Generally, RIAs have some common roles to play. They provide a systematic and detailed impact of the change the government wishes to bring through some change or introduction of new policy. However, quite often they may also be prepared to analyze the impact of an already implemented policy. This may be done to see if the policy should still be kept or some changes should be brought. This is done because the market conditions keep on changing due to which a decision may not be as useful as it was when it was taken.

RIAs highlight if the regulatory change wish to be brought or already brought may help the government achieve its objectives.

There is dire need for RIAs simply because decision making is not easy and involves several complex steps. Since government regulations have a huge impact on individuals and the nation as a whole, decisions cannot be taken in a hurry without proper care. A decision has several impacts that are not very easy to foresee before a decision is implemented. This is why this mythological approach is necessary.

The government measures the impact a change may bring and prepared RIAs so that in the light of them decisions may be taken. This assessment may be done in various ways. Generally, a systematic approach is used where everything is measured properly keeping in mind the present and future scenarios.

In a nutshell, the main purpose of RIAs is to make sure that regulations are welfare-enhancing. They are often conducted to compare two or more options that one may have so that it becomes easier to choose one path keeping in mind the advantages each has. The option that minimizes the costs and gives the highest benefits is normally chosen.

Conducting analysis and preparing RIAs is considered a best practice. When one looks at it RIAs are not only useful in government projects but every other project. It is an important tool of policy-based decision making.

It is important to run an analysis and see all the impacts that a decision may have – both positives and negatives. It is important to make sure that the positives overpower the negatives at the end of the day so that the decision proves to be beneficial.

If such a scenario is not achieved then it is better to not implement the change. Yet, if it is mandatory one can bring some changes to the policy and analyze the situation once again to see if the change will result in something better.

Looking at the scope of RIAs, many countries have adapted it in recent times. Generally, it consists of six parts (Canada). They are:

-   Description

-   Alternatives

-   Benefits and Costs

-   Consultation

-   Compliance and Enforcement

-   Contact

Each part highlights a specific section. First, the project is described and then alternatives are presented in which benefits and costs of each alternative are highlighted. All these points help decision makers compare the alternatives so that they can easily select the one that gives the maximum output within minimum input.

Government compliance is necessary for avoiding audits and investigations that are uncalled for. Federal agencies ensure that government data regarding fiscal policies etc stays protected and companies who fail to keep their noses out of the way have to suffer their due diligence.

Best practice actions vary according to the type of circumstance the government may be in. This includes deficits and surpluses. Planning of conformity rules is done in accordance to their outcomes in the previous fiscal years with close monetary evaluation of every concerning aspect.

There are certain factors that determine the budget formation of a government in lieu of best practices.

GDP

The Gross Domestic Product used to measure the prosperity of a government should be kept at a stable level. This will guarantee the government’s safety in economic terms.

Employment Status

The government should be able to reduce the level of unemployment in a country providing enough capacity to hire needy persons.

Taxes

Policies regarding tax collection and imposition should be accounted for as they form a major part of the GDP every year.

Food Reserves

The government should have enough supply of nutritious food for its people in case of natural disasters or emergencies. This surplus food storage should be separated from the supplies intended for daily use.

Individual Health

The government must also ensure that its people are getting adequate medical treatments which follow the rules and regulations listed by the department of Health and Human Services (HHS).

Education and Labor

The labor getting their due share in wages and work hours with proper education regarding their work is also the government’s responsibility. Ensuring that organizations are complying to the standards set by federal agencies is a key element in boosting a country’s economy.

Compliance to a fixed budget is necessary for countries, organizations and even small businesses because it determines their rate of profit and growth. An ideal budget is basically designed in way to bring maximum revenue to a country or organization whilst reducing the chances of deficits. The aim is to generate enough revenue that could be used to aid people or the industry in times of financial downturn.

Government budgets are comprised of the following policies:

Fiscal Policies

These involve the analysis of policies associated with

• Tax
• Revenue
• Spending
• Debts
• Surplus values
• Funding of the ministry of finance

Monetary Policies

Monetary policies involve a careful analysis of

• Supply of money within and outside the country
• Interest rates
• Bank reserves- for attaining information on the aspects of spending and loaning
• Gold reserves- which are used for international monetary exchanges for countries not trading with the Dollar
• The state bank

Trade Policies

Trade policies involve

• The balance of trade- imports and exports having the same levels of trade
• Creating trade opportunities
• Keeping up with the trade bloc of the region
• The limits on free trade
• Diversion of trade
• Protection of trade rights- this includes exporters and importers

Spending and Cash flow

This involves analysis of the cash flow taking place within and outside the country. Determining the validation of spending money can give an idea of which spending is necessary and which is avoidable.

