Budget Development and Management within Departments

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As a compulsory best practice, agencies and departments in any business enterprise must manage their annual appropriation. This is important in order to be able to deliver products and services efficiently, in compliance with government regulations. Therefore, departments must possess a sound budget management and development system. Additionally, there will be need for best practices to integrate internal budgets with business processes.

In addition to this, according to the Audit Act 1994, Section 16AB business enterprises must submit a report of their audit to the parliament. In order to ensure compliance with this, the government sector has two recommended budgeting processes. These include:

  • State Budget Process: This requires the government’s estimate of expenditure and revenue for the entire budget year, combined together. This process is also known as the “External Budget” and offers appropriations to departments to encourage delivery of products and services.
  • Internal Budget Process: This is best described as a “Departmental Budget Setting Process”. It is an important best practice, included in the department’s financial management system. It is important for business planning, performance management and resource allocation.

State Budget Process:

This process is hinged on the submission of budget tenders or bids. These bids are submitted to the government by the budget development department of the organization. This is a two step process:

Step 1: The best practice of updating forward estimates every November in order to input it in budget planning. As part of best practices, the treasury and finance department must seek information to assist with the process.

Step 2: The treasury and finance department must present a brief to the government about its output (products and services). It must also include assets in the reports. This will facilitate the government to consult with special interest groups and broader communities before concluding its stand on the proposed budget.

The final decision is dependent on cabinet approval, which depends on annual state budget and departmental budgets.

Internal Budget Process

When an audit department focuses on internal budgeting, it must focus on the level of training and education of employees. In addition to these business best practices, auditors must focus on the following:

  1. Integrate business planning and internal budgeting process
  2. Develop and manage the internal budget
  3. Monitor and review budget performance

Recommended Best Practices

Here are some recommendations for budget development and Management within departments:

  1. The training and infrastructure department must ensure the following best practices.
  • Align internal budgets with output delivery cost targets.
  • Modify financial management systems and information best practices so that they show budget and actual outcomes against output delivery targets.
  1. The department responsible for training employees must whether budget centers are performing responsibly. This involves the best practice of assessing cost of maintenance and accountability of the budget centers.
  2. The advisor budget management system must meet the requirements outlined by managers.
  3. There must be a benchmark for internal budget to guide development processes. This best practice will enhance efficiency or a wide range of departmental processes.
  4. The infrastructure of the department must review variations between budget estimates and actual results mentioned in the annual budget report.

Conclusively, compliance with these practices involved in budget development and management within departments, is compulsory for a professional business setup.

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