The Role of Budgeting in the Management of Public Institutions


A serious discussion on the budget is always welcome the time is passed when  serious budgeting was reserved for the private sector.  Those were the days of additive and incremental budgeting techniques, when budgets were only for the purpose of securing funds form approving authorities.  This lasted for so long in Nigeria as a result of our prolonged experience whit dictatorship.  Military rule did not allow for separation of power and its obvious advantages including democratization of the economics financial legal and socio- political document  it makes an important input on the life of every citizen as well as on every sector  of the economy.  it holds the key to sound economic management and programmed development.  When the history of the miracle of Japan is completely written a chapter must be devoted to its disciplined budgeting system (Nweke 1999:1)

According to Koontz etal (1981:744) “budgeting is the formulation of plans for a given future period in numeric terms.  As such budgets are statements of anticipated results, in financial terms as a revenue and expense and capital budgets or in non financial terms as in budgets of direct labour- hours materials, physical sales volume or units of production.  It has some times been said that financial budgets represent the “dollarizing” of plan”

According to Olewe (1995: 381), during the looking of era of laisses faire budget was looking upon merely as a  device for securing orderliness and method in management  of the state finance. In the present industrial society with complexities and  uncertainties the state’s role in national property and welfare has assumed a wider dimension and greater significance.  With such changing situations characterizing the role of the state there has emerged new conception of budgets as a major instrument of social and economic policy such objective include:

  1. Securing full employment for the citizens as part of the good welfare of the state.
  2. Redressing the inequalities in the distribution of income and wealth.
  3. Increasing productivity; and
  4. Combating inflation caused by several factors


According to white (1958:108) “budget is a proposed work programme with estimates of the funds necessary to execute it. As a basis of efficient  fiscal management Willouph by (Ency, iii and iv:39) opined that the “real significance of the budget system lies in proving for the orderly  administration of the financial affairs of the government..  such operation involves estimates of revenue and expenditure appropriation acts reports etal.  It is in this direction that Willouhby ( Op Cit) further states that “an estimate is first made of the expenditure that   would be regained for the proper conduct of government  the public treasury  one the basis of such information the executive set forth his programme of work for the coming years with proposal of the financing of such work”

Budget has been seen in recants periods in Nigeria as a device for stepping productivity by protecting and  subsiding industrial and agriculture.  This budgets preparation and/ or execution or implementation have for reaching effects on the economy of a country for an economy to grow budget preparation and   execution must be devoid of petting politics religions and ethnic sentiments (Olewe, Op Cit: 382)

According to Nwous (1981:3) (in Udenta 1993:1-2) a budget is a financial plan which  is intended to provide guide for future events and behaviour. In a more general sense budgeting is concerned with the translation of financial resources into human purposes.  it may be concerned with the translation of financial resources into human purposes.  it may be conceptualized as a series of goals with price tags attached.  This last perspective is important because budgets in the public sector are generally treated as rigid plans which must be followed  irrespective of changing circumstances  which is wrong.  And again budgets are seen as ready cash already appropriated for expenditure and consequently must be spent.  Which again is equally foe form the reality. The reality is that it is a financial plan which is intended to provide guide for future events and behaviour.  However this is important viewed from another angle the budget may be regarded as a from of contract. This is the basis of the perception of budgets in the public sector as  rigid plan which must be followed.

Budgeting from the foregoing is not simply a one way process in which the executive makes proposals it is a joint exercises by the executive, the legislative authorized and the administrators.  The executive prepares the legislative authorities and the administrator’s implement.


Budgets have the following elements:

  1. It is statement of expected revenue and proposed expenditure of concerned authorities
  2. It requires some authority to sanction it.
  • It sets forth procedure and manner in which the collection of revenue and the administration of expenditure is to be carried out.
  1. It has a definite period one year three years or five years.



The principle of budgets are:


The chief executive being  responsible to run the administration he is in the best position to state the quantities of funds required to make it functional.  Budget preparation being a difficult task the chief executive must seek the assistance of budgetary experts  who also guides its execution.  In Nigeria the  chief executive is helped by the minister of finance and the bureau of budget.