1. Formalizing Duties and Functions

There is need to formalize and announce the appointment of voted directors on the board. Their duties and roles must be presented in writing to ensure compliance.

2. Reform the Structure of the Board

This will add more value to the effectiveness of the board. The size and level of commitment influences compliance with responsibilities. Moreover, the directors and the chairperson should be independent. This is important because it increases efficiency. Most importantly, the chairperson and CEO must not be the same individual. They must be separate offices, with defined duties. Ideally, the board should also have an established nomination committee.

3. Responsible and Ethical Management

Important best practices must be complied with to manage the organization. This requires agreement with Code of Conduct. There are other necessary practices needed in order to maintain customer confidence in the company. Though responsible and ethical management can be achieved through investigation and reporting. Reporting must be done in compliance with standard formats. Besides, directors, officers and employees must be informed about trading policies and securities involved.

4. Financial Reporting Protocols

There must be an established audit committee that provides data for reporting. CEO’s and Chairmen should be able to certify that the information is valid. The protocols required for generating these reports must involve reporting best practices.

5. Timely Disclosure of Information

Important matters and information regarding the company must be disclosed ONLY to people concerned. Timely disclosures are important because they ensure conformity with established policies.

6. Respect Rights

Stakeholders have rights that must be respected. They must be encouraged to take an active part in general meetings and other activities. Likewise, external auditors should also attend the meetings to answer questions related to audit reports.

7. Risk Management

There must be a strong system to oversee risk management. This involves identifying risks and implementing compliance with internal controls. Policies about risk management must be reviewed regularly. All these must be put into writing and disclosed to employees, officers and stakeholders.

8. Standards for Performance Evaluation

The organization must have standards for performance evaluation. This involves making established criteria that must be met by individual directors, key executives and the community as a whole.

9. Compensate Responsibly and Fairly

You must compensate employees and customers responsibly. This is one of the toughest practices in every organization. Managers must take account of the employee’s performance. In a standard firm, there must be remuneration policies.

10. Recognize Legitimate Stakeholders’ Interests

There are legal obligations and other requirements that must be fulfilled. Providing information about stakeholders’ interests in the report is recommended. These are important in establishing risks attached with decisions about the business.

Compliance with these essential governance best practices is the basis of a strong business enterprise.

Best Practice 1: Revenue Attainment:

The main goal of a business is not just to budget travel cost, but also to achieve a level of revenue attainment while maintaining cost control. This means one needs to think about whether they need better raw materials, salespeople or improvement in management. Additionally, knowing the source of resources is also as important.

Best Practice 2: Build Models:

There will be need to build models for operational management and risk management, based on driving forces. Think about what your revenue targets are? Think about sales plan and availability of resources and what the driving force behind them is. Using the drivers, you will be able to model new product strategies.

Best Practice 3: Prepare Budget Templates

There will be need to develop product, market and administrative reporting templates to make a budget.  CEOs and mangers can use this to get a clear idea of the reporting units needed and how to manage them. This helps maintain compliance with operational strategies.

Best Practice 4 –New Strategies, Capital Projects, Sales Plan and HR Plan

These three must be included in budgeting and forecasting because they help with operational planning. Therefore they contribute to the overall budget.

Best Practice 5 – Accountability and Budget Calendar

Implement compliance with accountability and issue a budget calendar. This helps forecast the activities for the fiscal year and keeps expenses in check.

Best Practice 6 – Transparency

The management should produce actual and budgets for the public. This reflects successful compliance with operational strategies. It also serves as proof of strong management skills.

Best Practice 7 – Revise Budgets

It is advisable to revise budgets when forecasts show unfavorable developments and risks. If budgets are not revised it will be a sign of failed risk management practices. A forecast without impact is a waste of efforts and time.

Best Practice 8 – Encouragement

Managers and CEOs should be informed about their objectives and their accountability. Their objective must be built into their compensation plan.

Best Practice 9 – Acquire Best Software

The use of the best software to help with budgeting and forecasting is recommended. However the software must be capable of the following:

• Forecast Delivery
• Budget Preparation
• Data Integration
• Unified Data Repository
• Accountability
• Team Management Report Writing
• Modeling Capability
• Dashboards
• Graphics
• Scorecards

Best Practice 10 – Knowledge about Best Practices

There are always case studies on users of software. As the vendor to provide these case studies about the best practices the software helps with. If necessary there may be need to train your staff. They will need guidance on use of the software.

