Accounting Policies & Procedures Mannual Chapter 3

 

3          Budgetary Control

Table of Contents

 

 

 

3.1          Introduction                                                                                                                                                                3.3

3.2          General Policies                                                                                                                                                         3.5

3.2.1            Responsibilities for budgeting                                                                                                                         3.5

3.2.2            General budget classifications                                                                                                                        3.5

3.2.3            Method of budgeting                                                                                                                                       3.6

3.2.4            Budget format                                                                                                                                                   3.7

3.3          Detailed Procedures                                                                                                                                                  3.8

3.3.1            Introduction                                                                                                                                                       3.8

3.3.2            Budgeting procedure - overview                                                                                                                    3.9

3.3.3            Policy setting and issue of Budget Call Circular                                                                                         3.9

3.3.4            Preparation of non-development budget                                                                                                   3.10

3.3.5            Preparation of non-development (permanent) budget                                                                           3.10

3.3.6            Preparation of non-development (temporary) budget                                                                            3.12

3.3.7            Preparation of development budget                                                                                                           3.13

3.3.8            Preparation of receipt estimates                                                                                                                  3.16

3.3.9            Consolidation of budget data                                                                                                                      3.17

3.3.10          Authorisation                                                                                                                                                  3.17

3.3.11          Implementation                                                                                                                                              3.17

3.3.12          Reporting and monitoring                                                                                                                             3.18

3.3.13          Supplementary Grants                                                                                                                                  3.20

3.3.14          Review                                                                                                                                                              3.20

3.4          Specific Budgetary Procedures                                                                                                                           3.22

3.4.1            Introduction                                                                                                                                                    3.22

3.4.2            Charged Expenditures                                                                                                                                   3.22

3.4.3            Centrally provided for expenditures                                                                                                           3.22

 

3.1              Introduction

3.1.1.1          In the public sector, the Budget is an instrument by which the Government expresses its priorities and allocates resources to implement its policies.  The Budget is a tool by which planned expenditures are controlled, at all levels of Government, including spending ministries, departments and units.

3.1.1.2          The Budget applies only to the Consolidated Fund.

3.1.1.3          Under the Constitution, the Federal/Provincial Government is required annually to lay before the National/Provincial Assembly, a statement of estimated receipts and expenditure for the forthcoming financial year.  This is referred to as the Annual Budget Statement.  This statement indicates separately the sums required to meet expenditure charged upon the Federal/Provincial Consolidated Fund and other expenditure to be made from the Federal/Provincial Consolidated Fund.

3.1.1.4          The budgeting cycle consists of six phases broadly categorised as follows:

·         setting of budget policy and initiatives: the Cabinet meets to determine budget policy, initiatives and priorities.  These are then communicated to ministries and departments via the Finance Division/Department and Financial Advisors in the case of Federal Government.

·         preparation: this stage includes the preparation and  submission of budget estimates of expenditure and receipts by entities and subsequent review and consolidation of estimates by the Financial Advisors (in the case of Federal Government) and the Finance Division/Department.

·         authorisation: this stage involves submission of the Annual Budget Statement before the National/Provincial Assembly.  This consists of two stages; approval by the National/Provincial Assembly, and authentication by the Prime Minister/Chief Minister.   The approved budget is referred to as the ‘Schedule of Authorised Expenditure’.

·         implementation:  this stage refers to the communication of the budgets to the spending ministries and departments via the Finance Division/Department and the Financial Advisor in the case of Federal Government.  On implementation of the Budget, the entity can carry out activities and incur expenditure, for which funding has been given in that period.

·         reporting and monitoring: actual revenues and expenditures (including commitments) are recorded and reported  to monitor  progress against budget throughout the financial year.  Reporting assists managers in decision making and in particular re-allocation of funds where required (Chapter 7).  This includes the provision of both internal and external reports.

 

·         review:  the periodical review of financial performance and the achievement of policy objectives by spending agencies and external review bodies.  This includes audit activities and review by Public Accounts Committee.  At year end outstanding commitments are reviewed and budget provision (through supplementary grant) made for the following year.  For Revised Budget Estimates see 3.3.5.3 and 3.3.13.

3.1.1.5          The budgetary cycle is represented in the following diagram.

           

 

3.2              General Policies

3.2.1          Responsibilities for budgeting

3.2.1.1          Spending ministries are responsible for the preparation of their own budget estimates.  In each ministry there is a Financial Advisor who is under the administrative control of the Finance Division/ Department.  This officer guides the preparation of estimates by spending entities within the ministry and co-ordinates the budget with the Finance Division/Department and various other bodies as required throughout the budget cycle.

