WHAT ARE THE PRINCIPLES OF BUDGET?
- Periodicity- Appropriation should be authorized for a definite period of time
- Publicity- All stages of budget executive recommendation, legislative consideration and budget execution should be made public
- Accuracy- Budget estimates should be as accurate as possible
- Clarity- The budget should be understandable to every citizen
- Comprehensiveness- The budget should contain expenditure and revenue on a gross basis and not on net basis
- Unity- All receipts should be recovered into one general fund for financing all expenditure
- Rule of lapse- This means that any part of the grant not spent within the financial year expires at its close and cannot be kept over for future
WHAT IS THE OBJECTIVE OF BUDGET?
- Management- Budget helps in planning by providing information about expenditure and performance. It also helps in coordination of various activities of financial management by preventing duplication and waste.
- Socio-economic change- Social change through progressive taxation eg. more tax on luxury items. Economic change through differential taxation e.g. reduce tax on cloth to promote textile industry.
- Legislative control- Budget ensures legislative control over executive through debate and discussion on budgets, cut motions, enactment process etc.