The budgetary processes of preparation of estimates legislative action and execution must be based on complete financial and operating report coming form all level of administration.  Budgetary without such reporting is blind and arbitrary


The estimated expenditure should nor exceed the revenue income when the amount of expenditure and revenue in a budget are equal or nearly equal it is called a “balanced budget.  If the expenditure is less than the anticipated revenue it is called a “surplus budget” if the expenditure is more than the estimated revenue it is  called a “deficient budget”.  Budget should neither be surplus nor deficient, but in developing countries like Nigeria where development programmes require high investments and the capital or funds are in short supply, it is difficult to have a balanced budget.  In the last few years in Nigeria (1994 195) there had been balanced budget due to some administrative commercialization exercises.






it means estimates being as exert as possible there should neither be over- estimating nor under estimating.     Over estimating results in people being heavily taxed.  The departments would waste money because they over- estimated their programmes  and there would be difficultly in spending it this  leading to squander mania.   Over estimating also leads to cuts in the estimates of other department. Under estimating on the other hand upset calculation, accounts and audits would be affected.


The budgetary heads should be the same of as those of accounts.  This facilitates preparation and control of budgets as well as the keeping of accounts and audit.


Budget has two parts viz

(a)  Revenue budget and

(b)  Capital budget.

a.       The revenues budget involved recurring income and expenditure.

b.       The capital budget on the other hand is that in which receipts from loans deposits sales proceeds of property etc.  are occasionally and  not recurring.  On its expenditure said also, capital outlay on works debts payments, paying back deposits etc.  it keeps the financial picture very clear and their balance separately too.


The estimates of income and expenditure should be related to what is expected to be actually received or spent during the year and mot to liabilities or demands which incurred or which accrue within the year under reference but are to be meet or realized in some other.

viii.    RULE OF LAPSE

This means that the money kept unspent by a department has to be returned to the treasury.  This money does accumulate for the department.  Money left unutilized is very harmful.  That is the reason why budget should be as exact as possible.




The government should have one budget incorporating all revenue and expenditure.  This would make it possible to know the overall financial position of the government as a whole.

Although the principle of budget units often advocated.  For example in India there are two separate budgets in the country the railway budget concerning the railway ministry or the departments overall income and expenditure and general   budget containing estimate’s of income and expenditure and financial proposal for all other departments except the railway



Beside the long term budget for fives years or ten years plan or the rolling plans budget should be prepared on the annual basis that is for a period of one year.



Budget should have provision to accommodate necessary changes in the light of changing social and economic situation.



Budget is the programme of the chief executive.  As an executive programme, it most be under the direct supervision of the chief executive.



Budgetary responsibilities of the chief executive requires him to be endowed with certain administrative tools.  For instance he must have an adequately equipped budget office attached to him and authority to earn mark monthly or quarterly allotment of appropriations



though all government operations are reflected in the budget the methods of budgeting may vary according to the nature of operations hence the budgeting of quasi commercial activities may be different from that of purely administrative activities (Olewe,Op Cit 384-388)



According to Koontz (Op Cit 745-747) since budget express plans and since the typical enterprise has a huge verity of  plans there are many types of budgets. This may be classified into five basic types with a budget summary prepaying the total planning picture of all the budgets.

  1. Revenue and expense budget.
  2. Time space material and product budget
  • Capital expenditure budget
  1. Cash budget and
  2. Balance sheet budget.



By fat the most common business budget spell out plans for revenues and operating expenses in (Naira) terms.  The most basic of these in a business is the sales budget the formal and detail expression of the sale forecast.  As the sale forecast is the corner- stone of planning the sales budget is the foundation of budgetary control.  Although on organization may budget other revenues such as expected income from rentals royalties, or miscellaneous sources the revenues from sale of products or service furnishes the principle income to support operating expenses and yield profit.

Operating expenses budgets can be as numerous as the expenses classification in an enterprise chart of accounts at the units of organization in its structure.  These budgets may deal with individual item of expense such  as direct labour materials supervision clerical rents heat power travel, entertainment, office, supplies, shop, supplies and many others, sometimes the department heads may budget only major items and lump together other item in one control summary for example of the manager of a small department is expected to one business trip a year at a certain cost budgeting the cost each month at nay amount would mean little for monthly planning or control.



many budgets are better expressed in physical than in monetary terms although such budgets are usually translated into monetary qualities they are much move significance at a certain stage in planning and control if dealt with in physical quantities.  Among the more common of these are the budget for direct labour hours machine hours, units of materials, square  foot allocated, units produced.  Most firms budget product out put and most production department budget their share of the output of components of the final product.  In addition, it is common to budget either in labour hours or labour days be types of workforce workers required.