3.2.1.2          A number of other Government entities provide support during the budget process.  These include various committees responsible for the review and approval of budget proposals (as nominated from time to time by the Ministry of Finance), including:

·         the Planning Commission

·         the Economic Affairs Division

·         the Accountant General.

3.2.2          General budget classifications

3.2.2.1          The estimates provided in the Annual Budget Statement must be shown in accordance with Constitutional requirements.  Under the Constitution the budget estimates must show separately:

·         the sums required to meet expenditure charged upon the Federal/Provincial Consolidated Fund  (refer to Direction 3.4.2.1. for a list of items included as charged expenditures)

·         the sums required to meet other expenditure, other than charged, proposed to be made from the Federal/Provincial Consolidated Fund.

3.2.2.2          Within these overall requirements, spending ministries and departments are required to submit budget estimates in prescribed classifications.  On the expenditure side, separate estimates are prepared for current and development expenditures.  Separate forecasts are also prepared for receipts.  The classification of current and development expenditure needs to be sub-classified into their Foreign Exchange and Rupee components both denominated in rupees.

3.2.2.3          Non-development expenditures refer to the on-going administrative operations within a ministry or department, in fulfilling its policy objectives.  These include salaries and allowances of officers and staff.  There are two types of non-development budget; permanent and temporary:

·         permanent budget: these are non-development expenditures that have previously been approved and are continuing.  These include permanent staffing establishments, travelling, fixed allowances and contingent expenditure.  This is submitted as the ‘Part I’ budget

·         temporary budget: these are new items of non-development expenditure such as temporary additions to existing establishments or services that have either continued on from year to year on a temporary basis or have been newly sanctioned and not included in the current year’s budget.  This is submitted as the ‘New Items Statement’ (NIS) or ‘Part II’ budget.

3.2.2.4          Development expenditure refers to activities conducted and managed distinctly as individual projects, with finite start and end dates and clearly specified deliverables.  Development projects typically involve the construction or improvement of physical assets or the development of human resources.  Development projects are submitted as ‘New Item Statements’.

Development budgets should have a flow-on effect to the non-development budget.  When a development project is completed it should result in new items of non-development expenditure, such as salaries, maintenance and utilities.

3.2.2.5          Forecasts of revenue shall be prepared by those entities responsible for administration of those revenues.  This includes tax authorities such as the Central Board of Revenue in the Federal Government and the respective Excise and Taxation Departments in the Provinces.

3.2.3          Method of budgeting

3.2.3.1          The method used by ministries and departments for preparing budget estimates will be determined by the Finance Division/ Department.  Irrespective of the type of expenditure or method of budgeting used, the estimates provided to the Finance Division/ Department must be fully substantiated.

3.2.3.2          Ministries and their subordinate spending entities should frame their budgets according to planned outcomes and not inputs.  For example, a ministry should first consider what outcomes it wishes to achieve against a particular function or program, rather than how many new staff it wishes to employ.  Development and non-development budget estimates should be considered jointly, in order to determine whether the planed outcomes of the entity (and those of the Government as a whole), can be met.

3.2.3.3          Estimates of expenditure are to be provided on a cash basis, that is, expenditure incurred when payment is made within the financial year.  This is consistent with the accounting policy for the recognition of expenditure.

3.2.3.4          Forecasts of revenue are to be prepared on a cash basis, that is, based on what can reasonably be expected to be paid and collected in the financial year.  This will be calculated from prior year collection figures, adjusted for changes in revenue collection policy.  The forecasts will be provided in gross amounts (e.g. revenues will not be shown net of any related costs).  This is also consistent with the related accounting policy for the recognition of revenues.

3.2.4          Budget format

3.2.4.1          The format by which budget estimates are to be submitted, consolidated and ultimately presented before the National and Provincial Assemblies will be the same, as determined by Finance Division, in consultation with the respective Provincial Finance Departments. 

3.2.4.2          The budget will be compiled to be consistent with the Chart of Accounts specifications.

 

3.3              Detailed Procedures

3.3.1          Introduction

3.3.1.1          This section describes steps to be followed in the budgetary procedure, based on the components of the budgetary cycle as outlined in the Introduction (Direction 3.1.1.4).

