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Budgeting and Financing

All countries in the world have particular ways of deriving their revenue and of utilizing them. They usually have different needs and wants therefore they prepare budget according to what their official considers best and important for the organizations.

In every organization, its management prepares a budget that shows how it will derive its earnings and how to spend its funds so as to maximize on its profits. The budget refers to the list that shows the way revenues and expenditures are to be earned and to be spent. The purpose of the budget is to assist the preparers of financial statements to forecast on how the revenues and expenditures of an organization will be prepared within a given period of time.

It shows how the actual financial operations of the business should be measured against the forecast of an organization. Budget process is the procedure that is followed by the government financiers so as to create and to approve a budget that should be used within an organization.

Similarities and differences in the budget process at the local, state and federal level

Federal budget process

It refers to the process in which the congress develops the tax and spending legislation that is enacted in Congressional Budget Act of 1974 that states the guidelines that should be followed in order to achieve the objectives of a government. It has a centerpiece resolution that is used to set out the limits in which the spending rates and tax cuts should be undertaken within an organization. The limits are applied to the legislations that are developed by the individual congressional committee and the Houses or Senate floor that offers amendments to the   legislation.

The issues that are addressed within the budget process are; the president’s budget request that outlines the budget process of each year, congressional budget resolution that shows how it’s developed and its contents. It also shows the terms of the budget resolution that are enforced by the House and senate. The budget process consists of budget reconciliation that is used to show special procedure that facilitate the passage of spending and tax legislation of a country to other sectors of the economy (Davila, A. and Foster, G.  2005).

Budget process at the state level

The budget is usually prepared by the government officials who streamline and govern its procedures and laws.The rules are prepared on the basis of frameworks of the constitution of a country. Its presented in every year where it outline the statements of the estimated receipts and payments of the state government. The annual financial statements indicates the sums of money that should be spent within a given financial year, the estimates of receipts and expenditures are also stated, and also shows the financial position of the government at a particular point in time.

Budget process at the local level

It is prepared by the council when it resumes its duties in every year. The management presents a revised budget that shows how revenues and costs have been earned and incurred respectively. In cases where the budget is not approved by the council before the beginning of every financial year, the local governed sets up strategies that are meant to show money should be spent and in most cases it’s spent in accordance with the period stated of not less than thirty days.

It’s usually prepared by the District Government, town Council Administration and it’s approved by a respective council .The monies’ collected are usually utilized in accordance with the annual and supplementary budget and later on its approved by the council of the government.

All the budget processes are used to indicate how revenues of a government are earned and utilized within a stipulated period of time. The funds collected are utilized in accordance with the constitutions of various governments that are state, local and federal governments.

The reasons why the inefficiencies may occur within an organization are that there may be limited time for discussing all projects that should be funded so as to meet the needs and wants of the people in a community. The economic conditions such as recession, depression and inflation as they can hinder the implementation of the budget process since funds may not be generated at this time yet they are needed to accomplish the goals and objectives of an organization.

It is possible to remove the inefficiencies if control measures are put in places that ensure funds are not misappropriated by the officials. The government should employ compete people with their organization so as to facilitate quicker decision making process.

The government is usually big this is because it is represented from the highest rank to the lowest ranks since government has a flat organization structure .At the lower level we have chiefs, sub chiefs and elders that deliver services to the citizens and to the top most level we have the president therefore citizens can easily access services from the government.

4. Fiscal year refers to the period of twelve months in which an organization outlines plans on how it should utilize its funds so as to meet its goal and objectives. It is usually used in preparing the annual financial statements of a business or any organization. A budget appropriation refers the money that is set aside by the government so as to undertake a particular project within the organization.

A government official is usually a pointed to withdraw funds from the treasury so that he can allocate funds to projects that are meant to provide services to the citizens of a country. The appropriations are utilized in accordance with the funds that have been allocated in the budget (Davila, A. and Foster, G. 2005).

Budget forecasting refers to the process of setting up budgets within an organization that are meant to cater for the uncertainties that may arise in the future. It also helps in improving on the performances of an organization so as to derive as much revenues as possible in the future. The free riders are the persons who enjoys free goods that are provided by the government and yet they do not contribute to their success or their implementation.

