Nov 2016 Q3 a&d
a) Budget hearing is a critical activity in the budget process which is conducted to review strategic plans and estimates of the departments in order to ensure that these plans and estimates are in accordance with government’s macroeconomic policy framework.
Required:
Explain FOUR significant principles of Budget Hearing that ensures that Ministries, Departments and Agencies (MDAs) prepare their budget proposals in accordance with the government macroeconomic policy framework. (4 marks)
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- The MDA budget should not be a new political proposal which will lead to incremental or radical changes in the government macroeconomic framework;
- There should be certainty in the budget outcomes of the MDA budget proposals;
- It is important to determine whether there are new commitments or there are alternative choices that do not conflict with government policies,
- All relevant costs in the MDA budget proposals must be captured so that incremental costs do not extend beyond one fiscal year;
- MDA budget proposals must not conflict with existing laws or legal rules of the nation;
- It is necessary to establish whether projects or programmes in MDA budget proposals will lead to variations of costs.
d) The budgetary control function ensures effective control over government units in public spending and accountability for all funds, property and other assets for which each department or agency is responsible.
Required:
Explain FOUR methods used by government to ensure that government entities comply with budgetary control regulations. (4 marks)
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- Adherence to fixed targets (expenditure ceilings)
- Adherence to spending on intended purpose of programmes;
- Reduction of spending overruns, that is, spending within legally binding appropriations;
- Stricter prioritization to achieve objectives of public organizations;
- Greater efficiency in spending to improve economic sustainability;
- Reduction of volatility of spending in order to create a degree of predictability in fiscal policy and making fiscal policy less stabilizing.