1 - Lecture on Budget Making in Punjab.ppt

BUDGET MAKING
Management and Professional Development Department
Ch. Barkat Ali
Deputy Secretary (Budget)
0322-6785332, 042-99211087
2

SCHEME OF PRESENTATION
 BUDGET MAKING - AN OVERVIEW.
– What is Budget?
– Constitutional requirements of Budget Making.
 BASIC CONCEPT OF BUDGET MAKING.
– Budget Terminology.
– Budget calendar.
– Budget Cycle
– Budget Classification
– Distribution of Budget & Grants.
3

SCHEME OF PRESENTATION
 PREPARATION OF BUDGET.
 UTILIZATION AND REVIEW OF BUDGET
 STATEMENT OF EXCESS & SURRENDER
 FINANCIAL IRREGULARITIES
 PRACTICAL BUDGET MAKING EXERCISE
 EXPLANATION OF VARIOUS
FORMS/STATEMENTS
4

Budget
Financial statement containing the estimated
receipts into, and the estimated expenditure
from, the Provincial Consolidated Fund
(PCF) for that year, required to be laid before
the Provincial Assembly, before the
commencement of that year, in terms of the
Article 120 (1) of the Constitution, is known
as Budget [Annual Budget Statement (ABS)]
5

What is a Budget?
Previously the Budget was referred to
‘King’s bag’
Represented the resources available to
King for public use
Expended according to State priorities, as
per King’s will
Now in modern era this term extends to:
Estimating Revenues
Planning Expenditures
Matching Expenditures with Revenues

Budget – Individual’s Perspective
Rs. 1,300,000/-
Rs. 30,000
Rs. 40,000
Rs. 30,000 Rs. 40,000
Rs. 70,000 Rs. 50,000
Income Rs. 0.550 m
vis-à-vis wish list
Rs1.600 m
(Resource Gap)
Rs. 20,000
Rs. 10,000Rs. 10,000
Rs. 70,000 Rs. 50,000
Rs. 375,000/-
Rs. 5,000
Rs. 40,000
Rs. 10,000
Rs. 1,600,000 Rs. 550,000

CONSTITUTIONAL PROVISIONS OF BUDGET MAKING
CONSOLIDATED FUND
 All revenues received by the Government,
 All loans raised by that Government
 All moneys received by it in repayment of any loan
 Shall form part of a consolidated fund,
Article 118(1) of the Constitution
8

PUBLIC ACCOUNT
Money received by or on behalf of the
Provincial Govt.
Money received by or deposited with the
High Court or any other court
established under the authority of the
province.
CONSTITUTIONAL PROVISIONS OF BUDGET MAKING
Article 118 (2) of the Constitution 9

BUDGET ESTIMATES
Represents Receipts & Expenditure
of the Federal / Provincial/District
Governments.
Represents financial policies of the
government for strategic planning.
Represents Consolidated Fund and
Public Account of a government.
10

BUDGET ESTIMATES
 Budget Estimate relating to a financial year means
the estimated receipts and expenditure (current,
development & capital) through the Provincial
Consolidated Fund and Public Account.
 Current budget for a particular financial year is
assessed by the Finance Department in
consultation with Drawing & Disbursing Officers
(DDOs), Collecting Officers (COs), the Head of
Departments.
Para 1.2 of Budget Manual
11

BUDGET ESTIMATES
 In the case of development
expenditure, the above exercise is
completed by the Planning &
Development Department.
 Budget making process is
regulated under a budget calendar
Contd..
12

BUDGET ESTIMATES
ACCOUNTING
Under Article 170 of the Constitution
Auditor General of Pakistan is responsible to
prescribe the form and manner of keeping the
accounts of the Federation and Provinces.
Auditor General had earlier prescribed a Chart of
Accounts (CoA) introduced under NAM to record the
accounting entries.
Contd..
13

BUDGET ESTIMATES
As a Generally Accepted Principle, the
Accounts follow the Budget
Budget documents are also prepared on the
principles of Chart of Accounts (Function cum
Object Classification)
Punjab budget has been prepared on the
principles laid down under new Chart of
Accounts (CoA), developed under New
Accounting Model (NAM) since FY 2005-06,
Contd..
14

PUBLIC SERVICE MANAGER’S PERSPECTIVE
 Manage competing demands from:
Public served
Program Personnel
Higher management
Funding agencies (Including Governments)
Objective Effective and efficient service delivery
Focus Efficient service delivery from existing
network
Expenditure Prioritized in relevance to its impact on
service delivery

BUDGET- GOVERNMENT’S PERSPECTIVE
 Used as a ‘tool’ for implementing policy decisions;
 Analyzing policies implemented;
 Ensuring ‘public service’ delivery;
 Meeting socio-economic objectives and tackling
poverty related issues, etc.

