget -
Contd.

A number of review processes must be initiated

to after submission to the Finance Div/ Dept
Priorities Committee
Annual Plan Coordination Committee (APCC)
Establish the available resources for Dev.
Expenditure, and
Examine demands of individual projects.

214
 Preparation of Development
Budget - Contd.

Review of each project is made in light of

following factors:
 Overall resource position (resources available
from the Budget to finance the Annual
Development Program)
 Sectoral priorities
 Phasing of projects
 Status of projects
 Availability of foreign aid
 Likelihood of completion in the forthcoming
financial year
215
Preparation of Receipt Estimates
Authorities required to submit receipt
estimates are:
CBR and the respective Excise and Taxation
Departments - for direct and indirect tax receipts,
Economic Affairs Division - for foreign aid
receipts; and
 Administrative ministries and departments - for
other receipts.

216
 Consolidation of Budget data

 Preparation and Submission of Demands for Grants by

the concerned Ministries/Departments.

 Review of Demands by Finance Div/Dept in light of the

Budget Policy

 Consolidation of Demands and preparation of Annual

Budget Statement
 Preparation of Annual Schedule of Authorised
Expenditure

217
 Reporting and Monitoring

 PAO of each spending entity is responsible for

controlling expenditure

 At transaction level, DDOs must ensure claims

for payment are properly prepared and duly
approved, as per the Schedule of Authorised
Expenditure, classified, and recorded according
to the rules and procedures for expenditures.

218
 Reporting and Monitoring…
Contd.

No transaction exceeding the value of

available funds can be passed for payment
PAO in each spending entity, must submit
a Budgetary Control Statement of excesses
and surrenders to the Finance Div/Dept at
prescribed dates, and in the format set out.
Budget Execution Reports
219
 Review-Appropriation Accounts

 An annual statement of expenditures against

budget referred to as the Annual Appropriation
Accounts, is prepared and published by the
AGPR and respective provincial AGs.

 All self-accounting entities prepare and publish

their own Annual Appropriation Accounts, duly
certified by the DG’s of Audit.

220
 Review-Audit

 Review process also includes auditing function,

which may be both external (i.e. by DAGP) and
internal (by ministry or dept. itself)

 Public Accounts Committee investigate those cases

in which a ministry or dept has incurred a material
deviation from budget and make recommendations
to the National/Provincial Assembly.

Information and feedback obtained from above review

processes will be used in developing next year’s
budget, thus completing budgetary cycle.

221
 Appropriation Accounts
This report must provide, for the whole
financial year just completed:
A comparison of actual expenditure with Final
Grant.
Comparison of actual expenditure with previous
year actual
Information will be provided for each grant, down
to minor unction and object level.
Results of discussion on Appropriation Accounts

222
 Supplementary Budget Statement
Supplementary Grant
Token Supplementary/Technical
Supplementary Grant
Same Presentation
Same Authorization Process
Prepared during the currency of the
respective Financial Year

223
 Excess Budget Statement
Prepares after discussion of the
Appropriation Account in the
PAC/Assembly
Same Presentation
Same Authorization Process
Prepared after the year to which the
Expenditure actually pertains

224
 Special Budgetary Processes

Centrally provided for expenditures

The following expenditures shall be centrally provided

for by the AG under instructions issued by the Govt:
Expenditure on pensions
GP fund expenditures
Loans and advances
Interest on miscellaneous debts.

These estimates are to be submitted to the Finance

Div/Dept by the prescribed date for inclusion in the Annual
Budget Statement
225
 Points to remember for Budget
Preparation
 Be prepared:
Brainstorm about Expenditure item
Fixed items like Salaries, Allowances etc
Variable Items like, Contingencies, TA/DA, Medial
Reimbursement Charges
Think about possible and legal sources of revenue
 Be resourceful
Collect as much information as you can
Previous Years’ data
Discussion with relevant people
 Be Consistent
 Be Conservative
226
Any Q
THANK YOU