3.3.1.2          These procedures refer to the budgeting process in general and, unless otherwise specified are applicable to all spending entities.  Ministries and departments will ensure procedures for the collection of subsidiary details and the preparation and scrutiny of budget estimates are laid down in departmental regulations of the ministries and departments.

3.3.1.3          From time to time the Finance Division/ Department will issue orders pertaining to budgetary procedures.  These include specific orders for a financial year or a particular class of expenditure.  Such instructions are to be followed in conjunction with the procedures contained in this Manual.

3.3.1.4          The following key controls are essential to the budgeting process:

·         all budget estimates for a ministry or department must be reviewed and signed off by the Financial Advisor before it is submitted to the Finance Division/ Department

·         all budget estimates for a ministry or department must be approved and signed off as evidence by the Financial Advisor before it is submitted to the Finance Division/ Department

·         budget estimates and supporting schedules must be prepared in a prescribed format

·         the budgets must be authorised by the National/Provincial Assembly

·         authorised budgets must be communicated to the Accountant General so that a complete record is maintained for verification and authorisation of payment

·         the Finance Division/Department must communicate the authorised budgets to the spending ministries and departments through release letters

·         the Principal Accounting Officer for each entity must monitor actual transactions against budget.

3.3.2          Budgeting procedure - overview

3.3.3          Policy setting and issue of Budget Call Circular

3.3.3.1          Each year, the Cabinet must meet and set out the budget policy, including new initiatives, targets and priorities.  The budget policy will establish the planned surplus or deficit, with underlying assumptions on economic growth, inflation and other planning parameters.

3.3.3.2          After the Cabinet has set the budget policy, the Finance Division/ Department will prepare and issue the Budget Call Circular.  This document sets out the timetable in which budget estimates are to be provided by the spending ministries and departments and any other relevant instructions to be followed.

3.3.3.3          The deadlines for submission of estimates shown in the following sections are indicative only, as they will vary from year to year and between individual provinces.  In all cases the dates shown in the Budget Call Circular shall be adhered to.

3.3.4          Preparation of non-development budget

3.3.4.1          After the Budget Call Circular is issued, ministries and departments shall prepare detailed estimates of their non-development expenditure for the forthcoming financial year.

3.3.4.2          Development budgets must be prepared on an integrated basis. permanent and temporary budget estimates must not be prepared independently of one another.

3.3.4.3          Estimates of non-development expenditure must show separately, within each grant:

·         ‘charged’ and ‘other than charged’ expenditure

·         expenditure on revenue account and expenditure on capital account.

3.3.4.4          The Principal Accounting Officers must approve and sign off the budgets relevant to their entities.

3.3.4.5          For each spending entity within a ministry, the level at which non-development estimates are to be submitted is as follows:

·         for each grant, the grant and units of appropriation

·         for each primary unit of appropriation, to the detailed levels of both function and object heads

3.3.5          Preparation of non-development (permanent) budget

3.3.5.1          Estimates provided under the permanent (or Part I) budget, as defined in Direction 3.2.2.3, must only include items which have already been cleared by the Finance Division/ Department.  If an item appears in these estimates for the first time, it must be supported by a copy of the approval for continuation of that item on a permanent basis.

3.3.5.2          It should not be assumed that estimates provided under the permanent budget are fixed items.  Spending ministries and departments should review their overall establishment requirements and patterns of contingent expenditure to identify potential savings when preparing their budget.

3.3.5.3          In order to form the basis for the following year budget estimates, revised estimates must be prepared for the current financial year.  Revised estimates should be determined in light of:

·         actuals for the first 4 months of the current financial year plus actuals for the last 8 months of the previous financial year

·         commitments entered into and expected to be paid in the current financial year

·         12 months actuals for the previous two years

·         adjustments arising from:

·         re-appropriations within particular grants during the current financial year

·         new items of expenditure approved through Supplementary Budget during the current financial year

·         surrenders made or expected to be made during the current financial year.

·         any other relevant factors

·         the impact of development and non-development factors.

3.3.5.4          Where the revised budget exceeds the approved grant, the ministry or department must indicate how the excess is proposed to be met and the delegated authority who authorised the increase.

3.3.5.5          Where the revised budget is less than the approved grant by more than 5%, an explanation of the saving must be provided by the ministry or department.