PROVINCIAL BUDGET
Provincial Budget
Provincial Consolidated Fund Public Account
Provincial
Government
District
Governments
17

Charged
Charged
expenditure
expenditure
Receipts
Receipts
Revenue
Revenue
expenditure
expenditure
Charged
Charged
expenditure
expenditure
Voted
Voted
expenditure
expenditure
CONSOLIDATED FUND
Expenditure
Capital
Capital
expenditure
expenditure
Voted
Voted
expenditure
expenditure
Other
Other
receipts
receipts
Capital
Capital
receipts
receipts
Current
Current Developmen
Development
t Capital
Capital
Grants
Grants Grants
Grants Grants
Grants 18
NFC Award Provincial
Own Receipt

Criteria for Sharing of the Divisible Pool under
7th
NFC Award
Resource Distribution Criteria
Item Percentage
Population 82.0%
Poverty and backwardness 10.3%
Revenue Collection /
Generation
5.0%
Inverse Population Density 2.7%
Total 100%
19

Province wise share under NFC Award
. Province Before 7th
NFC Award
7th
NFC
Award
Punjab 53.01% 51.74%
Sindh 24.94% 24.55%
KPK 14.88% 14.62%
Balouchistan 7.17% 9.09%
Total 100% 100%
20

OUTLAY FOR THE YEAR 2012-13
(Punjab)
 Total outlay of Budget 2012-13 is Rs.793.807 billion
including:
• Development Budget Rs. 250.0 billion
• 14% growth over Development Budget of 2011-
12 (Rs. 220.0 billion)
• Current Revenue Budget Rs. 532.860 billion
• 13.9% increase over 2011-12 current budget
revised estimates of Rs.467.993 billion
• Current Capital Budget Rs.10.947 billion

RECEIPTS
 Total General Revenue Receipts: Rs.780.675 billion
 Divisible Pool Receipts: Rs.657.321 billion – based
on FBR Target of Rs.2,338.0 billion
 Provincial own receipts estimated at Rs.123.3 billion
including:
• Tax Receipts Rs.95.0 billion comprising:
• General Sales Tax on Services Rs.40.5 billion
• Other Tax Receipts Rs.44.5 billion
• Non-Tax Receipts Rs.28.3 billion

FINANCING RESOURCES FOR
BUDGET
• Divisible pool taxes under NFC Award
• Provincial Own Receipts (Tax / Non-Tax)
• Net Capital Account
• Net of Public Account

SHARE OF FEDERAL / PROVINCIAL
REVENUE IN RECEIPTS
01-
02
02-
03
03-
04
04-
05
05-
06
06-
07
07-
08
08-
09
09-
10
10-
11
11-
12
Federal
Transfers
82.6 82.0 80.2 81.1 82.7
84.
1
83.9 86.8 82.5 81.0 81.0
Provincial
Own
Receipts
17.4 18.0 19.8 18.9 17.3
15.
9
16.1 13.2 17.5 19.0 19.0
(In Percent)

Year Current
BE % Dev. BE % Total
2002-03 117.100 85% 20.750 15% 137.850
2003-04 129.195 81% 30.500 19% 159.695
2004-05 141.884 77% 43.440 23% 185.324
2005-06 157.528 75% 53.000 25% 210.528
2006-07 191.378 66% 100.000 34% 291.378
2007-08 243.487 62% 150.000 38% 393.487
2008-09 256.949 62% 160.000 38% 416.949
2009-10 314.873 64% 175.000 36% 489.873
2010-11 386.786 67% 193.500 33% 580.286
2011-12 434.749 66% 220.000 34% 654.749
Share of Current and Development
Expenditure in the Overall Financial Outlay
(Rs. in Billion)