The capital expenditure budget outlines specifically capital expenditure for plants machinery equipment inventories  and other items whether of a short or a long term this budget requires care in giving definite from to the plans for spending the forms of an enterprise. Since capital resources are generally one of the most limiting factors of any enterprise and since investment in plant and equipment usually requires a long period for recovery capital expenditure budget should be diligently tried in with long range planning.



The cash budget is simply a forecast cash received and  disbursement against which actual cash expense is measured. Whether  called a budget not this is perhaps the most important simple control of a business. The availability of cash to meet obligation as they fall due is he first requirement of business assistance and handsome profit do little good when tired up in inventory  machinery or other non-cash assets.  Cash budgeting also  shows availability of excess cash thereby making possible planning for investment of surplus



The balance sheet budget forecasts the status of assets liabilities the capital account as of particular times in the future. Sine the sources of change in balance sheet items are the various other budgets  it proves the accuracy of the other budget.

In addition to the balance budget many of its items may be budgeted in various degree of detail.  The more common in addition to cash and capital investment are special budgets of accounts receivable inventories and accounts payable.



According to Mikesell (1992: 213) in the recent time some specialized budgeting  techniques have been developed to aid management in the performance of  its functions.  Two of these techniques are planning programming budgetary system (PPBS) Zero based budgeting (2BB).


  1. Planning Programming Budgetary System (PPBS)

The PPBS which was developed the united states of America has been widely adopted in many countries and industries.  It was first practiced at General motors as early as 1924 and later at the was production boards control material plan” during the world war II.  The U.S department of Defence ( DOD) was the first government agency to adopt PPBS.

There was a need to combine performance in budgeting after world war II. The stimulus came from the first.  Hoover commission (USA) which noted that the U.S budget for fiscal year 1949- 1950 (July 1st to 30th June) contained 1,625 closing printed pages with about 1.5milion words curiously, however, there was no clear detail about the work proposed or accomplished in the budget. The Hoover commission then recommended that the whole budgetary concept of the federal government should be refashioned by the adoption of a budget based upon  function activities and project called performance budgeting (later called programme budgeting).

According to Desmond keeling, PPBS is a process by which resources are identified cost assigned to the objective to which their use is intended to serve through a series of programmes each comprising a   number  of programme elements.

Abbah (1997-189) identified four elements which stand as the components of formal structure of PPBS

  1. Programme Budget

The activities and budgeting cost of programme are grouped into programme categories programmes  whose outputs are closely related and therefore either close substitutes or necessary components are grouped tighter.  These are programmes or programme classification they can and should be changed as analytical needs dictates.  Broad categories such as health are classified into sub-categories such as development  of  health resources and prevention and control of health problems.  Each of these sub-categories is in turn further divided into programmes elements. The sub- categories in this case prevention and  control of health problems for example may contain such programme elements as mental retardation radiological health air pollution, etc.  there is noting secret about the programme classification.

  1. Programme and Finance Plan.

Each agency is required to submit as part of the annual budget process a multi year (usually 5 years) programme and finance plan according to programme categories sub-divided into sub-categories and programme elements. Both financial cost and whenever possible measurers of proposed programme outputs are provided.  In effect the programme and finance plan in a tabular records of the ministry’s proposed activities measure in both physical and financial terms and finance plan is not a planning document in the true sense of the word since the plan does not fully reflect the ministry’s proposed coursed of action over the period covered by the plan.  There are in effect two types of forward plan.

The first cover the future budgetary consequences of current decision.  It provides an information system whereby built in budgetary increases can be estimated in the aggregate and by individual programmes.

The second project the composition of the ministry’s programmes  over extended period including consequence of decision which will be taken for several years. Such  plans are by nature highly tentative and change periodically.

  1. Programme Memorandum

while the programme and finance plan is a tabular record of costs and output consequence of proposed budgetary decisions, the programme memorandum  provides strategic  and  analytical justifications for the these decision.  Each major programme is covered by a programme memo. Ideally, it summarizes the analytical basis for important policy choices. It gives detailed explanation to the programme and finance plan as it relates to the entire programme progremme classification (sub-categories) and programme elements

  1. Special Issues

For the programme memorandum to be a useful tool, decision making cannot incorporate the independent analytical study programme issues but can only summarize the basic programme strategy and where relevant the analysis on which it is based.  Each year the office of budget and planning and the individual ministry jointly  agree on a programme issue for which detailed analytical  study is to be carried out.  The result of  studies are themselves the subject of discussion and form the basis for programme memoranda.  Budaget are allocated to programmes and special issues within theses programmes and not to individual departments and finally the output of each programme is  compared with its objectives.