3.3.5.6          Budget estimates for the next financial year are then prepared for each detailed head (detailed function and object within each unit of appropriation).  For permanent budgets, the following information must be provided at detailed head level:

·         actuals for the last financial year and budget variances for that year

·         budget estimate for the current financial year

·         revised estimate for the current financial year

·         budget estimate for the forthcoming financial year.

3.3.5.7          From the information collected above, a statement will be prepared comparing the differences between:

·         current year’s approved grant and the revised estimate

·         the budget estimate submitted for the current year and the estimate for next year.

3.3.5.8          Budget estimates should be prepared to include subsidiary details in the prescribed form (e.g. nominal rolls, calculation of allowances etc.), and made available for scrutiny by the Ministry of Finance, if requested.

3.3.5.9          Other relevant factors should also be considered in developing an estimate for next year’s budget.  These include the following:

·         adjustment for expected inflation as provided, increase in salary costs and any other planning assumptions provided in the budget call circular.

·         known deferred liabilities, as recorded on the Liabilities Register, for the next year.

·         anticipated savings arising from productivity gains, and reduction or termination of specific programs.

3.3.5.10          Estimates relating to approved establishments, both permanent and temporary, should take into account provisions for leave, expected vacancies and allowances payable to employees, based on past actuals and other relevant factors.  Substantiation must be provided for variations from the previous year’s establishment.

·         posts which will not be filled must not be provided for.  This includes provision for staff on long-term transfer or leave.

·         estimates of salaries must be supported by the number of posts against each establishment, and an explanation of any variation between the next year and the current year’s posts.

3.3.5.11          Lump sum provision in the budget must not be made unless in exceptional circumstances.  For example, the use of ‘other’ expenditure heads should be avoided, in favour of more clearly defined heads.

3.3.5.12          Permanent budget estimates must be submitted by the concerned spending entities to the Financial Advisor no later than 1 December each year.  Subsequently the Budget Orders pertaining to the permanent (Part I) budget must be submitted to the Budget Wing of the Finance Division/Department and copied to the Accountant General, no later than 1 January

3.3.5.13          The dates detailed are applicable unless otherwise notified by the Ministry of Finance.

3.3.6          Preparation of non-development (temporary) budget

3.3.6.1          Temporary budget estimates, as defined in Direction 3.2.2.3, shall only be included in this section of the budget where already agreed with Finance Division/ Department.  No scheme of fresh items can be included in the Budget unless it is complete and approved.

3.3.6.2          The requirements for preparation of revised estimates and excesses and surrenders as given in Directions 3.3.5.3 to 3.3.5.5 also apply to temporary budgets.

3.3.6.3          Temporary budget estimates must be submitted by spending entities to their respective ministries for examination no later than 1 November each year.  Where clearance of fresh charge proposals is required by other ministries or departments, it should be obtained prior to submission .

3.3.6.4          Temporary budget estimates must be submitted to the Financial Advisor no later than 1 December each year.  Subsequently the budget orders pertaining to the temporary (Part II) budget must be submitted to the Budget Wing of Finance Division/ Department with a copy to the Accountant General no later than 1 February.

3.3.6.5          The comparative analysis of revised estimates with sanctioned grants and budget estimates for the current year and next year provided for in Direction 3.3.5.7, should also be submitted.

3.3.6.6          The dates detailed are applicable unless otherwise notified by the Ministry of Finance.

3.3.7          Preparation of development budget

3.3.7.1          Detailed procedures for the preparation, appraisal and approval of development project proposals are set out in the ‘Manual for Development Projects’ issued by the Planning Commission and are applicable to all spending entities.  Development project estimates must only be prepared for projects approved in accordance with those procedures. 

3.3.7.2          When spending entities submit their proposals to the Planning Commission for the Annual Development Programme, a copy of this submission must be forwarded to the respective Financial Advisor.  This will include detailed estimates for individual projects.

3.3.7.3          Estimates of development expenditure for each project/scheme  must be furnished by spending entities to the Financial Advisor no later than 1 December each year.  The following information for each project/scheme must be provided:

·         name of project/scheme

·         expected date of completion

·         physical targets to be achieved in the project

·         accumulated expenditure and percentage of completion up to the end of the previous year

·         revised budget estimate and physical targets for the current financial year

·         budget estimate for next financial year

·         targets proposed for next financial year and basis for determining target.

3.3.7.4          The level at which development project budgets will be submitted is as follows:

·         development grant and scheme (project) within each grant

·         at detailed function and object level for those heads pertaining to project expenditures within each primary unit of appropriation.