TREND IN FEDERAL TAX REVENUE
(Rs. in Billion)
Year
Federal Tax
Revenue (FBR)
Growth Rate
1999-2000 347.1
2000-01 392.3 13%
2001-02 404.1 3%
2002-03 460.6 14%
2003-04 520.8 13%
2004-05 590.4 13%
2005-06 713.4 21%
2006-07 847.3 19%
2007-08 1008.1 19%
2008-09 1161.2 15%
2009-10 1327.0 14%
2010-11 1559.0 17%
2011-12 1850.0 19%
Average Growth Rate 15%


BUDGET ESTIMATES FY 2012-13 - AT A GLANCE
Summary
RECEIPT EXPENDITURE
Description BE 2011-12 RE 2011-12 BE 2012-13 Description BE 2011-12 RE 2011-12 BE 2012-13
General Revenue Receipts 654.674 667.442
780.675
Revenue Expenditure 654.750 633.504 782.860
Federal Transfers * 536.952 541.994
657.321
Revenue Expenditure 434.750 467.993 532.860
Provincial Receipts 114.222 125.448 123.354 Development Expenditure 220.000 165.511 250.000
Privatization Receipts 3.500 -- --
Capital Receipts 306.260 208.408 270.530 Capital Expenditure 305.868 242.393 268.523
Recoveries of Loans A/C - I 5.218 0.547 6.816 Repayment of Principal A/C –I 32.447 31.092 35.465
Foreign Loans 30.097 2.257 8.742 Investments 11.000 7.000 8.500
Recoveries of Investment A/C-II 153.589 92.226 107.578 Loans and Advances (Principal) 0.100 -- 0.100
Cash Credit A/C-II 97.721 101.981
105.906
State Trading in Medical Stores 0.024 0.022 0.027
Foreign Project Assistance 18.610 11.396 11.488 Loans to MCs 10.987 10.072 10.947
Grants (Foreign) 1.025 0.0 30.00 Domestic Debt Account-II 251.310 194.207 213.484
Public Account Credits -
0.048 0.178
Public Account 0.316 -- --
Public Account Credits - 0.048
0.178
Public Account Debits 0.316 -- --
Total Receipts A/C-I 709.624 681.690 837.899 Total Expenditure A/C-I 709.624 681.690 837.899
Total Receipts A/C-II 251.310 194.207 213.484 Total Expenditure A/C-II 251.310 194.207 213.484
Total Receipts 960.934 875.897 1051.383 Grand Total 960.934 875.897 1051.383
* Federal Transfers includes Receipts from Federal Divisible Pool Taxes, Straight Transfers.
(Rs in billion)

OBJECTIVES OF BUDGET
Provide a framework for the assessment and
allocation of resources,
Execution, monitoring and evaluation of
government program / projects / activities under a
comprehensive fiscal plan
Developed, authorized and executed in
accordance with laws, rules & regulations
Principles of sound fiscal management;
28

OBJECTIVES OF BUDGET
 Enforce effectively the various means of
raising revenues / receipts, and the
limitations on the expenditure of Public
funds.
29

CHALLENGES IN BUDGETING
 Lack of information on costing of Policies,
Programs and Services
 Primary focus on inputs instead of outputs
 Short-term horizon for budget making ignoring
long-term costs and benefits
 Lack of strategic focus and articulation of sectoral
priorities in budgetary process
 Performance judged largely by matching spending
with budget appropriation

CHALLENGES IN BUDGETING
 Human resource (capacity issues)
 Weak forecasting (scarcity of qualified staff)
 Capacity to generate monthly and quarterly reports
 Ad hoc commitments to targets
 Input based budgeting (incremental budget)

FISCAL MANAGEMENT OF THE PROVINCE–
CHALLENGES AND OPPORTUNITIES
CHALLENGES – GENERAL
• Matching outlays with resources
• Accommodating competing demands amongst
sectors, functions, programmes and activities
• Financing government expenditure in the wake of low
tax to GDP ratio, persistent inflationary trends leading
to greater cost of public service delivery
• Ensuring investment in various sectors of the
economy for provision of goods and services within
specified quality, cost, and time schedule