In the words of Henry, (1980:212-213) PPBS represents a systemization of political choice in the format of budget formulation. He added that PPBS is an effort to render decision making by public administrators as rational as possible, PPBS represents a respondent between budgeting and planning. Its major characteristics are listed below;

  1. PPBS is an effort to integrate budgeting formulation with Keynesian economic concepts, that is, it attempts to consider the effects of government spending on the national economy.
  2. PPBS is an effort to develop and use new information sources and technology to bring more objective and quantitative analysis to public policy making. PPBS is an effort to integrate system-wide planning with budgeting.


According to Hatry, (1974:107), the favourable aspects of PPBS rest on the fact that it sharpens and clarifies the policy options available to administrative decision makers. In this vein it causes many agencies that use it to reconsider their missions and how they have been defined, with a broader range of policies being opened.  Coordination is enhanced by the use of PPBS because the hard analysis that it forces brings out the inter-relationships among the various programme of the agency.

  1. PPBS advocates the application of the Rational Comprehensive Approach (RCA), of decision making into budgeting. The (RCA) is however, largely not practicable. For practical reasons, budgetary decisions in government have been made on the basis of incrementalism. Both administrators and parliament accept programmes and budgets as “given” and concentrate on requests for financial increase or reductions. This process is neither rational nor comprehensive but seeks mainly a compromise. According to Lindbloom, (1968:110), “partisan mutual adjustment is characteristics of the real world and that complex decision, making is necessarily fragment, disjoined and incremental”
  2. For the above reasons PPBS is also political unsuitable actually government budgetary decision are arrived at by striking a compromise between the contending groups factions and interests rater then rationality
  3. PPBS is very technical un nature and most executive do not posses the technical knowledge to operate of understand the details involved.
  4. There is an apparent conservatism on the part of both the legislative and executive alike on the traditional line items budgeting. Even most departments ate reluctance to make the change  from their usual practice and procedure of annual budgets to longer range programme budgets.
  5. PPBS requires accurate and up to data information and data to be operated successfully. These are usually lacking in most organization



According to Philips (1985 262) the PPBS is not as strange to Nigeria as it may sound for over decades now several knowledgeable Nigerians have been giving through to its adoption in Nigeria.  More importantly already two state governments (Oyo partially and Ogun totally) have adopted the PPBS with favourable results within the last six years (from 1985 through)


According to henry (OP Cit 222) Zero base budgeting system developed at USA in 1970 by peter Pyhur at the taxes instruments. It was however adopted first in government in the state Gerogia under Jimmy Carter as governor in 1971 it the US federal government as president.

According to Carter (1974:42) the service provided by Gerorgia’s state government are now greatly improved and every tax dollar is being stretched farther than ever before. There has not been a general state wide tax increases  during my term. In fact there has been  a substantial reduction in the ad volerem tax’

In the word of Schicilc (1978:178) “ZBB was introduced quickly and painstakingly   because it did not alter the rules of evidence for budgeting or the structure for budget choice.  There is not a single bit of budgetary data unique to ZBB.

Agency after agency accommodated ZBB to its existing budgetary framework.  If an agency had a programme budget is selected programmes as decision units if its budget still was oriented to organizational lines these became its ZBB categories”

ZBB, in practice, employs two steps the first step is the development of “decision packages” for each agency with each package containing a summary analysis of each programme within the agency. These packages are ranked by the agency priorities. The second step requires that each decision package be evaluated by top management to determine  whether it is justified for further funding.  Programmes that are considered ineffective or to have out grown their usefulness are discarded modified or combined in other agencies.