3.3.7.5          Spending entities shall provide details of physical targets to be achieved by the project, along with budget estimates.

3.3.7.6          If a project is new, and a budget estimate is submitted for the first time, it should be accompanied by copies of the relevant PCI and PCII (project definition and feasibility) forms.

3.3.7.7          Proposals submitted to Works Division/Department for works expenditure to be incurred under a development project, shall be compiled by Works Division/Department on a project-wise basis and submitted to Finance Division/ Department.

3.3.7.8          Spending entities must ensure that there is no overlap of budgets between individual development projects or between development and non-development expenditures.

3.3.7.9          The local currency component of the development project estimate must be shown separately from the foreign currency component.  In addition, these components of the development project budget are not interchangeable throughout any stage of the project.

3.3.7.10          In relation to the estimate of foreign aid for a project, the following rules shall apply:

·         all foreign aid, in both loans and grants, shall be incorporated into estimates of development projects.  Such estimates of foreign aid must first be cleared by the Economic Affairs Division

·         the foreign currency component of a development project estimate must be shown distinctly with the source and type of aid (e.g. Foreign aid, loan or grant).  This information shall be provided in a separate statement to the Financial Advisor

·         foreign aid in the form of commodity assistance, where it is utilised under a development project, shall be provided for in the local currency component of the project estimate

·         the estimated Rupee equivalent of foreign currency loans to be repaid, shall be retained by the Ministry of Finance to cover such payments.  This is referred to as ‘Rupee cover’.

3.3.7.11          Once satisfied with these estimates, the Financial Advisor must obtain approval from the Principal Accounting Officer, who will sign off the budgets.

3.3.7.12          Subsequently the estimates of development expenditure must be submitted to the Budget Wing of the Finance Division/ Department, in the form of a New Item Statement, no later than 17 December each year. The new item statement, countersigned by the delegated technical authority in the Planning Commission, should include distinct information for the foreign currency component of each development project as to its source and type of aid (i.e. foreign aid, loan or grant). This information should be shown in the budget book.

3.3.7.13          After submission to the Finance Division/ Department, a number of review processes must be initiated to establish the available resources for development expenditure and examine demands of individual projects.  The review of each project must be made in light of the following factors:

·         overall resource position (resources available from the Budget to finance the Annual Development Program)

·         sectoral priorities

·         phasing of projects

·         status of projects

·         availability of foreign aid

·         likelihood of completion in the forthcoming financial year

3.3.7.14          The Federal Public Sector Annual Development Program, consisting of scheme-wise budget allocation, by sector, to each Ministry must be prepared by the Inter-Ministerial Priorities Committee. This is then submitted to the Annual Plan Co-ordination Committee for review and final approval by the National Economic Council.  This document incorporates provincial program and provincial foreign aid requirements and forms the basis for the compilation of the development portion of the Federal Budget.

3.3.8          Preparation of receipt estimates

3.3.8.1          Estimates of receipts must be prepared by those authorities responsible for administering revenues.  Preliminary revenue estimates must be submitted to the Financial Advisor for scrutiny and forwarded to the Budget Wing of Finance Division/ Department no later than 1 December each year. This enables the overall resource position to be determined for financing of the Public Sector Development Program. Final estimates, with explanatory notes, shall be received by 1 March each year.

3.3.8.2          The authorities required to submit receipt estimates are the Central Board of Revenue and the respective Excise and Taxation Departments for direct and indirect tax receipts, Economic Affairs Division for foreign aid receipts and administrative ministries and departments for other receipts.

 

3.3.9          Consolidation of budget data

3.3.9.1          After budget estimates have been reviewed by the Financial Advisor and approved by the Principal Accounting Officer, the demands for grants pertaining to that ministry or department must be prepared and submitted, (along with the supporting Budget Orders and New Item Statements) to the Budget Wing of the Finance Division/Department.

3.3.9.2          The Finance Division/Department shall review and consolidate the demands for grants submitted by the respective ministries and departments.  Where in place, computerised budget management systems should be used to capture, verify and consolidate the budget data.

3.3.9.3          The Finance Division/Department must review the consolidated estimates to ensure the overall budget policy and objectives have been met, and make adjustments in consultation with ministries and departments where required.

3.3.9.4          Upon completion of the consolidation and review process the final budget documents will be produced, for tabling before the National/Provincial Assembly.

