Budgeting, a tool for Management
There
is no denying the fact that Accounting figures provide an important
tool for
budgetary control. The normal practice is to compile income /
expenditure of
each month separately and then compare the same with the monthly proportion
/target and work out the difference, if any. This is followed by preparation of
an analysis of the variation with reasons thereof. This will help the top
management in reviewing the actual performance against the plan and taking
corrective measures and making modifications where necessary. The authority to
whom fund has been allotted is responsible for ensuring necessary control over
expenditure. This control may be
exercised through observance of relevant rules and procedures, which are mentioned
here:
v Financial
justification
v Budget
provision
v Admissibility under existing rules and procedure
v Canons \standard of Financial Propriety
v Competency of sanction
The
authority, before according sanction, must keep the rules and procedures in
view. Unless the authority has regard for financial discipline and a deep sense
of responsibility budgetary is not possible. Exchequer control or control over
‘National Purse’ is one of the functions of the Parliament. The Annual Financial
Statement known as Budget showing the estimated receipts and expenditure of the
Govt. are laid before the Parliament .Although it has no voting power on
charged expenditure, but in case of other expenditure it has full power to
assent to refuse to assent or reduce the amount submitted in the form of
Demands for Grants. No money shall be withdrawn from the consolidated fund
except under appropriation made by law passed by the Parliament. If the amount authorized
for a service is insufficient or a need has arisen for expenditure upon a new
service or the money spent has exceeded the amount granted for a service,
Parliamentary approval is sought for in the form of Supplementary and Excess Grants.
It has been observed that the cases of supplementary grants are placed before
the Parliament for approval, but the cases of excess expenditure are never
placed for regularization. The Parliamentary control is not at all strict. The
Statutory Audit has a role to play in putting a check on expenditure in excess
of the grant. In terms of Article 128 (1) of the Constitution read with the
Additional Functions Act 1974 with up-to-date amendment, the accounts of all
the Govt. departments/offices, semi-government organizations and autonomous
bodies are audited by the COMPTROLLER & AUDITOR GENERAL or his authorized
persons. The
irregularities detected in the audit are sent to the concerned
authority for disposal. If the irregularities are not settled within the
stipulated time these are incorporated in Annual Audit Report of the Auditor
General. The Audit Report is submitted to the President for laying before the
Parliament. The Audit Reports up to the financial year 1994-95 have already
been submitted and placed before the Parliament.
The Audit Report as laid
before the Parliament is examined by the Public Accounts Committee, one of the
Standing Committees of Parliament formed in terms of Article 76 of the
Constitution. The Committee is composed of the members of the Govt. party as
well as those of the opposition. The Committee holds special meetings in order
to resolve the irregularities recorded in the report. The Principal Accounting
Officer (Secretary to the Government is required to appear before the Committee
and submit explanation to the satisfaction of the Committee. On hearing from
both the COMPTROLLER & AUDITOR GENERAL and Principal Accounting Officer,
the Committee takes decisions regarding settlement of the irregularities. The
decision taken by the Committee is final and binding and cannot be challenged
in the court. If we look at the performance of the Committee, it is totally frustrating.
Although Audit Reports up to 1994-95 have been put forward only three years’
Reports have so far been discussed. Unless the Public Accounts Committee
becomes active effective budgetary control cannot be ensured.