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Definition of the public budget cycle
Generally, a budget is a statement that apportions resources so as to achieve the objectives of an organization, entity or an institution within a given period of time. A budget focuses on a financial plan. It shows the amount which an entity expects to receive and draws a plan on how to spend the expected revenue. Thus, the role of a budget is fundamental in an institution.
It creates a connection between resources available and human behavior so as to achieve specific objectives. A budget is required for two basic reasons. The first reason is to apportion resources based on priorities and secondly to create responsibility among employees of an organization. A public budget comprises of two components these are revenue and expenditure.
The major sources of revenue for a government agency are taxes, user charges, borrowings, special allocations, and internal transfers among others. Key public spendings are on public programs, capital expenditures, administrative expenses, and debt servicing. Just like a budget for any other institution, preparation of a public budget goes through a cycle.
A public budget cycle is the process from the start of developing a budget to the final execution of the budget. Ordinarily, a public budget cycle covers a whole year commonly known as a fiscal year. Fiscal year various across various nations. Some run from October 1 to September 30 of the succeeding year while other between July 1 to June 31.
A public budget is quite comprehensive and it contains various activities. The activities can be grouped into four phases these are formulation stage, approval, execution, audit, and evaluation. These stages are discussed below (Lee, Johnson & Joyce, 2008). The government agency that will be reviewed is the United States’ Federal Bureau of Investigations (FBI).
Formulation is the first stage of a budget cycle. It is carried out at the onset of every fiscal year and it overlaps with the last stage, that is, auditing and evaluation of the previous year’s budget. The state law requires that the formulation of the budget for various agencies should be carried out in a transparent manner.
Some activities that are carried out at this stage are economic modeling, estimation of revenue, and determination of agency expenditure ceilings among others. The formulation stage is crucial in the budget cycle for the agency thus, all participants are involved at this stage. This enhances the effectiveness of the budget. Also, it minimizes resistance during implementation.
It is worth mentioning that at this stage, the formulation team must ensure that the resources available are able to cover all the expenses thus eliminating the possibility of a deficit of surplus. In case of a deficit, the team must come up with ways of raising the additional revenue required or eliminating some expenses which are not of priority.
Further, at this stage the formulation team must ensure that the budget takes into account the objectives of the organizations. Also, short term and long term plans must be taken into consideration at this stage. The outcome of this stage is a comprehensive budget proposal. After a fruitful formulation, the budget is submitted to the secretary of the treasury for appraisal before approval (Cumming & Masse, 2007).
In the US, budgets for government agencies are sanctioned or rescinded by the Congress of the United States of America. Since there are several government agencies, the Congress only approves budget for a whole federal government not for individual agencies. However, the Treasury of the United States of America carries out an extensive review of budget for agencies before submitting to the Congress for approval.
In cases where the Treasury is not satisfied with the content of the budget, it can send it back to the agency for amendments. The Treasury often specifies the areas that require amendments.
In some cases, the Treasury may commission a public hearing with the officials of the agencies to discuss some contentious areas in the budget before approval (Heniff et al., 2010). Once a budget is approved, it moves to the next phase that is, execution.
Execution is the third stage of the budget cycle for the agency. It entails effecting the content of the approved budget. A key activity in this phase is the dispersal of funds as outlined in the budget plan. The plan must be strictly followed otherwise major changes during allocation may lead to inadequacy of resources. At the FBI, the executive branch is mandated to execute the content of the budget plan.
The unit is charged with a key responsibility of ensuring that the disbursed resources are utilized for the intended purpose as stipulated in the budget plan. Further, the FBI maintains an integrated system of accounting. This system encompasses all the units within the agency.
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It is mandatory that units in the agency must post all transactions relating to the disbursed funds in the system. The measures taken by the FBI ensures that there is transparency during the implementation phase. The measures also ensure the success of the plan and minimizes embezzlement of resources. Finally, the measures promote audit trail during auditing and evaluation (Cumming & Masse, 2007).
Audit and evaluation
The final stage of the budget cycle is audit and evaluation. Evaluation of the budget plan for the agency is carried out frequently. Evaluation is carried out by monitoring and evaluation unit. They continually review the periodic reports generated. This internal control mechanism ensures that weakness in the implementation of the budget plan are identified and corrected early before reviews are carried out by external bodies.
Audits are carried out by external officers who are independent of normal operations of the agency. The staff members carrying audits are, in most cases, drawn from the Treasury of the United States of America or Federal Reserve. Audits are carried out at the close of a fiscal year. It is worth mentioning that reference is made to an audit report before approval of the budget in the next budget cycle.
How the budget cycle relates to the overall mission of the FBI
The FBI’s national security mission “ is to lead and coordinate intelligence efforts that drive actions to protect the United States” (Federal Bureau of Investigation, 2013). The agency strives to understand various threats and cross border networks that pose threats to the security of the country (Federal Bureau of Investigation, 2013).
The agency is responsible for modeling an intelligent mechanism that enhances security in the nation. As discussed above, the public budget cycle of the agency is transparent. It is also orderly. The budget cycle is consistent with the internal processes of the Agency.
Cumming, A., & Masse, T. (2007). FBI intelligence reform. New York: Nova Science Publishers, Inc.
Federal Bureau of Investigation. (2013). Mission. Web.
Heniff, B., Streeter, S., Lynch, M., & Tollstrup, J. (2010). Introduction to the Federal Budget Process. Washington, D.C.: The Congressional Research Service.
Lee, R., Johnson, R., & Joyce, P. (2008). Public budgeting systems. Sudbury, MA: Jones and Bartlett.