BUDGETING PROCESS & SIGNIFICANT BUDGETARY INNOVATIONS.pptx

This is a significant topic in the subject of Financial Planning & Control.

1. BUDGETING PROCESS & SIGNIFICANT BUDGETARY INNOVATIONS

2. BUDGETING is important because it enables the government to plan and manage its financial resources to support the implementation of various programs and projects that best promote the country’s development.

3. The budgeting process is also called the “ Budget Cycle ". A budget Cycle is a way in which financial control can be exercised by the management of the department or agencies within the budget cycle or budget process .

4. BUDGET CYCLE

5. The preparation of the annual budget involves a series of steps that begins with the determination of the overall economic targets, expenditure levels, revenue projection, and the financing plan by the Development Budget Coordinating Committee (DBCC). DBM Secretary as Chairman Bangko Sentral Governor Secretary of the Department of Finance Director General of the NEDA Representative of the Office of the President

6. BUDGET CYCLE

7. In accordance with the requirements of the Constitution. the President submits his/her proposed annual budget in the form of Budget of Expenditure and Sources of Financing (BESF) supported by details of proposed expenditures in the form of a National Expenditure Program (NEP) and the President's Budget Message which summarizes the budget policy thrusts and priorities for the year. In Congress, the proposed budget goes first to the House of Representatives, which assigns the task of initial budget review to its Appropriation Committee.

8. BUDGET CYCLE

9. This is where the people's money is spent. As soon as the GAA is enacted, the government can implement its priority programs and projects.

10. BUDGET CYCLE

11. This phase happens alongside the Budget Execution phase. Through Budget Accountability, the DBM monitors the efficiency of fund utilization, assesses agency performance and provides a vital basis for reforms and new policies.

12. BUDGET CYCLE

13. SIGNIFICANT BUDGETARY INNOVATIONS

14. A. Developments under P.D. no. 1177 The Provisions in the 1973 Constitution which changed the philosophy and structure of the old budget process guided the enactment of P.D No. 1177 on July 30, 1972. This Decree institutionalized the budget reforms initiated under the New Society and which continue to apply in the New Republic.

15. A. Developments under P.D. no. 1177 The introductory portions of the Budget Reform Decree or P.D. 1177 outline the major thrusts of the budgetary reforms. Section 3 summarizes these thrusts as follows: A stronger linkage in the planning, programming and budgeting sequence, the close operating relationship between budgeting and internal agency management, a regionalized budget that is supportive of a region based government structure, the recognition that the national budget is only part of the integrated whole of a total national resource budget, and the need to prepare annual budgets as one step in implementing the national long-term plan and long-term budget program."

16. A. Developments under P.D. no. 1177 1. BUDGET PREPARATION a. The shift from fiscal year to calendar year to facilitate social and economic accounting and to harmonize the planning and budget cycles with those of government corporation and the private sectors. b. Simplification of budget documents for laymen, researchers and even government officials. c. Institutionalized of the regional budgeting system by reorganizing regional offices as the basic budgeting unit.

17. A. Developments under P.D. no. 1177 1. BUDGET PREPARATION d. Increased attention given to foreign-assisted projects. e. The need for some organizational changes and strengthening of the role of coordinating bodies. f. The development of a national resource budget.

18. A. Developments under P.D. no. 1177 2. BUDGET AUTHORIZATION a. The policy in P.D. 1177 specifies that the Legislature shall focus on budgetary policy, levels, thrusts and strategies while details of agency expenditure shall be the proper concern of the executive branch. This policy focuses on the concept of performance budget wherein greater emphasis is placed on projected results and not on detailed items of expenditure.

19. A. Developments under P.D. no. 1177 2. BUDGET AUTHORIZATION b. A provision in P.D. 1177 states that the General Appropriations Act shall not contain any itemization of personal services. This provision limits the past predilection of lawmakers with positions and not with the programs of agencies.

20. A. Developments under P.D. no. 1177 2. BUDGET AUTHORIZATION c. There is a requirement that expenditures in the budget should be backed up by existing proposed revenue measures to avoid unplanned and injudicious spending. This requirement to limit deficit spending. In the past, expenditure measures were passed even without revenue backup.

21. A. Developments under P.D. no. 1177 2. BUDGET AUTHORIZATION d. There is a rule that no supplemental appropriation measure supported with existing revenue measures shall be enacted except those involving the creation of new offices or the undertaking of new programs or activities. This budgetary innovation is directed towards the past pernicious practices of supplemental budgets.

22. A. Developments under P.D. no. 1177 2. BUDGET AUTHORIZATION e. There is a prohibition against an increase of appropriations, enactment of additional special provisions and against transfer of funds among the various branches. f. There is delegation of authority to regional budget offices. This is intended to save time and effort in the processing of budget quests.

23. A. Developments under P.D. no. 1177 2. BUDGET AUTHORIZATION g. Procedures were streamlined to facilitate the approval of appropriations, limitations on budget debates, reenactment of the appropriations law of the preceding year's, implication of the veto power, unauthorized revisions during the printing of the budget, the use of Key Budget Inclusions (KBI), and cash advances on foreign assisted projects.

24. A. Developments under P.D. no. 1177 2. BUDGET AUTHORIZATION h. Fund releases for the purchase of equipment are faster. For equipment amounting to P25,000.00 or less, no DBM analysis needed because release is already automatic. For those which exceed this limit, the agency's annual equipment program is used for processing the request.

25. A. Developments under P.D. no. 1177 3 . BUDGET EXECUTION PHASE a. The comprehensive fund release system is considered the most important innovation in the budget execution phase. This system is a departure from the old practice of quarterly releases which often delay and hamper agency operations. The indicated quarterly amounts in comprehensive release are automatically made available for expenditure at the beginning of each year.

26. A. Developments under P.D. no. 1177 3 . BUDGET EXECUTION PHASE b. There is a general rule that appropriations equal programmed funds unless a reserve is imposed. This departs from the old practice of appropriating more than what the treasury could be reasonably expected to fund

27. A. Developments under P.D. no. 1177 3 . BUDGET EXECUTION PHASE c. Releases whose repetitive nature leads to mechanization are computerized. In addition, the monitoring and reporting aspects are partially computerized to facilitate the administration of the budget allotment system.

28. A. Developments under P.D. no. 1177 3 . BUDGET EXECUTION PHASE d. There is monitoring of local counterpart support to foreign assisted projects. This is a very important innovation, especially since the government has been increasing the level of its borrowings. Lending institutions normally require counterpart commitments on the part of the borrowing agencies.

29. A. Developments under P.D. no. 1177 3 . BUDGET EXECUTION PHASE e. Other changes involved integrated funds programming, a better information system, and LOI 638 which calls for evaluation of agency operations. Equally significant is the emphasis on the inter-agency coordination.

30. “WITH GOOD PLANNING AND THE RIGHT STEPS, YOU CAN CREATE A BRIGHTER AND MORE STABLE FINANCIAL FUTURE”