• Creating greater fiscal space for development expenditure
after accounting for obligatory expenses i.e. salary, pension
and debt servicing
• Ensuring greater allocation for law & order / security
• Mitigating negative economic impact of prevailing energy
crises
• Ensuring sustainability of socio-economic investments
• Linking outcomes to resource allocation i.e. result based
management
• Adequate resource allocation for O&M costs
• Sustaining expenditure on subsidies / pro-poor initiatives
CHALLENGES – SPECIFIC

HOW TO BUDGET?
 Determine what you want to do or achieve
 Analyze Activities
 Identify Outputs & Inputs
 Assign Costs
36

KEY LEARNING POINTS
Budget represents the ‘objectives’ of
a Government or of an organization
in ‘financial terms’
Forecast of likely future spending
Analytical approach towards
budgeting
37

REFORMS - AS BUDGET MAKING TOOLs
Project to Improve
Financial Reporting &
Auditing (PIFRA)
Deals with the budgeting,
accounting and auditing
reforms
Punjab Procurement
Regulatory Authority
(PPRA)
Deals with procurement
reforms
Medium Term
Budgetary Framework
(MTBF)
Budgetary reforms for
estimation of Budget
Estimates as multi year
planning, normally three
years.
39

Budget
Preparation
Budget
Execution
Accounting
Audit
Reporting
MTBF
PPRA
PIFRA
REFORMS - AS BUDGET MAKING TOOLs
40

NEW ACCOUNTING MODEL
Auditor General of Pakistan, in terms of
Article 170 of the Constitution, has prescribed
New Accounting Model (NAM) introduce
under PIFRA
Under the NAM a consolidated Budget Call
Circular (BCC) had been issued instead
issuing separate BM forms
All data relating to Budget is being captured
through computer system known as SAP/R3
41

MTBF
(Medium Term Budgetary Framework)
 MTBF is a multi-year approach to budgeting
 Introduces a three year perspective towards
planning and budget preparation
 Assists in relating spending to policies and
objectives
 Resources linked to outputs / what the organization
would like to achieve in terms of outputs
 Three year resource commitment by Finance
Department
42

 Providing a longer term financial management and
development perspective that supports Vision 2020
 To achieve continuity in financial planning and
forecasting
 To align resource mobilisation with the requirements
of the Medium Term Development Framework
(MTDF)
The MTBF is central to Punjab's fiscal
management, reforms and socio-economic
agenda
43
MTBF
(Medium Term Budgetary Framework)

BUDGETARY PROCESS
 Preparation
 Authorization
 Implementation
 Reporting and monitoring
 Review
 Feedback into policy
44

BUDGET ESTIMATES OF A YEAR
Budget Estimates, relating to a financial year, are the
estimated receipts into, and expenditure (Current,
Development & Capital) from the Provincial
Consolidated Fund and assessed by the Finance
Department initially in consultation with;
 Drawing & Disbursing Officers (DDOs)
 Collecting Officers (COs),
 the Head of Departments,
 and P&D Department for development
expenditure
46

BUDGET ESTIMATES OF A YEAR
CONSULTATIVE PROCESS
 Later stage consultative process is extended to other
stakeholders through Development Forums, mutual
understanding at Federal/Provincial level.
 Such processes are helpful in generating awareness to the
general public, NGOs and political leadership
 Play an important role to determine the need assessment
(gaps in social sector) and in identification of future
investments (new development schemes)
47

Issuance of Budget Call Circular (BCC)
Issuance of Budget Call Circular under
MTBF
Analysis of Demands for Regular Budget
Analysis of Demands for SNE Budget
Finalization of Budget Demands including
Budget for next year and Revised
Estimates for the current year
BUDGET MAKING PROCESS
BY FINANCE
48

BUDGET CALENDAR
CURRENT BUDGET
1st
August Distribution of BM-I Forms by
Finance Department
15th
Feb. -
1st
March
SNE meeting with Deptt. to
finalize S.N.Es
1st
October Distribution of BM-II Forms
10th
March Indication of resources by
Federal Government
31st
March Last date for submission of
2nd List of E & S
1st
November SNE (New & Contd) Starts
30th
April Final Abstract of Budget
10th
May Resource Mobilization
10th
January Last date for SNE (new &
continued)
25th
May Printing of Current Budget
1st
February First abstract of permanent
budget
5th
June Approval of Draft Budget by
the Cabinet and Presentation
to Assembly.
Para 3.19 of Budget Manual (Appendix-C)
49

