Financial Administration

Financial administration involves planning of public expenditure and revenues, making funds available for the governmental activities and ensuring the lawful and efficient use of these funds.
Financial administration is a composite term for a number of discrete functions as follows:-
  (a)  Preparation of the budget i.e. , of
         the estimates of the revenue and
         expenditure for the ensuring           
         financial year;
  (b)  Getting those estimates passed
         by the legislature or other
         competent authority;
  (c)   Execution of the budget i.e.
          regulation of the expenditure and
          raising of revenues according to
          it;
   (d) Treasury management i.e. safe
         custody of the funds raised and
         due arrangements for the
         necessary payments to meet
         the liabilities;
    (e) Rendering of the accounts by the
          executive and audit of these
          accounts.

What is a Budget?

The term budget has been derived from a French word, 'Bougette' which means a leather bag or wallet. The term was used in its present sense for the first time in 1873, in a satire directed against Walpole's financial plan for that year. Traditional budget acquired the descriptive title of 'line item', as the object was put on the left side and the cost on the right side. As Widavsky has put it: A budget is ' a series of goals with price tags attached'.
A budget is in reality a statement of the estimated receipts and expenses during a fixed period. It is a comparative table giving the amounts of the receipts to be realised and of the expenses to be incurred,it is an authorisation or a command given by the proper authorities to incur the expenses and to collect the revenues. It is the document through which the executive comes before the fund raising and fund granting authority and makes full report regarding the manner in which government has managed affairs during the last complete year.

Evolution of Budgetary Thought: Bertram Gross and Allen Schick have classified the different stages of the evolution of Budgetary thinking in government. Periods categorised by them are as follows:-
1. Traditional or line item budgeting, with inherent control orientation;
2. Performance budgeting with its management orientation;
3. Planning programming budgeting system with its economic planning thrust;
4. Management by objectives with emphasis on budgetary decentralisation;
5. Zero based budgeting, with its emphasis on ranking programme priorities; and
6. Budgeting as political management, with its centralising and legislative overtones.

Types of Budget:- Usually there are three types of Budget;
1 Legislative:- When budget is prepared by a committee of the legislature on the request of the executive, it is known as a legislative type of budget.

2 Executive:- Here in budget is prepared by the executive and after it has been approved by the legislature, responsibility for its execution lies with the executive.

3 The Board or Commission Type:- In this type, Budget is formulated by a Board or a commission which may consist wholly of administrative officers or a joint team of legislative and administrative officers.

A Budget system has three phases:-
1. Formulation of the Budget and determination of the authority for the formulation of the budget.
2. Legislative action upon the Budget.
3. Executive of the budget i.e, putting of the provisions of the Revenue and Appropriation Acts into effect.

Budgetary Processes includes publicity, clarity & precision, comprehensiveness,unity,periodicity, accuracy and integrity.