In short, ZBB gets its name from the fact that each year budget is computed from a hypothetical “zero base” it asks what would we do with this agency ‘s funds if they were not already committed? To determine such options parishioners of ZBB identify each decision unit analyze each unit within a decision package evaluate and rank all decision packages to develop the appropriations request and finally prepare a detailed operating budge that reflects those decision packages approved in the budget appropriations.  In short and like management by  objectives zero base budgeting is in many respects a throwback to performance  budgeting of the 1950s in that to quote of all “zero base means the evaluation of all programmes (Henry Op Cit 223)


  1. Unnecessary activities are easier to detect in separate packages than in the traditional block budgeting.
  2. Since move than one level of performance and cost for the same activity is submitted an activity/service level can be chosen that is cost compatible with objectives and availability funds.
  3. Where alternative ways of performing the same function are developed terms of efficient and effective choice can be selected.
  4. It ensures that all managers whatever their levels in the organization evaluate in detail the cost effectiveness’ of their unite activities.
  5. Because it involves every managers ZBB gives the organizaiton the benefit much expanded management participation of in planning and budgeting  at all level of the organization


  1. It requires a real deal of time work, people and money than the traditional budgets
  2. The expertise to analyze the decision packages is always lacking in most organizations.
  3. ZBB is based on the RCA and public budgeting begin a political activity proceeds by instrumentalism
  4. Public expectation as to level of service and pressures of interest group make ZBB impracticable in public organizaiton.



According to the civil service hand book (1997:12-16) the term “public finance” is referred to as “government finance or “public moneys” it is defined by section 2 of the finance (control and management) act of 1958

  1. The public revenue of the federation
  2. Any moneys held in his official capacity

whether subject to any trust of specific location or not by any officer in the public service of the federation or by any agent of the government either alone or jointly with any other person


In economic via interpenetration through  fiscal policy using discretionary changes in the levels of government taxes expenditure, and borrowing to achieve desired socio- political and macro-economic objectives.

However public finance or government revenue refers to various sources of income to the government. Revenue can be classified into broadly two sections namely:

  1. Oil revenue
  2. Non-oil revenue

Oil revenue includes petroleum profit tax rent royalties and government crude oil sales and proceeds from domestic consumption etc.

Indirect taxes include exercise duties import duties purchase tax etc.

Tax revenue and non-tax revenue.  The tax revenue includes or consists of both direct and indirect taxes while the non-tax revenue refers to income accruable to the government outside its taxes such as operation surplus from its parastatals.  In many cases government revenue is classified into heads and  subheads as shown in the examples below. Government revenue or moneys accruing to the government to meet its service as derived from various sources but largely form oil revenue and additional revenues from oil revenue. OIL REVENUES COMPRISING MAINLY 

  1. Joint venture cash calls royalty (TVC):
  2. Petroleum profit tax;
  • Rent
  1. NNPC earning from direct sales, sales of gas (crude oil sales)
  2. Proceeds from domestic market
  3. Penalty from gas flared
  • Pipeline licenses and other fees
  • Excise and VAT on domestic crude


  1. Non-oil revenue
  2. Customers and excise
  3. Direct taxes

iii.      Mining

  1. Head 001: customs and excise: sub heads
  2. Import duties
  3. Export duties

iii.      Excise duties

  1. Fees.
  2. Head 002: direct taxes: sub head
  3. Company income tax;
  4. Federal government independent revenue;

iii.      Value added tax (VAT)

  1. Technical committee on privatization and commercialization (TCPC)
  2. Pump price of petroleum product (PTF)
  3. Back duty penalties

vii.     Capital grain tax;

viii.    Surcharge on pioneer companies

  1. Personal income tax
  2. Pump duties and penalties


  1. Head OO3:mining sub heads
  2. On pipelines licenses;
  3. Rent on mineral licenses

iii.      Royalty on oil and gas sales;

iv       NNP Earning from direct sales;

  1. Sales of crude oil for domestic consumption.
  2. Penalty for gas flares
  3. Head 004 and 005 (vacant)
  4. Head 006: statutory allocation from federation account: sub-head

federal governments share of federal account.