3.3.10          Authorisation

3.3.10.1          Budgets approved in procedures as detailed earlier must subsequently be tabled before the National/Provincial Assembly for authorisation.

3.3.10.2          Authorised budgets must be recorded in the Schedule of Authorised Expenditure, with subsidiary information contained in the Details of Demands for Grants and Appropriations annual publication (current and development expenditure).

3.3.11          Implementation

3.3.11.1          After the budget is passed by the legislature, together with sums tabled for charged expenditure, the Finance Division/Department must formally communicate the budgets, as set out in the Schedule of Authorised Expenditure, to each ministry and to the respective Accountant Generals.

3.3.11.2          A separate release letter must be sent by the Finance Division/Department to the spending ministries and departments, with copies to the respective Accountant Generals, to advise on the funds made available against these budgets.  The Accountant Generals must communicate this information to the District Accounts Offices.

3.3.11.3          An appropriation ledger must be maintained by the Finance Division/Department to record the initial distributions of budgets made to spending entities and any subsequent adjustments made throughout the year.

3.3.11.4          It is the responsibility of the Principal Accounting Officer to ensure the budgets applicable to his/her spending entity are properly communicated to the various delegated officers in that entity.  The Principal Accounting Officer will maintain a record of such distributions.

3.3.12          Reporting and monitoring

3.3.12.1          The Principal Accounting Officer of each spending entity is responsible for controlling expenditure from the grants available and will exercise this control through his/her delegated authorities.

3.3.12.2          At a transaction level, Drawing and Disbursing Officers must ensure claims for payment are properly prepared and duly approved, as per the Schedule of Authorised Expenditure, classified, and recorded according to the rules procedures for expenditures laid down in chapter 4 of this Manual.

3.3.12.3          No transaction exceeding the value of available funds can be passed for payment.  However, if the claim is inevitably payable under legal contracts and insufficient funds exist, the demand for payment may be honoured.  The disbursing officer must report the matter to a delegated authority before approving the claim (Direction 3.3.12.7).  In such circumstances the Principal Accounting Officer must take appropriate actions to find the extra funds for such payments.

3.3.12.4          Any spending entity required to undertake work or incur expenditure on behalf of another is required to exercise proper budgetary control over the funds provided by the principal authority.  The entity incurring the expenditure must ensure:

·         the funds provided by the principal entity are not exceeded

·         the money is spent for the purpose intended

·         any anticipated savings are promptly surrendered back to the principal entity.

The principal entity will communicate the grant within which expenditure may be incurred to the concerned spending entity and issue the required approval for expenditure to be incurred by a nominated authority in that entity.

3.3.12.5          The Principal Accounting Officer in each spending entity, as part of his/her responsibility for monitoring expenditures, must submit a statement of excesses and surrenders to the Finance Division/Department at prescribed dates, and in a format set down by the Finance Division/Department.

3.3.12.6          All anticipated savings must be surrendered to the Government immediately as they are foreseen, but no later than 15th May each year.  Savings from funds provided after 15th May  must be surrendered no later than 30 June.  Stringent controls should be exercised in the spending of all potential or actual savings.  In addition:

·         no savings should be held in reserve for possible future excesses

·         expenditure postponed must not be re-allocated to meet new items of expenditure

·         expenditure must not be incurred simply because funds may be available within a particular grant.  Grants that cannot be properly utilised must be surrendered.

3.3.12.7          Excesses (i.e. expenditure for which no provision has been made in the current year’s original budget) should not normally be incurred.  However, in certain cases where budgetary factors have changed abnormally or have been under-estimated (such as growth rates and inflation) it is possible for the Principal Accounting Officer to re-allocate funds, provided they are available from savings arising in the same grant.  In this case the Principal Accounting Officer or his/her delegated officer is permitted to re-allocate funds between the individual allotments made to delegated officers or between detailed object heads of the same primary unit of appropriation within a particular grant, provided the:

·         re-allocation is not to or from the establishment (salaries and allowances) budget

·         delegated authority is also an authority competent to approve expenditure under these heads

·         re-allocation is authorised before the expiry of the financial year to which the budget relates

·         amount re-allocated does not exceed any financial limits as determined by the Finance Division/ Department.

3.3.12.8          Re-allocation between primary units (major object) of appropriation and between different grants must be approved by the Finance Division/Department.  The specific authorities for such transfers are set out in the ‘Delegation of Financial Powers’ issued by the Federal Government and each of the Provincial Governments. 

