Home > Free Essays > Economics > Budget > Public Sector vs. Private Sector Budgeting
Cite this

Public Sector vs. Private Sector Budgeting Essay


A budget is a financial list of all planned expenses and revenues. It shows saving, borrowing and spending habits. The budget of a government summarizes all intended plans of revenues as well as expenditures. It consists of a plan developed in monetary values (Cooper, 2006: 23).

Budgeting keeps economies active. It is worth noting that the budgeting process is a system of financial planning and management that guides both public and private sectors within the economy. Private and non-governmental organizations have established financial departments that are charged with the responsibility of drawing the financial plan for every financial period.

In the same manner, various governments around the world also have finance ministries which are tasked to provide financial roadmap for the government’s spending activities within a given year. In the light of the above, budgetary processes of the private sector still emerge to be better than the public sector especially based on the principles governing both budgetary processes.

The budgeting process in the private sector is systematic and strict. Usually, private organizations engage in budgeting processes once in a year. In this context, various leaders within different departments in the organization are charged with the task of developing the budgetary estimates for their respective departments.

These leaders are then supposed to submit their budgetary proposals to the top level management for consideration and approval.

Once the executive arm of the organization receives the proposals, thorough analysis is done to the proposals from every department. Since the organization is guided by a series of principles and culture, the budgetary proposals are approved based on such terms. As a result, there are high chances of fairness to all the departments as concerns their budgetary proposals.

Similarly, the executive branch of the organization ensures that only pertinent elements within all the budgetary proposals from the departments are approved based on the policies within organization. This means that chances of equality and fairness are high in private sectors (Fry, Brian and Raadschelders, 2008: 78-79)

On the other hand, budgeting processes in the public sectors are often unstable and full of partiality. Since governments are composed of three arms (legislature, executive and judiciary), the budgetary processes often encounter a lot of challenges.

In as much as the executive branch tasks the financial department to develop a budget for a nation, several procedures are often observed leading to low levels of implementation of the proposed budgets (Denhardt, 2003: 56-58).

As a matter of fact, the proposal produced by the financial department has to be exposed for review, scrutiny and criticism by the legislative. It is in such contexts that various legislators with selfish interests underscore various proposals that are unsuitable for them. As a result, pertinent and helpful budgetary proposals are disregarded by most legislators.

This is due to the fact that the legislators can institute or amend laws to cancel various budgetary proposals. It is worth noting that all the arms of the government are often misguided by political interest. As a result, the budgetary processes in the public sector are majorly unstable and full of partiality.

Secondly, the system of budgeting in private sector is highly controlled thus eliminating any elements of mistakes. This is because any proposals provided by a department that are contrary to the company’s policies would automatically be ignored. As a result, an organization manages to plan within its financial means and estimates.

This is contrary to the public sector which has various centers of power thus making it difficult to control spending on various elements in the budget. Since the government is three-armed, the issue of controlling various pertinent and unnecessary elements of the budget becomes overly difficult. As a result, the budget is error prone (Mckevitt and Lawton, 1994: 112-114).

In consideration of the above differences, it is clear that the public sector needs to learn from the private sector. Indeed, the public sector should strictness and properly enforced policies to govern the budgetary process. All the arms of government need to set up independent committees tasked with analyzing and verifying the budgetary proposals produced by the treasury department.

This process will protect the budget from political influences as well as selfish goals by various arms of government. In order to establish success in most public sectors, financial budgeting needs to be free from any political and individual interests. The needs of the nation have to be prioritized accordingly.

Secondly, a regulatory commission should be established by the government to eliminate errors and overspending. Unlike private sectors that are controlled by a team of executives, the public sector lack definite regulatory systems. As a result, public sector is often prone to overspending and high tax cuts to ordinary citizens in a bid to meet the budgetary costs (Shafreitz and Hyde, 2008: 56-67).

Therefore, successful budgeting in the public sector should be governed by an independent impartial regulatory commission that will eliminate all errors. Such a commission will also ensure that the government stays on-course within its budgetary means to avoid overspending and borrowing.

In conclusion, budgetary processes of the private sector still emerge to be better than the public sector especially based on the principles governing both budgetary processes. This is because the private sector is systematic and strict. In addition, it is highly controlled thus eliminating any elements of mistakes.

As a result, the public sector needs to set up independent committees tasked with analyzing and verifying the budgetary proposals produced by the treasury department in order to match the success of the private sector. In addition, a regulatory commission should be established by the government to eliminate errors and overspending.

Bibliography

Cooper, Phillip J. Public Law & Public Administration 4th Ed. New York: Wadsworth Publishing, 2006.

Denhardt, Robert. Theories of Public Organization by 6th Ed. New York: Wadsworth Publishing, 2003.

Fry, Brian R., and Raadschelders Jos C.N. Mastering Public Administration: From Max Weber to Dwight Waldo, 2nd Ed. Boston: CQ Press, 2008.

Mckevitt, David, and Lawton Alan. Public Sector Management Theory, Critique and Practice. London: Sage Publication Ltd., 1994.

Shafreitz, Jay M., and Hyde Albert C. Classics of Public Administration, 6th Ed. New York: Wadsworth Publishing, 2008.

This essay on Public Sector vs. Private Sector Budgeting was written and submitted by your fellow student. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly.

Need a custom Essay sample written from scratch by
professional specifically for you?

Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar

301 certified writers online

GET WRITING HELP
Cite This paper

Select a website referencing style:

Reference

IvyPanda. (2019, May 30). Public Sector vs. Private Sector Budgeting. Retrieved from https://ivypanda.com/essays/public-sector-vs-private-sector-budgeting/

Work Cited

"Public Sector vs. Private Sector Budgeting." IvyPanda, 30 May 2019, ivypanda.com/essays/public-sector-vs-private-sector-budgeting/.

1. IvyPanda. "Public Sector vs. Private Sector Budgeting." May 30, 2019. https://ivypanda.com/essays/public-sector-vs-private-sector-budgeting/.


Bibliography


IvyPanda. "Public Sector vs. Private Sector Budgeting." May 30, 2019. https://ivypanda.com/essays/public-sector-vs-private-sector-budgeting/.

References

IvyPanda. 2019. "Public Sector vs. Private Sector Budgeting." May 30, 2019. https://ivypanda.com/essays/public-sector-vs-private-sector-budgeting/.

References

IvyPanda. (2019) 'Public Sector vs. Private Sector Budgeting'. 30 May.

Related papers