  1. Head 007: direct tax sub-heads.
  2. Personal income tax: armed forces police and foreign affairs
  3. Personal income tax: Federal capital territory  residents

iii.      Company pre-operation levy

  1. Sales tax in Abuja
  2. National economics recovery fund arrears;
  3. Personal income tax non residents

vii      Capital gain tax I.T.D (Esg)

viii.    Non- resident company I.T.D (RC)

  1. Non- resident individual I.T.D (RS)
  2. Value added tax (VAT)
  3. Head 008; licenses and internal revenue sub heads
  4. Goldsmith and gold dealer licenses;
  5. Radio and station licenses;

iii.      Arms and ammunition license

  1. Head 0010: fees such heads
  2. Supreme court/ industrial court.
  3. Trade marks fees

iii.      Company and business name fees

iv       passport fees;

  1. Deeds registration fees (F.M.N & H)
  2. Head 0011: earning and sales: sub heads
  3. Earning and sales (aviation)
  4. Earning and sales (G.C.A)

iii.      Establishments and stores

  1. Prisons, etc.
  2. Head 0012: rent on government property: sub-head
  3. Rent on federal government quarters, juniors staff
  4. Fees for temporary occupation

iii.      Oil plot rents and aerodromes etc

  1. Head 0013: interests and repayments;

General: sub heads

  1. Investment general
  2. Joint consolidated fund

iii.      Stock transfer

  1. Central bank operation
  2. Nigeria national petroleum corporation (NNPC) operating supplies etc.
  3. Head 0014: interest and repayments

State government: head

  1. 1959 FRN 1st development loan; sinking fund
  2. 1961 exchange loan: interest
  3. Uk exchange loan: interest.
  4. Head 00015: reimbursement (8) sub head
  5. Reimbursement of audit fees
  6. Police secondment fees and reimbursements

iii.      Aviation unity service Kano and Ikeja

  1. Cost of collection of customs and excise
  2. Revenue part reimbursement state government etc.
  3. Head 0016: armed forces sub-head
  4. Rent
  5. Sales

iii.      Electricity and water receipts

  1. Head 0017: miscellaneous: sub-head
  2. Refund of overpayment
  3. Deposit of lapse

iii.      Sundries.



Between July and August each years, the ministry of finance and economic development sends to the accounting officers of each ministry and extra ministerial developments a circular letter know as the “call circular” which includes details regulations for the preparation and submission officer to submit the estimates for the anticipated revenue recurrent and for the anticipated revenue recurrent and capital expenditure of the votes administered by the department for the financial year beginning on the following 1st January.  These details normally cover the period between 1dt January and 31st December of the year (commonly referred to as financial or fiscal year).  It should be stated however that there is no special significance for the data fixed for the beginning and end of the financial years.



In vary degrees several ministries and  Extra- ministerial departments in the federal and state civil services are responsible for collecting government revenue form the people depending on the size of social and other service that the government may provide for the people. Depending on the size of government revenue, it extremely important that accounting officers (permanent secretaries and departmental heads) and other staff in revenue- earning ministries and  extra-ministerial departments should do all they can to collect all the moneys due to government.

Time and again in his career an officers may be called upon to help in collecting government revenue.  In this regard the accounting officer of the ministry of extra-ministerial departments will ensure that the provisions of the financial regulations are complied with.



Government expenditure in ministry or extra ministerial departments are mainly as follows.

  1. Recurrent expenditure, and
  2. Capital expenditure.

The salaries and wages of the civilian establishment in the 12-month period form the 1st of January  to the 31st of December are shown under the recurrent expenditure head in the annual estimates.

The recurrent expenditure of government  ministerial and extra-ministerial departments are expenditure  which re-occur year after year.  They mainly relate to the votes for the salaries wages and allowances of public servants.

The capital expenditure of government are the costs of capital works and projects, e.g. Kainji Dam, office buildings, hospital, bridges etc.  undertaken by government.




The control of government finance in civilian regime is exercised by the national assembly and through the executive.

The main feature of such control is that no money; should be spent except approved by the national assembly.  The body responsible for querying malpractices in the expenditure of ht budget approved  by the national assembly is called the public accounts committee.  It is committee of the national assembly.  The apposition is also represented by the committee the auditor-general for the federation is always in attendance at examining sessions of the committee and it is on the basis of his advice that enquires are conducted.

The financial responsibilities of government officers are laid down by law and regulations form time to time by the minister of finance.  The officer chiefly  responsible for the receipts and payments of government funds in a ministry ( the accounting officer) it the permanent secretary.  The accounting officer of an extra ministerial department is the head of department. Federal government financial regulations define the term accounting officer “as” the officer of the ministry or extra- ministerial department who, the ministry of finance regards as primarily responsible for the control of all funds voted for service provided by the ministry.  Extra-ministerial department within the ambit of the ministry or extra ministerial department.