Companies using these best practices make larger profits because they keep their share holders happy.

The objective of budget control is to optimize financial resources for day-to-day processes. Managers have to reduce expenses and manage costs to sustain the market. Best practices in budget control are important in order to achieve successful risk management. Companies that manufacture at a large scale are subjected to more pressure. Monitoring expenses and cost becomes challenging and risky. Therefore, defining objectives of budget control is recommended.

Objectives of Budget Control

1. Encourage Self Assessment: Various aspects of the company must be evaluated and used by executives to help improve the business.
2. More Coordination: Budget control ensures coordination and involvement of the entire operating team. This leads to a united and cooperative approach to achieve objectives.
3. Promote Planning: Budget control encourages executives to plan the course of action by key members of the company.
4. Compliance with Policies: Through budget control, compliance with company policies and government acts can be achieved. CEOs and Managers will have to implement best practices to define the aims and responsibilities of employees.
5. Increase Efficiency: Budget control will force increased efficiency and maximized performance by employees. With limited resources, there will be less waste of resources and more productivity. Although, this theory cannot be generalized for all kinds of businesses.
6. Highlight Potential Improvements: Budget control helps highlight the company’s weaknesses. Making changes where operations can improve becomes possible by assessing budget control reports.
7. Relate with Economic Conditions: Budget control best practices ensure that the company’s finances are managed effectively, keeping economic conditions in mind.
8. Facilitate Implementation of Controls: There are controls in every enterprise. Budget controls facilitate compliance with these controls.
9. Increases Accountability: Budget control ensures accountability by the treasury departments. This encourages proper documentation of all financial transactions (expenses and reconciliations).
10. More Transparency: Budget control encourages CEOs and Managers to promote transparency in every process. Direct communication between executive officers and the employees is encouraged through this best practice.

Consequently, compliance with best practices in budget control facilitates coordination and proper management.

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.

Recently there has been an increase in interest towards IT governance, due to compliance management initiatives. The implementation of Basel II in Europe and Sarbanes-Oxley Act in USA has also contributed to bringing IT governance into perspective. Moreover, the want for improvements in decision-making and accountability also contributes to the need for better IT systems. This particularly benefits stakeholders in companies.

Traditionally, executives and business owners make decisions in any firm. However, IT decisions are made by IT professionals, not by executives of the company. Therefore, it is only logical that IT compatibility affects the outcome of decisions taken by top management in any firm. In the long term, stakeholders get negatively affected by poor decisions. Hence, their involvement in business best practices is crucial.

IT governance involves everyone in the company. Involvement of customers, employees, stakeholders, management and directors is equally important for the success of IT governance. Therefore, IT governance provides a module or framework that ensures transparence and accountability. Through proper IT governance, it is possible to trace decisions made. This is because IT governance requires allocation of duties and responsibilities of key players in the firm’s system.

IT Governance Framework

This includes the following best practices:

• Control: This means practicing control of work done by employees of the firm. It must be in moderation to ensure successful best practices and risk management.

• Coordination: In every industry there are segments of work /departments, and duties are distributed. IT governance framework ensures coordination of best practices at every segment/department.

• Evaluate Outcome: It is important for the management to assess and evaluate the outcome from business decisions. IT systems make this easy and quick through compliance with IT best practices. Moreover, this also helps with implementing risk management strategies.

• Internal Policies and Regulations: This best practice is important to ensure the success of risk management. Through IT systems, controls and standards can easily be implemented on employees and customers.

• Rationalized Spending: IT governance assists with rationalizing spending. Managers can use data for making decisions accurately.

• Transparency and Accountability: IT systems ensure proper data management. This increases transparency and accountability at various levels of the firm.
• Customer Service: Through IT governance, techniques employed for customer management improve. This facilitates good connection of customers with the business. Additionally, handling stakeholders also becomes effective.

Conclusively, IT governance best practices are the key to proper risk management and good management decision-making. It improves business performance at various levels.

A Government budget will lead to a deficit or a surplus, which is the difference between government receipts and government spending in a single year.

Just like households, if a government spends more money than it brings in, it has a deficit (indicated by a negative number). If it spends less than it brings in, it’s a budget surplus (indicated by a positive figure).

Unlike households, there is no universal best practice pertaining to government budget management; worse, best practice recommendations vary.