BUDGET CALENDAR
DEVELOPMENT BUDGET
1st
July Approval of Un-
approved schemes
30th
April Final Estimates of
Budget
1st
November Proposals for new &
Continued schemes
15th
May A.P.C.C meeting
1st
December Schemes costing
above 1000 million
submitted to ECNEC
20th
May NEC meeting
15th
Jan to 10th
Feb
Discussion of ADP
with Departments
26th
May Printing of ADP
20th
March Finalization of ADP 30th
May Development Budget
31st
March 2nd
list of E & S 5th
June Approval of Draft
Budget by the cabinet
and presentation to
Assembly
Para 3.19 of Budget Manual (Appendix-C)
50

Current Expenditure (Permanent Activities)
Proposals are sent to Finance
Department on BM-2 forms, as part of
BCC
Proposals are based on actual
expenditure for last 3 years and on 8+4
months actual expenditure of previous and
current year
Net increase/decrease over current level
51

RECEIPTS
Receipt estimates are proposed on BM-1
and BM-2 forms
Actuals / proposed are based on 3 years
and 8+4 months actuals
Net increase/decrease over current level
52

Annual Development Programme
Proposals are prepared on BM-12 forms
Separate forms for various sections/sectors
Nomenclature of development scheme
properly stated
53

Annual Development Programme
 Lumping of development schemes into programmes not
appreciated
 Foreign funded schemes are reflected separately under
appropriate sector details
 Source- Revenue Surplus after meeting current exp
54

Development Budget
Formulated on the basis of ADP
Allocations are reflected on the basis
of function-cum-object classification
(minor object level) & scheme-wise
Revenue & Capital expenditures are
allocated under separate grants.
55

INSTRUCTION FOR PREPARATION OF
EXPENDITURE ESTIMATES
 Include under Appropriate function &
Object Code.
 Include all foreseeable expenditure.
 Restrict expenditure to minimum.
 Consult relevant Administration
Functionaries.
 Include views of concerned locality if
possible.
56

 Base expenditure on current expenditure &
next years expenditure.
 justify additional demand for expenditure.
 Keep in view effect of annual increment
and rate of inflation
 Keep in view trend of accounts and
actual expenditure
INSTRUCTION FOR PREPARATION OF
EXPENDITURE ESTIMATES
57

Under Article 122(3) of the Constitution,
Demands for Grants should not be presented
to the Provincial Assembly, except on the
recommendations of the Provincial
Government
APPROVAL OF BUDGET ESTIMATES
58

Under Rule 23(1) of the Punjab Rules of
Business, 1974 the Budgetary Proposals of the
Provincial Govt., to be presented to the
Provincial Assembly are first brought before
the Cabinet, seeking its approval
59

The ABS after approval by the Cabinet is laid
before the Provincial Assembly, for
discussion / vote, on the date fixed for the
purpose, which should be sufficiently earlier
than the date of commencement of the
financial year to which it relate
60

Receipt
Tax Receipt
Non Tax Receipt
Capital Receipt
Current Expenditure
Capital Expenditure
Development Expenditure
Public Account
ANNUAL BUDGET STATEMENT
61

AUTHORIZATION
Under Article 120 (1) of the Constitution,
Statement of estimated receipts into and the
expenditure from the Provincial Consolidated Fund,
for a financial year, required to be laid before the
Provincial Assembly
Includes a statement of receipts and
disbursements out of the Public Account of the
Province
62

 Accounting principles prescribed by the
Auditor General of Pakistan,
 Annual Budget Statement (ABS) is divided
into following two sections:
Provincial Consolidated Fund
Public Account
63
AUTHORIZATION

 Provincial Consolidated Fund is further
divided into :
Revenue Account
Capital Account
64
AUTHORIZATION

REVENUE
 Revenue Account deals with income
derived from taxes and other receipts as well
as expenditure incurred there from
Net result of above represents the revenue
surplus or deficit
65
AUTHORIZATION

CAPITAL ACCOUNT
 Capital Account caters the expenditure,
met from borrowed funds and other
capital resources with the object either
Increasing concrete assets of a
material character
Reducing recurring liabilities.
66
AUTHORIZATION