The chief accounting officer of government is the accountant- general of the federation this counterpart in a state government is called accountant general. He is responsible for all receipts and payments of non self accounting departments.  In accordance with the financial regulations “he  is also responsible for the general supervisor of the accounts of all ministries and extra ministerial departments within the federation and for the compilation of the annual financial statement of accounts and such other statements of accounts as may be required by the national assembly or by the minister of finance”

Constitutionally, the federal auditor general is responsible for the audit of accounts of all accounting officers and all persons entrusted with the collections reports custody and issue of payments of federal public moneys or with the receipts custody, sales transfer of delivery of any stamps securities stores or other property of the government of the federation and for the certification of the annual accounts of the federal government



All civil servants should be cost conscious in spending public funds on behalf of government.   Extravagance may be checked in the following wages:

  1. Every officer or employee should justify his employment by giving efficient services in return for his earning.
  2. Every official expenditure should be dully authority as required by regulations.
  3. The expenditure should be in accordance with the financial regulations.
  4. Staff recruitment should be dictated by real needs so that under employment and over establishment are avoided
  5. Economy should exercised in buying office furniture equipment and stationery;
  6. Made in-Nigeria goods should be preferred to imported goods.
  7. No officer should condone wasteful spending of public funds by other civil servants.





the budgetary process offers the government an ample opportunity to review existing programmes and projects to ascertain their impact in the society.  Based on the findings the government will be in a position to take a decision on whether increase in resources should be maintained or not on a particular programme or whether resources allocated previous year should be reduced.

Among other uses the annual budget enables the government to prepare a short term financial plan which shall constitute an ample tool for cons trolling its activities through the year.  It is also a qualified political document and ensures a continuous monitoring procedure



The process of budgeting in Nigeria, how ever presently starts around June with call-up circulars request for the amount of and capital expenditures envisaged un the coming years.

In response to this the director general/ Permanente secretary of each ministry informs the divisional heads of his ministry and departments accordingly.  He collects viable information  from each divisional head that assist him in preparing the advance proposal of revenue and expenditure and which he finally forwards to the director of budget as instructed.

The office of the director of budget collects the advance proposals form the various ministries for consideration by a body of inter-ministerial committee officials commonly called the treasury board.

The board is comprised of representatives of the ministry of financial audit department and the cabinet office.  Each department or ministerial department is allowed to defend their respective proposals.

As soon as the inter ministerial committee completes and budgetary policies initiatives and recommendations through the director of budget to the executive  council for consideration.  The budget this moves form a technical to a political  stage because the executive council as made of political heads ie. Commissioners at the state and federal ministers at the federal level.



Under the civilian government another development at this level is that the programmes of the party in power and the particular preferences of the chief executive tend to be given a priority over any other items in the estimates.

The draft estimates is sent to the national house of assembly in the  state house of assembly at the state level by the governor and to the   national assembly at the national level by the president.  At this stage the appropriation committee examines each aspect of the budget emanating from the federal executive council.  The committee reserves the right to all on the various federal ministers to explain certain inserted in the budget.  Once the committee has finished deliberating whole house where it goes through the processes of policy making.  Later on it is sent to the president for his assents as appropriation act it is worth noting that where both house refuses to agree (at the national level) within 2 months a joint committee both houses meets to resolve the difference.  Where the president or governor fails to assent to the appropriation at within 30days it shall be returned to the house where it may be passed with a majority vote.  The president /governors assent is no longer required here.



According to Udenta (OP.Cit 6) sequll to the approve of the budget the departments or agencies carry out their approved budgets appropriations are spent and service are delivered. The approved budget becomes an important device in monitoring spending activities. While there are other important managerial concerns and actions spending is expected to proceed to proceed in a manager consistent with the financial regulations appropriations laws.  Agencies and/or departments are usually forbidden form spending more money than has been appropriated.  Defaulters are expected to face appropriate sanctions. On the other hand spending less than the appropriation while a possible sign of efficient operation may well mean that anticipated service have not been delivered or that agency or department budget request were needlessly  high.  Therefore finance officer need to continuously monitor the relationship between actual expenditures and planned approved expenditure (the appropriation) during the fiscal year.  Pre-audit activity  finds it essence in connection with the above mentioned processes/ activities.  A pre-audit with an agency prior to expenditure ascertains the   legality or appropriateness of making payment.  Such an analysis often occurs prior to the  delivery  or release of patrol   cheques.  We now turn to the last major stage in the cycle