Paretal optimality refers to the situation where an individual neither gains nor loses from an event .It said to be inefficient when there are certain changes to the allocation of goods that may make them to be better off than others, although it can be reserved by improving on the performance of an individual skills

The relationships between the terms are that; the funds that have been allocated for an organization should be utilized within a fiscal year that is a period of twelve months. The management should prepare budget appropriations that should be used to meet the uncertainties that may occur in the future .The uncertainties that could be a threat to an organization since it may fail to achieve its goals and objectives ( Alagiah, R. 2006).

Some people within organizations could enjoy services that they have not paid for example low income earners who are taxed less than the wealthy the people in a country. The funds that are used to provide these services are allocated by the official at the treasury who ensure that citizens obtain services effectively.

The relationship between the congressional budget office and office of the management and budget

Congressional budget office

It is a federal agency that is within the legislative branch of the United States government. It was created by the Congressional budget ad the Impoundment Act of 1974. The Congressional Budget Office was established in the year 1974 so as to assist the Congress in strengthening the controls that are in the federal budget. It also provides information and the analysis on the economic trends and budget requirements of the organization at that time.

It also used to compare the current authorizations and appropriations of a government  so as to the overall government expenditures, budget authority and the outlays the congress annual budget resolutions are properly taken into account so as to make proper controls for an organization.

It carries out the same activities as those of the Joint Committee on Taxation that estimates revenues of the congress Department of the treasury for estimating revenues for the executive’s branch and office of the management and budget that estimates the spending for the executive branch. Its major responsibilities are those of projecting the effects of the proposed legislation. Its goals are to provide congress with the objective, timely, non-partisan analyses that are needed for economic and budget decisions. It also provides information and estimates that are required for the congress process ( Alagiah, R. 2006)…

The office of the management and budget

It refers to the federal agency that is responsible with approving the federal regulations and data collection instruments.It’s a cabinet level office that has the largest office with the executive office of the president of United States of America. White house oversees the activities of the federal agencies. It provides the white house officials with advice that concerns a wide range of topics that relate to the federal policy, management legislative, regulatory and budgetary issues.Its employers are charged with the responsibility of monitoring how the assigned federal programs to the presidential policies are implemented and followed by the residents.

It also performs other tasks such as; gathering, filtering and promulgating the president s annual budget request, issuing bulletins, memorandums and circulars that dictate the management practices so that it can adhere to the rules and regulations of the organizations.

The relationship between the office of the management and budget and Congressional budget office is that they both control measures that are used to ensure that the projects of an organization have been allocated funds that will lead to its accomplishment of its goals and objectives within the stipulated period of time

The agencies do have counterparts at the state level because they are enacted according to the governments’ constitution and have their acts being recognized by the government. Their offices are within the government therefore they run their affairs according to the regulations of the government ( Alagiah, R. 2006).

The budget can be estimated by determined the population of a country, occupation of its citizens, age group of the people in a country and geography of a country. In case the populations of a country have a high population then the budget estimates are higher unlike when the population is low. If the numbers of people in a country are unemployed and poor then more funds are released to provide services to them.

Equation

Yield=Base *rate –uncollected refer to the income that is derived a government or an organization after investing funds in a project. The base is usually less than one year

Characteristics of good taxation system

The taxation system refers to the system that is recognized that is used by the government to assess and collect taxes so that it can undertake various activities within an o country such as improving the rate of growth within a country, reducing poverty and providing safety services for the citizens

The good tax system should be understandable such that the people should know the reasons why they are been taxed or not being taxed so that they can undertake that task effectively. It should not fluctuate from one year to another therefore should be stable so that persons may not doubt the way its operated thus resulting to evading of taxes due to the fact that it acts as disincentive that can make people to work less.

Tax system should be fair such that parties involved can be in a position to balance between two main parties that is those who should be paid more or those who would get the most benefits out of the tax revenues. It is impossible to avoid paying taxes since all residents and organizations are expected to comply with the regulations and laws of the organization.

It is important for organization to control and monitor how funds are utilized within their organization so as to overcome budget deficits in the future.

References:

Alagiah, R. (2006). The Object and the Subject of Accounting Budgets: Evidence of Early Use            by British Colonial Houses. Journal of Applied Management Accounting Research

                        (Summer): 63-76.

Davila, A. and Foster, G.  (2005). Management Accounting Systems Adoption Decisions:

            Evidence and Performance Implications from Early-Stage/Startup Companies. The

                        Accounting Review (October): 1039-1068.

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