As prescribed in the Punjab Government’s
Rules of Business
Finance Department is responsible for
formulating the Annual Budget Statement
(ABS) along with its explanatory
memorandums
Laying it before the Provincial Assembly
for its approval
67
AUTHORIZATION

SCHEDULE OF AUTHORIZED EXPENDITURE
68

For consideration the Annual Budget
Statement by the Provincial Assembly in
respect of a financial year, Finance
Department shall:
Prepare a schedule in the same form
as of Annual Budget Statement, in so
far as it relates to expenditure,
specifying:
69

Grants made or deemed to have
been made by the Provincial
Assembly under Article 122 of the
Constitution
Sums required to meet expenditure
charged upon the Provincial
Consolidated Fund;
70

Under Article 123(i) of the
Constitution, get it authenticated by
the Chief Minister
Shall be laid before the Provincial
Assembly, but under Article 123 (2)
ibid shall not be open to discussion
or vote thereon
71

DISTRIBUTION OF BUDGET AND GRANTS
 On approval of the Budget Estimates by the
provincial Assembly, allocations against a
grant are placed at the disposal of the Head of
Department on 1st
July
 On implementation of the WAN under
PIFRA,
Allocations are placed at the disposal of the Head
of Departments through SAP system for placing at
the disposal of the DDOs.
73

Transfer of savings in the appropriation of
one or more objects to meet the excess
expenditure anticipated under another such
object of a function, by the officers delegated
to do so
RE-APPROPRIATION
75

SUPPLEMENTARY BUDGET
 Un-avoidable and un-foreseen
circumstances may sometimes arise in
a financial year making it necessary to
incur additional expenditure, such
additional expenditure may be of the
following types;
 Additional funds sanctioned for the
purpose already provided for in the
Schedule of Authorized Expenditure
of that year (charged/voted).
76

SUPPLEMENTARY BUDGET
 Expenditure on purpose not
provided for inthe Schedule of
Authorized Expenditure for that year
77

SURRENDER
 Means an amount included in the
budget that is given back, and not
spend in the Financial Year by the
office.
 Amount sanctioned through
supplementary grants cannot be
offered as Surrenders
78

 Statements of Excess and Surrenders
viz. Statements have been designed to
review the budget.
 Statement of Excess & Surrenders
provide the opportunity to check whether
the modified grant/revised estimates for a
year exceeds or pitched below the original
estimates.
Prescribed Form BM-29
STATEMENT OF EXCESS & SURRENDERS
79

REVISED ESTIMATES
Budget Estimates for a year, during the currency of the financial
year, may under go
Change due to re-appropriation,
Change due to sanction of supplementary grants
Change due to surrender of surplus funds,
Finance department with the help of statement of excess &
surrenders determine the Revised Estimates (REs) on the
following formula;
Original estimates + Excess grant – surrenders = Revised Estimates
80

AUDIT AND ACCOUNTS
 Under Article 171 of the Constitution, the
Auditor General of Pakistan is required to
submit to the Governor the accounts of the
province relating to each financial year
alongwith his report thereon. These
accounts together with the reports are
called:
 Appropriation Accounts
 Finance Accounts
 Audit Report
 Commercial Accounts
REVIEW BY THE PROVINCIAL ASSEMBLY
81

Under Rule 12(i) read with item 6 Part (A) of
Schedule-III of Rules of Business, the
Accounts and Audit reports are submitted to the
Governor for seeking his permission as ;
 To lay the Account and Audit Reports
before the Provincial Assembly; and
 For initiating action on such points, raised
in those Accounts and Audit Reports,
which in the opinion of the Finance
Department, may be taken up before they
are considered by the Public Accounts
Committee
82

PUBLIC ACCOUNTS COMMITTEE (PAC)
 Committee of the Provincial Assembly,
constituted by it, in the manner laid down
under Rule 150 of Rules and Procedures of
the Provincial Assembly
 Public Accounts Committee is entitled to
offer criticism and recommendations on any
matter discussed in the Appropriation
Accounts and in the Auditor’s General
comments thereon
83

BUDGET PUBLICATIONS
Following books are published by the Finance
Department as explanatory memoranda to the Annual
Budget Statement (ABS) of a financial year;
 Estimates of Receipts
 Estimates of Charged Expenditure and
Demand for Grants (Current)
 Estimates of Charged Expenditure and
Demands for Grants (Development)
 Annual Development Programme (ADP)
85