A audit is an “examination of records facilities system and other evidence to discover or verity desired information.  Internal audits are those performed by professionals employed by the entity being audited; externals audits are performed by outside professionals who are independent of the entity” (Rousmanier quoted in Mikesell 1982:32) information will be documented on the basis of a sample of transactions and other activities of ht entity a judgment about purchasing practices for instance will be made from a review of a sample of transactions not   from examination of all invoices.  Post expenditure audits determine compliance with appropriation and report findings to the legislative (or to judicial body if laws have been violated)

The purpose of the audits is to determine as well as guarantee elective compliance with the provisions appropriations law; to ensure honesty in dispensing public funds and in preventing waste.

Audits assumed different forms depending on their orientation as determined by the expected use of the budget. One a financial audits which checks financial records to determine whether the funds were spent legally whether receipts were properly recorded and controlled and whether financial records and statements are compete and reliable. This audit concentrates on establishing compliance with appropriation law and on determining whether financial reports prepared by the operating agency or department are accurate and reliable. It also examines whether or not there has been theft by government employees (Mikesell, Op Cit 35)

Two a management or operations audit which focus on the   efficiency of operation including utilization and control of resources.  The stress is on managerial matters including such concerns as duplication of effort utilization of resources and mismanagement of equipment supplies stock and so forth.  This from is more concerned with the waste of public resources than on the theft and allied matters around which financial audit revolve.

Three, a programe audit which examines the extent at which the desired results are being achieved and whether there might be lower cost alternative to reach the desired results. It this focuses on whether the objectives of a programme are being met and then how far they are being met.

Four a performance audit which assesses the overall operation of a government agency including compliances management and programme audit.

Sunset reviews provide opportunity for such audits.  Sunset legislation establishes “a set schedule for legislative review of programmes agencies unless affirmative legislative actions is  taken to reauthorize them. Hence the “sunset” on agencies and programes” (Mikesell 1982:32)

In the united states of America where this practice is well known states with provisions form sunset reviews typically include a performance audit as part of the preparation for action on agencies or programmes eligible for termination.

At this juncture  it is not out of place to add that his “sunset” practice is highly recommended for Nigeria there are several programes/ agencies that constitute nothing but source of waste of public revenue.

However when all audit work is completed the budget cycle for the fiscal year of concern is over.



Many of the deficiencies of the traditional budgeting system as shown by emergent states are explained by the fact the budget is dominated or predominantly geared toward  the control and accountability of expenditure. In this from of budgeting little or nor attention is paid to overall long term objectives of the government or programme content and their contributions to specified developmental objectives.

The consequences of this from of budgeting format are several e.g.

  1. The structure of the budget is oriented towards objective expenditure such as salaries travels and furniture and organizational responsibility for expenditure rather than an government programme/objectives. A budget structure in this manner however provides little information about the government objectives and its programmes and makes the examination of alternative courses of  expenditure particularly difficult.

Additionally this structure does not permit an analysis of the impact of the budget on the economy and its effect on investments and  other macro-economic variables.

  1. Another defect of the traditional budgeting is its heavy reliance on instrumentalism. Pervious levels of expenditure are accepted as given and only request for additional funds are examined.  Instrumentalism however can have damaging.
  2. Procedure of fiscal management takes precedence over the evaluation of expenditure “how” rather than “why” decision are made in the important consideration and this cause delays which adversely affect the implementation of programmes with a resultant displacement of objectives
  3. The traditional budget also tends to become a highly rigid documents. Even for a time horizon of only one year the foresight of an operating government department or budgeting agency is less than perfect coupled with changing circumstances and poor estimation form the out however, the all important twin concepts of control and accountability in the traditional budgeting male changes really difficult. The relocation for expenditure  from one line term to another or form one programme to another is resisted.
  4. With programme performance usually measured exclusively in financial terms and by objects of expenditure it is difficult to determine the results effects and benefits of a government’s programme.
  5. Concern over control and accountability has implication for the time horizon of the budget.  Seldom is there an effort to examine the expenditure implications of current decisions beyond the budget year in question for the accountants or the budget control officers this is understandable since his function is to see that present budget decisions are properly implemented rather than to be concerned with he dimension of future budgets.
  6. Concern over accountability also influences the type of personnel who staff the budget offices.  Accountants and the typical budget officers are trained and oriented to control but not for the function of planning of resources allocation


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