3.3.12.9          The Principal Accounting Officer is not permitted to re-allocate funds between major and minor function heads within the entity.

3.3.12.10          In all cases of funds re-allocation, the Accountant General’s office must be immediately informed once it has taken place.

3.3.12.11          Re-allocation of funds between voted and charged components of the Budget is not permitted.

3.3.13          Supplementary Grants

3.3.13.1          If funds are still not available within the grants available to the spending entity, it should then consider whether the expenditure can be postponed.  If it cannot be postponed, the spending entity can then apply to the Finance Division/Department for a Supplementary Grant.

3.3.13.2          A submission to the Finance Division/Department for a Supplementary Grant will not be accepted unless the excess is due to a cause beyond the control of the spending entity concerned and expenditure cannot be legitimately postponed.

3.3.13.3          Expenditure on new services or programs in which no provision in the budget has been made will not normally be admitted as a Supplementary Grant and should be met from savings.

3.3.13.4          The Finance Division/Department will need to give their consent for the Supplementary Grant application.  However, the Supplementary Grant application can only be approved by the National Assembly/Provincial Assembly during the budgetary cycle for the following year.  Expenditure during the interim period in respect of the additional appropriation applied for through the Supplementary Grant application commencing from the MoF/FD’s consent to the approval by the National Assembly / Provincial Assembly will be governed by MoF/FD circulation and standing orders issued from time to time.

3.3.14          Review

3.3.14.1          An annual statement of expenditures against budget (appropriation), referred to as the Annual Appropriation Accounts, is prepared and published by the Accountant General Pakistan Revenues and respective provincial Accountant Generals.  All the self-accounting entities prepare and publish their own Annual Appropriation Accounts, duly certified by the DGs of Audit.

3.3.14.2          This report must provide, for the whole financial year just completed:

·         a comparison of actual expenditure with original and supplementary budget.

·         details of excesses and surrenders and supporting explanatory notes (as provided by spending divisions and departments)

·         comparison of actual expenditure with previous year actual.

This information will be provided for each grant, down to minor function and object level.

3.3.14.3          The review process also includes the auditing function, which may be both external (i.e. by the Auditor General’s Department) and internal (by the ministry or department itself).  Internal review processes may assess performance against budget, and achievement of planning objectives against financial and non-financial performance measures.

3.3.14.4          The Public Accounts Committee should investigate those cases in which a ministry or department has incurred a material deviation from budget and make recommendations to the National/Provincial Assembly.  The National/Provincial Assembly approve the material deviations from budget recommended by the Public Accounts Committee (excess expenditures) and publish the approval in the form of an Excess Budget Statement.

3.3.14.5          Information and feedback obtained from the above review processes will be used in developing next years budget, thus completing the budgetary cycle (Direction 3.3.5.3).

3.4              Specific Budgetary Procedures

3.4.1          Introduction

3.4.1.1          This section discusses specific aspects of the budgeting process that need to be considered in addition to the Detailed Procedures set out in the previous section.

3.4.2          Charged Expenditures

3.4.2.1          Article 81 of the Constitution sets out those items which are to be charged upon the Federal Consolidated Fund.  Similarly, Article 121 of the Constitution sets out related items to be charged upon the Provincial Consolidated Fund and is broadly in line with the above.  These items are:

·         the remuneration payable to the President and other expenditure relating to his office

·         remuneration payable to the Judges of the Supreme Court, the Chief Election Commissioner, the Chairman and Deputy Chairman, the Speaker and Deputy Speaker of the National Assembly and the Auditor General

·         the administrative expenses of the above offices

·         all debt charges for which the Federal Government is liable including interest, repayment of capital and other expenditure connected with the raising of loans, and the servicing and redemption of debt on the security of the Federal Consolidated Fund

·         any sums required to satisfy any judgements, decrees or awards against Pakistan by any court

·         any other sums declared by the Constitution or by Act of Parliament to be so charged (e.g. Wafaqi Mohtasib).

3.4.3          Centrally provided for expenditures

3.4.3.1          The following expenditures shall be centrally provided for by the Accountant General under instructions issued by the Government.  These estimates are to be submitted to the Finance Division/Department by the prescribed date  for inclusion in the Annual Budget Statement:

·         expenditure on pensions

·         GP fund expenditures

·         loans and advances

·         interest on miscellaneous debts.