BUDGET PUBLICATIONS
 White Paper-explanation of financial position
of provincial government, activities of various
functions/departments & detailed notes on
receipts/expenditure
 Budget Speech
 Supplementary Budget
 Schedule of Continued and New Expenditure –
(Current)
(Para 3.2 of Budget Manual)
86

BUDGET CYCLE
Finance
Department
Cabinet
Provincial
Assembly
AD / AG
Controlling
Officer
DDO / CO
Attached
Dept.
Department
Authorization
Utilization
Releases
Distribution
Reporting and
Monitoring
87

BUDGET TERMINOLOGY
Appropriation
An allocation of funds to a spending entity
on the basis of authenticated schedule of
authorized expenditure.

Administrative Department
means a self contained administrative unit in the
Secretariat responsible for the conduct of business
of the Provincial Government, in a distinct and
specified sphere, and declared as such under the
Rules of Business by the Provincial Government.
BUDGET TERMINOLOGY
89

Administrative approval
Sanction or an administrative approval for
any fresh charge which has not been
acted on for two years must be held to
have lapsed, unless it is specially renewed
with necessary provision in the budget
estimate
90
BUDGET TERMINOLOGY

Required revision if the total cost of the
scheme is likely to exceed 15% over the
approved cost
A copy is issued by Administrative
Department should endorsed to Planning
& Development Department and Finance
Department
91
BUDGET TERMINOLOGY

Technical Sanction
Sanction of the competent authority to a
properly detailed estimate of the cost of a
work of construction, or repair.
92
BUDGET TERMINOLOGY

Entity
Element enables reporting of transactions by the
organizational structure or in other words the
organizational unit, which is creating the transaction.
There are a number of sub-elements contained in the
entity element.
BUDGET TERMINOLOGY
93

Excess Grant
Relating to a financial year means a sum granted, or deemed to have
been granted by the Provincial Assembly, to meet the expenditure
which, after the close of that year, was found, through the
Appropriation Accounts, to have been incurred in excess of the
authorized expenditure of that year, under a grant
Schedule of Authorized Expenditure
Means the schedule prepared, following consideration by the
Provincial Assembly, of the Annual Budget or Supplementary Budget
or Excess Budget Statement in respect of a financial year, and
authenticated by the Chief Minister by his signatures, under Article
123 of the Constitution.
BUDGET TERMINOLOGY
94

Token Grant
In a financial year means a nominal amount included
in the Schedule of Authorized Expenditure relating to
a Supplementary Budget Statement of that year for a
new purpose, the expenditure on which is proposed to
be met (savings within the grant) by re-appropriation.
Voted Expenditure
Means such expenditure as is submitted to the vote of
the Provincial Assembly, with reference to Article
122 (2) of the Constitution.
BUDGET TERMINOLOGY
95

CHARGED EXPENDITURE
Items of expenditure enumerated in Article
121 of the Constitution
Not to submitted for vote to Provincial
Assembly under Article 121(1) of the
Constitution
BUDGET TERMINOLOGY
96

EXCESS BUDGET STATEMENT
Excess over total final appropriations under several
grants, whether charged or authorized, as
recommended by the PAC,
Should be included in the “Excess Budget Statement”,
Under Article of 124 of the Constitution, should be
laid before the Provincial Assembly
Dealt with in the same way as Supplementary Budget
Estimates
97
BUDGET TERMINOLOGY

SANCTION TO EXPENDITURE
 In all applications for sanction to expenditure,
should be distinctly stated
 Whether provision for the proposed charge has, or
has not, been made in the Schedule of Authorized
Expenditure (SAE) of that year,
 If has not been made, supplementary grant would
be required
98

 Sanction to the expenditure of money becomes
operative.
 When funds have been appropriated to meet
such expenditure.
 Two elements necessary before public-money
can be spent on any object or work;
Must be an act of sanction of an authority competent
to sanction.
99

 A Sanction of expenditure either
Administrative Approval, Audit Copy, and
Supplementary grant etc., would have the
following
 Fund/Grant No.
 Fund Center/DDO Code.
 Function Classifications.
 Object Classifications.
 Cost center/Profit center.
In the case of Development Expenditure
Project /Scheme No. of 10 Digit
100