A deficit occurs when the expenses of a government exceed the revenues collected by the government; on the contrary a surplus is when revenues exceed spending.

It is usually presented as a percent of gross domestic product (GDP).

Government deficits or surpluses are measured using the net borrowing (or net lending) figures of the general government sector in the national accounts. Put another way, it is the difference between total revenue and total expenditure, including capital expenditure (in particular, gross fixed capital formation).

Revenue is mainly in the form of taxes, social contributions, dividends and other property income.

Expenditures are chiefly compensation of government employees, social benefits, interest on the public debt, subsidies and gross fixed capital formation.

A government that has a recurring yearly deficit increases its debt.

Governments have 3 ways to raise debt: they can print money (banknotes etc…), sell off assets, or borrow.

1. Printing money can run a risk of “runaway” inflation.
2. Selling assets can be a short-term, partial fix and in some cases necessary – but, as in a household, it is not a substitute for learning to live within one’s means.
3. Borrowing is the most common way to finance debt, but it comes with interest payments, which can also hamper long-term growth and, in some cases, add to the deficit. Borrowing can be from residents of the country (internal debt) or from foreigners (external debt). Economists generally believe that internal debt is more manageable than external debt.

Throughout history there have always been different opinions and fierce debates on  what is the best practice in budget deficit. The schools of the ”pros” and “cons”  of budget deficit best practice have alternatively prevailed.

• The “pro deficit”

Many economists, the most influential of them being John Maynard Keynes, believe that governments should run deficits during recessions and periods of high unemployment to compensate for low private demand, while governments should work to balance the budget only during times of full employment and strong growth. The underlying assumption is that more government debt during a recession can stimulate the economy, whereas during times of prosperity, deficits can lead to high inflation rates. They state that the 2008-2010 stimulus packages around the world have softened the threat of a potential new “Great Depression” into a “Great Recession.”

• The “deficit phobics”

In contrast some Economists argue that the most important issue is to reduce the deficit by cutting government spending and/or increasing taxes. While at the start of the subprime crisis in the late 2000’s world leaders massively embraced the Keynesian economic theories – with huge stimulus packages in many countries-, the political decision makers have then focused on the growing debt levels and called for sharp cuts in public expenditures, as market turmoil was sparked by government deficits of countries in the euro area, particularly Greece in 2001.

The Balanced Budget Amendment is a constitutional rule which requires that the state does not spend more than its income. Therefore, best practices require that the government maintains a balance between the project receipts and the expenditures.

A Balanced Budget Amendment can be a bad turn-out for the government. Usually, when a government goes for the Balanced Budget Amendment, it means the government has failed in maintaining best practices with their balanced budget for the fiscal year. Nevertheless, there are both pros and cons of Balanced Budget Amendment.

A Balanced Budget Amendment is not advisable for any government unless the system is designed very well to sustain the amendment. A good system requires law makers to consider the fiscal consequences of their decisions and correct them.

When a government fails to maintain best practices in budget balancing, it slashes its spending. This hurts the economy, increases taxes, increases unemployment and loses a lot of money in form of debt. The federal government borrows money in order to make up the difference, and to mitigate the consequences of the failure in best practices to ensure a balanced budget.

When best practices in budget balancing are not respected the credit rating of the currency drops. This means the Gross Domestic Product (GDP) is going down the drains. The contributing factors to this situation include failure in best practices in the following ways:

• The Fiscal Crisis in the Country Threatens the Long Term Economic Growth: According to the citing made by the former Director Congress Budget Office Douglas Holtz Eakin there are disastrous long term consequences. In the next eleven years, people will have as much as double the debt they have currently. This means the percent of GDP will continue in an upwards trajectory.
• Implementing the Balanced Budget Amendment will lead to more taxes and fewer jobs: According to studies states with strict balanced budget requirements have taxes and still spend less than other states. For such states the per-capita spending is lesser. Therefore when states do not respect the best practices in budget balancing have higher spending. 
• Higher taxes will continue to damage the economy: The fact is that as taxes increase, there will be more deficit and spending reductions. These damage the economy and will continue to get worse. Unemployment rate will also increase because of failure to ensure best practices in budget balancing. The government will subsequently have to exercise close spending because of adopting the Balanced Budget Amendment.

Therefore, it is important for governments to ensure compliance with best practices to maintain a good budget balance, even though it is quite impossible. At least, respecting the best practices will prevent a Balanced Budget Amendment which has worse consequences for the government and the country.