Supplementary grant demo Advice
Finance Department agrees to sanction and release
a sum of Rs……. (Rupees……….), in anticipation
of the provision of through supplementary grant
during current financial year 2009-10, for
(purpose with grant, function & object), against an
equivalent surrender (federal receipt) (or net
supplementary grant). (Mode of payment should
also be indicated i.e Normal, SDA, PLA, AA) The
details of expenditure is as under,
101

Supplementary grant demo Advice
Finance Department further agrees to allow the
operation of funds through existing SDA (or assign the
funds in the assignment account).
The expenditure involved will be debitable
under grant No. PC 21020 Veterinary Function (up to
detailed Function…), LQ 4195……. Object (up to
detailed Object…) during current financial year 2011-
12. the funds in question stand released through
SAP/R-3 against cost center No…… vide document
Nos. …….., ………….
102

FINANCIAL IRREGULARITIES
• Expenditure incurred without sufficient or
proper sanction
• Expenditure incurred without sufficient
provision
• Re-appropriation made in the defiance of
the principle of re-appropriation of funds
103

• Expenditure incurred on a purpose not
provided for in the schedule of authorized
expenditure
• Loss of public money or property due to
fraud negligence or mis-appropriations
• Drawing money from treasuries, not
required for immediate disbursement
104

• Sale of public property below market rates
without the sanction of the competent
authority
• Reduction of dues payable under a license
lease without the sanction of the
competent authority
105

• Placing a contract without obtaining
competitive tenders in an open and public
manner
• Acceptance, without adequate reasons of
a tender other than the lowest
• Inadequate scrutiny of tender rates before
acceptance
106

• Deviation from the terms of contract in
favour of the contractors
• Purchase in largely in excess of the
requirements
• Purchase of material of inferior quality
• Make payments in excess of amount
admissible under contract of rules
107

RE-APPROPRIATION
NO.BI-21(90)/2011-2012
GOVERNMENT OF THE PUNJAB
FINANCE DEPARTMENT
(BUDGET WING)
Dated Lahore, the 29th February, 2012
To
The Secretary,
Government of the Punjab,
Livestock & Dairy Development Department.
SUBJECT:- RE-APPROPRIATION OF FUNDS DURING THE
FINANCIAL YEAR 2011-2012
Kindly refer to your U.O.NO.1(57)SO(B&E)/L&DD/2011-2012,
dated 20.02.2012 on the subject noted above.
2. In order to meet an anticipated excess of Rs.270,000 the
following re-appropriation of funds are hereby sanctioned from the
saving within the grant of current financial year 2011-2012 under
Grant No.PC21020-Veterinary:-
108

FROM TO
42106-ANIMAL HUSBANDRY Amount 42106-ANIMAL HUSBANDRY Amount
LQ4209-PROVINCIAL SCHEME
RESEARCH (DDO CODE LO4307-
FOOT AND MOUTH DISEASE
RESEARCH CENTER, LAHORE
LQ4209-PROVINCIAL SCHEME
RESEARCH (DDO CODE LO4307-
FOOT AND MOUTH DISEASE
RESEARCH CENTER, LAHORE
A03301-Gas 270,000 A13304-Building and Structure 270,000
TOTAL 270,000 TOTAL 270,000
3. The reasons for above excesses and surrenders may kindly be
communicated to all Audit Officer/District Accounts Officer concerned direct
under intimation to the Finance Department.
4. The expenditure would be incurred after full filling all financial/codal
formalities.
BUDGET OFFICER-I
RE-APPROPRIATION
109

Budget Making Practical Exercises
• Annual Budget Statement
• Current (Vol-II)
• Development (Vol-I)
• ADP
• Budget Call Circular
• MTBF 2013-2016
• Budget Call Letter District Government Lahore.
110

OTHER PUBLICATIONS
 Vision-2020 (during 2004-05)
 MTBF (from 2008-09)
 Multiple Index Cluster Survey (MICS)
 Punjab Economic Report
 Millennium Development Goals (MDGs)
 Punjab-Poverty Reduction Strategy Paper
(PRSP)
112

Should be accorded for the total approval
cost of scheme
Sanction to the creation or continuation of
the post, contingencies shall be issued on
year to year basis
113
BUDGET TERMINOLOGY

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